‘SMEs must be given more policy support’

POLICYMAKERS should prioritise the initiatives to protect and grow small to medium enterprises (SMEs) to ensure new job creation, drive economic growth and anchor its stability as the sector is now part of the backbone of the economy, analysts say.

SMEs remain largely unsung heroes but have become vital cogs to the growth and development of this economy while employing hundreds of thousands across the economy.

Notably, there has been a significant change in the Government’s attitude towards the SMEs sector. The SME sector is increasingly viewed as an important engine for employment creation and economic growth.

This has been necessitated by the increasing awareness within the Government that large projects in the industrial sector are less likely to generate the requisite employment opportunities. Interventions in support of the sector have included the creation of an enabling legal and regulatory environment, investment promotion, financial assistance, market promotion, technology and infrastructure support, entrepreneurship, management and skills development, targeted support, and institutional reforms.

According to the latest 2023 Fourth Quarterly Labour Force Survey the Zimbabwe National Statistical Agency (ZimStat), said 79,3 percent of the working population in Zimbabwe is employed in either the formal or informal sector, dominated by SMEs.

“The Informal sector (Non-Agriculture) comprised 43,7 percent of the employed population, and the agriculture sector, 22,3 percent,” ZimStats said.

The informal sector's contribution to Gross Domestic Product (GDP) is estimated to be just below 50 percent, which translates to about US$17 billion, according to the 2023 third-quarter gross domestic product (GDP) figures.

ZimStat recently pointed out that 77 percent of domestic expenditure is done in foreign currency, which also means that billions of transactions are done in hard currency and are mostly conducted in the SMEs or informal sector. Economist Tinevimbo Shava said, “With the informal sector employing such an amount of people, it means it can drive growth in the economy with the formal sector anchoring it. We need to move forward as a country and be innovative to include the sector in most of our planning as a country and reap rewards.

Another analyst, Gladys Mutsopotsi-Shumbambiri said authorities needed to determine the size of the sector and how much it contributes to fiscus.

◆ Read more on www.heraldbusiness.co.zw