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Dr Gift Mugano Correspondent
Zimbabwe is holding its maiden global micro small and medium enterprises (MSMEs) expo and exhibition. The ongoing expo was organised by the Ministry of Small and Medium Enterprises and Co-operative Development and Harare Chamber of Small and Medium Enterprises. We must take off our hats for the two organisations who are striving to find practical solutions to Zimbabwe’s economic challenges.

The expo, which is being held under the theme “Stimulating Global Partnerships and Joint Ventures for MSMEs and Co-operatives to Transform the Economy”, has drawn participants from Iran, the Seychelles, South Africa, India and Indonesia, to mention just a few.

The major thrust of this expo and subsequent expos to come is to build partnerships and joint ventures between local MSMEs and co-operatives with their global counterparts.

This week’s discussion would focus on the nature of MSMEs and build a business case of the need to establish an institution which would help to organise them into a formidable force which can tap into the global markets.

The estimated number of SME owners in Zimbabwe is about 2,9 million (sum of all those from provinces).

Of these, Harare has the highest number (541 456), followed by Manicaland (393 274) and Matabeleland has the least with 136 841.

The majority of SMEs owners (68,4 percent) are individual entrepreneurs that are entrepreneurs who work for themselves or who rely much on the spouse and children in the place of employees to do their business while 32,6 percent employ people in their business.

Basing on the definition of SMEs by number employed, about 1 percent are medium-sized business, 4,1 percent small enterprises, 26,7 percent micro enterprises and 68,4 percent individual business.

A reasonable number (35 percent) operate their business from residential premises (garage, home, by the gate) as they have no space for their business activities indicating lack of available or affordable working facilities or by choice as most SMEs operate informally or due to the volume of business attracted.

About 28 percent operate from their farms or plots; mainly those involved in horticulture (flower, horticulture and other agriculture produce), 25 percent operate from designated industrial (industrial sites, SMEs industrial areas e.g. Magaba, Glen View 7 Furniture Complex, Kuwadzana Furniture Complex, etc) and 12 percent operate from other locations such as undesignated places in urban areas, growth points and streets.

The majority of MSMEs constituting 77 percent are in agriculture and wholesale and retail business.

This is mainly driven by garden marketing, flowers and other agriculture produce and wholesale and retailing of clothing and artifacts (machira, madhoiri, zvivezwa, mistvairo).

Agriculture, wholesale and retailing are also easier to start and require less capital compared to other forms of businesses and there is a ready market for such products in neighbouring countries, with other markets already established before exports (more specifically for flowers).

A few (11 percent) of SMEs are in manufacturing, mining and construction because of the capital required in these businesses and the legality involved in doing such businesses in foreign countries such as South Africa, Botswana, Zambia and other countries.

The service sectors include those in the transport involved in cross- border routes and tourism.

Interestingly, active players in the MSMEs in the global market are construction, food and beverages, pharmaceuticals, mining, agriculture, transport, textile, computer and office equipment and furniture.

These are the same sectors which Zimbabwe’s MSMEs are operating in.

What it means is that opportunities for match making, partnerships and joint ventures exist!

The first day of the expo paraded opportunities which exist between Iran and Zimbabwe.

The Iranians are in big business in the areas of agriculture, co-operatives in housing development, pharmaceutical, leather manufacturing and entrepreneurship development, just to mention a few.

The big question for Zimbabwe is that how can we tap into Iran’s vast opportunities either in the form of partnerships and joint ventures with our 2,9 million MSMEs which are largely unorganised with 35 percent of them operating from homes. In order words, how can our MSMEs reach Tehran (capital city of Iran), India, Indonesia, the Seychelles, etc, as individuals without critical mass (as an individual)?

International experience has shown that MSMEs are significantly contributing to economic development. Statistics from the Organisation for Economic Co-operation and Development (OECD) show that MSMEs contribute on average 60 percent to global Gross Domestic Product, 50 percent of global employment and over 40 percent of global exports.

For specific countries like the European Union, MSMEs constitute 99 percent of total businesses, that is, 23 million in total.

Japanese MSMEs constitutes 99,7 percent of total businesses, that is, 3 850 000 in total.

The message from these numbers is that MSMEs is the economy.

All these big economies we envy so much are driven by MSMEs. The secret to the full realisation of the MSMEs potential in unleashing economic development in the global economy is institutional support!

These successful countries established an MSMEs export promotion agency whose mandate is two-fold, the international business linkages and export promotion.

The international business linkages programme outlines target international linkage areas that the Export Promotion Agency could forge in pursuit of facilitating exports.

Export promotion, on the other hand, entails issues of export marketing, trade and investment missions, participation in international fairs and expositions, trade agreements, training and seminars and export market information dissemination and search tools.

SMEs’ export promotion services will focus on the following:

Facilitating international market access and penetration of SME goods and services through their participation in contact promotion programmes, trade fairs and exhibitions, trade missions, buyer-seller meetings and conferences and group marketing schemes for the SMEs.

Facilitating export marketing of SMEs through display of their products in Zimbabwe’s Permanent Missions and external trade offices.

Organising sub-contracting production/supply schemes; establishment of export production village schemes, technical advisory services to facilitate product and market development as well as supply chain management.

Operating Export Training Programme that delivers short-term product development, market development and specialised trade development courses for export companies, trade facilitating agencies and businesses to upgrade their skills in export marketing.

Organising workshops, forums, conferences and seminars for both facilitators of export services and the exporting companies.

Identifying products with export potential and adapt them for the export market.

Guiding local enterprises to prepare export marketing plans tailor-made to their respective operations

Facilitating participation of SMEs at international trade fairs and expositions;

Undertaking trade missions;

Undertaking external market intelligence;

Undertake advocacy services for bodies involved in exports;

Advocating for the review of policies and legislation impacting negatively on export facilitation;

Disseminating export market information

The MSMEs Export Promotion Agency is the right instrument which can be used to organise our MSMEs and help them link with global players. Hence, as Government is making our interventions in supporting MSMEs like through the ongoing Global MSMEs expo, capacitating the Small Enterprise Development Corporation (SEDCO) and creating an enabling environment for MSMEs as enunciated in the recently launched MSMEs policy, it is important to establish the MSMEs Export Promotion Agency as a complementary effort.

Dr Mugano is an economic advisor, author and expert in trade and competitiveness. He is a Research Associate of Nelson Mandela Metropolitan University. Feedback: +263 772 541 209 or [email protected]