‘SMEs must be formalised to lure investors’ Cde Mnangagwa
VP Mnangagwa

VP Mnangagwa

Felex Share Senior Reporter
Government is formalising operations of Small to Medium Enterprises for investors to be able to evaluate their businesses and make decisions, Vice President Emmerson Mnangagwa has said. He said most SMEs were not registered and lacked accounting records and investment into them was considered high risk.

VP Mnangagwa made the remarks in Harare yesterday while opening the 2016 SMEs International Expo and launching the Virtual Business Incubation Centre for SMEs. The SMEs International Expo is an annual exhibition which affords small businesses and corporates a platform to showcase their products and services.

The Virtual Business Incubation Centre grooms small businesses through a mentoring programme that provides business planning, marketing, quality assurance, effective costing and reporting on performance.

“Government is seized with the development of a formalisation strategy to address the informality of these businesses,” VP Mnangagwa said.

“The strategy is designed to facilitate registration and licensing of these operations, provision of infrastructure, accessing banking products and tenders. There are tax rebates and allowances which can be claimed by businesses which are regularly assessed by ZIMRA. Moreover, unregistered SMEs continue to lose out on the 25 percent tender value issued to Government that is reserved for SMEs.”

He said in some countries, registered SMEs were offered export incentives. “They get paid a certain percentage of the tax invoices as a ‘Thank You’ by Government for successfully penetrating foreign markets,” he said.

“Government, in an effort to promote exports, is considering such incentives. Formalisation of SMEs allows them to do business with other companies and businesses or enter joint venture arrangements with local or foreign investors and be able to export their products.”

VP Mnangagwa said because of their informal status, most SMEs were failing to borrow from banks. He said SMEs had kept Zimbabwe’s economy alive, accounting for about 70 percent of the country’s economic activities.

“Despite the dominance of small business enterprises in Zimbabwe, most of them have failed to realise full potential due to a number of impediments that constrain their growth,” he said.

“These include lack of finance and appropriate technology, low business management skills, weak business linkages and lack of markets. For these reasons, it has been difficult for SMEs to grow beyond what they are now and to export into the regional and international markets.”

He said there was need for Government, through the Standards Association of Zimbabwe (SAZ) to work with small businesses to develop quality products. “Quality is the hallmark of market-success for every organisation,” VP Mnangagwa said.

“Quality allows for penetration of both domestic and foreign markets, constituting a major driver of industrialisation. In that regard, every effort meant to improve quality must be nurtured and supported by all. The ISO-certification, being an international quality-seal, enhances market confidence of the said products, resulting in increased domestic and export sales.”

VP Mnangagwa said with obsolete equipment, the SME-technological base was low, limiting productivity and making businesses uncompetitive on cost, quality speed and versatility.

“Taking advantage of ICT-specialised institutions and solutions, SMEs could develop sector specific software programmes that can help assist them to better manage their operations and processes and through internet access allow them to market and source globally, greatly expanding their market reach.”

He said small businesses were operated by “first generation entrepreneurs” hence the need for training and technical support.

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