Over the past decade, Zimbabwe has witnessed the emergence and growth of Small to Medium Enterprises (SMEs) mainly due to the high levels of unemployment in the country and the growth of the informal sector. These SMEs have mushroomed in various sectors of the economy ranging from farming right through to information and technology. Most of these small businesses are characterized by small number of employees and limited finance. Challenges to do with securing funding, regulation, payment of taxes and stunted growth are common among most SMEs. There has been also a major challenge of lack of adequate skills in the SMEs sector. Small businesses find it difficult to sell their products either due to poor packaging or marketing skills. It is important to also note that most of the SMEs were created as last resorts to try and generate some source of income as employment opportunities were hard to find. As such most of these businesses lack the expansion vision.
Globalization has presented new opportunities for SMEs. However despite playing a crucial role in employment creation in the country, SMEs have failed to develop into big entities which have the ability to penetrate external markets. SMEs in Zimbabwe cannot continue operating in the local space and fighting for the small piece of cake. Given the high level of competition in our local industry, SMEs must have a competitive advantage in their line of business and also create new markets, outside Zimbabwe so as to increase their customer base and overall sales. Regional and international markets need to be exploited by local SMEs so as to grow and increase their sales revenue.
The government of Zimbabwe, through the Ministry of Women Affairs, Community, Small and Medium Enterprises has an important role to play in assisting SMEs to take advantage of opportunities in the regional and international jungle. The country over the years has tried to make external trade easy for local businesses by signing a number of regional and international trade deals including, the Tripatite Free Trade Area (TFTA) of 2015; Zimbabwe-Mozambique trade agreement of 2005 and the Zimbabwe-South Africa trade agreement of 1996. These trade pacts seek to make regional trade easy by eliminating bottle necks that hinder the free movement of goods and services.
Another worrying statistic is that most SMEs are not registered. A recent survey carried out by FinScope Zimbabwe showed that only 15 percent of them were legally registered. There have been numerous cries for the formalization of the SMEs sector to be done so as to access external market benefits. This has a negative impact on growth as informality hinders small businesses from reaping the benefits of the regional and international trade agreements the country has in place. This formalization will also bring about benefits such as improved information discrimination and regulation of the sector.
Limited finance also acts as a barrier to entry for small businesses. Most SMEs operate on low budgets and hence the desire to produce large volumes to meet local and regional demand needs to be backed up with intensive capital investment so as to efficiently boost output. Access to regional and global markets requires substantial investment from the government in infrastructure development. Local small business must also improve the quality of their products so as to meet international standards and requirements. They must be able to respond quickly to market opportunities so as to reap benefits.
The emergence of globalization has presented new opportunities for SMEs to explore. The world is fast becoming one big market and local small businesses have to realize this and create markets outside Zimbabwe so as to grow. Government through policy formulation also has a crucial role to play in this growth.
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