The Sunday Mail
YOUNG people are a critical demography with potential to contribute immensely towards the development of Zimbabwe.
Trade Focus
Allan Majuru
Although this may sound like a cliché, the above maxim had somewhat been betrayed by lack of concerted effort from across the sectors to build transformational and sustainable institutions that allow young people to build stronger businesses.
It is encouraging that President Mnangagwa’s administration, through the National Development Strategy 1 (NDS 1), acknowledges that young people are a valuable resource when given opportunities.
NDS 1 states: “Youths are a valuable resource, especially if they are allowed to build and strengthen qualities that enable them to grow and flourish into responsible citizens.” To unlock the value inherent in young people, the Second Republic has committed to focus on youth issues to ensure the country benefits from the demographic dividend.
One of the strategies to onboard young people into the economy is through building youth-led sustainable businesses that contribute towards export growth, which will, in turn, strengthen the nation’s economy. No doubt, exports are crucial in the economic development matrix as they are a gateway to earning the much-needed foreign currency.
Regrettably, there has been little participation by young people in the mainstream export business, despite their potential to do so. To inculcate an export culture among youth-led businesses, ZimTrade — Zimbabwe’s trade development and promotion organisation — has been running a year-long programme dubbed the Eagles’ Nest Youth Export Incubation.
Since the launch of the programme in 2021, more than 200 youth-led businesses have gone through capacity-building trainings, either directly from the scheme or through other support activities run by ZimTrade. Through these interactions, some lessons have been drawn on the current state of youth-led businesses and what is required to unlock potential in their enterprises.
Most are informal businesses
One of the main issues that stood out during interactions with young businesspeople was lack of business knowledge, with some operating in less professional environments and others even going about their work informally. Small-scale businesses and the informal sector are significant players in the Zimbabwean economy and contribute significantly towards the nation’s gross domestic product. Most youth-led businesses are small enterprises and through interactions with ZimTrade, it became clear that most of them are operating informally and this presents challenges when dealing with exports.
For those trying to venture into the export business, they are also doing so informally, relying on colleagues crossing the border to deliver their products to regional markets. Additionally, although some youth-led businesses have a working knowledge of digital marketing and have managed to increase the visibility of their products across the borders, their operation spaces do not meet proper business standards. This has seen them failing to acquire huge orders and access available incentives put in place to develop small businesses.
For example, the Common Market for Eastern and Southern Africa (COMESA) is implementing a simplified trade regime (STR), currently operational between Zimbabwe and Zambia, and Zimbabwe and Malawi. The STR is a customs-clearance procedure used by small-scale cross-border traders importing or exporting goods between participating COMESA member states, allowing them duty-free access for goods worth not more than US$1 000. Thus, by operating informally, youth-led businesses are failing to enjoy these international and local trade incentives that can help boost their businesses.
There is need, therefore, for partners working with youth-led businesses to place emphasis on regularising their businesses.
There is also need for Government institutions to streamline the business registration process and ensure online mechanisms are put in place so that youth-led enterprises operating out of the main towns are not disadvantaged.
Financing
Another vulnerability youth-led businesses face, which is restricting their growth and export potential, is lack of financial support.
Access to affordable finance is critical for the growth of exports, especially for Zimbabwe, which wants to boost its exports and spread its trade footprint across the globe.
According to the World Trade Organisation, up to 80 percent of world trade is backed by some sort of financing or credit insurance, valued at around US$10 trillion a year. Trade financing supports the flow of credit in various supply chains and typically assists companies in managing their cashflows for international payments and associated risks, as well as provide the much-needed trade-related working capital.
According to the Reserve Bank of Zimbabwe, a small percentage of the total loans and advances by Zimbabwean banks go towards the small and medium enterprises (SMEs) sector, where most youth-led businesses are found. In addition, conventional funding options often require collateral, making it difficult for young people to get funding.
To address these problems, financial institutions should provide funding facilities tailored for youth-led SMEs to help turn their ideas into viable businesses that can help grow the economy and boost exports.
Knowledge dissemination
Many businesses that participated in the Eagles’ Nest programme aspired to export their products. However, they did not possess the knowledge or know-how of the export markets they want and the requirements to export their products there. The main challenge faced by youth-led businesses looking to export is their failure to invest much in market research. They assume the dynamics of the local market are the same with export markets.
This assumption is not always true and creates several challenges for youth-led businesses when they land in the targeted market. As such, knowledge dissemination is critical in increasing the number of youth-led businesses that are exporting, which, in turn, will contribute towards exports growth.
There is need for more export-related information to be channelled to young business leaders so that they make informed decisions regarding the future of their export businesses. ZimTrade provides market analysis services for free. Much more needs to be done to encourage youth-led businesses to access such services.
There is also need to build capacities for such businesses so that they can utilise trade analysis tools, such as International Trade Centre’s Trade Map.
Capacity building
One of the areas that require urgent attention is capacity building, which will create more benefits, including direct and indirect job creation and the development of human capital and new skills.
A more sustainable approach is to ensure that the youth are well-knowledgeable about business strategies, human capital management, factory floor interventions, skills development and financial literacy.
Engagements with most SMEs have revealed that most owners are not well-versed in business skills such as strategy development, creative design and use of technology to develop their export products and position themselves strategically in the global market.
Thus, capacity building can turn local enterprises into export businesses, creating employment opportunities and earning the country foreign currency.
E-commerce adoption
The emergence of e-commerce has given opportunities for youth-led businesses to participate and survive global value chains. It is now easy for local businesses to take their products to the world through the internet. Youth-led businesses should not be left out. Provision of information and communications technology-based solutions will enable local youth-led businesses to connect with the rest of the world and allow them to learn from competition.
This way, small businesses will grow enough capacity to reach export markets based on informed decisions, underlined by trending issues.
Tertiary institutions also have a critical role in the development of human capital needed by youth-led exporting companies.
Th curriculum in tertiary institutions needs to consider the economy so that their learning programmes are developed to help the country realise its vision of an export-led economy.
ZimTrade has been engaging tertiary institutions to ensure they consider such issues.
Allan Majuru is ZimTrade CEO
