Reviving Zimbabwe’s SMEs: Tackling the challenges head-on

Entrepreneurship Matters

Dr Kudzanai Vere

IN Zimbabwe’s bustling economic landscape, small and medium enterprises (SMEs) have long been the backbone of growth and innovation.

These dynamic businesses, often operating on a shoestring budget, have the potential to drive economic transformation, create jobs and foster a culture of entrepreneurship.

However, the SME sector in this country has faced a myriad of challenges that have hindered its full potential.

SMEs account for a significant portion of the country’s gross domestic product and employs over 60 percent of the working population.

These enterprises are the lifeblood of local communities, providing essential goods and services, while fostering a vibrant entrepreneurial spirit.

Lack of access to credit

Zimbabweans face challenges in securing the necessary capital to start SMEs, expand or modernise their operations. The limited availability of affordable and flexible financing options, coupled with stringent collateral requirements, has left many SMEs struggling to access the funds they need to thrive.

This lack of access to credit has stunted the growth of countless promising enterprises, hindering their ability to invest in new technologies, expand their reach and create more job opportunities.

Infrastructure deficits

Another pressing issue is the infrastructure deficit. Here, we are talking about unreliable electricity supplies, water scarcity and inadequate transportation networks.

Although we have a road network in place, moving from one point to another on some roads almost takes forever due to their poor state.

We applaud the Government for the Harare-Nyamapanda highway upgrade, which is set to start soon, among other road projects underway.

SMEs in Zimbabwe often find themselves grappling with logistical nightmares that undermine their productivity and competitiveness. These infrastructure challenges not only increase operational costs but also make it more difficult for SMEs to deliver their products and services to their customers in a timely and efficient manner.

Talk of the Harare-Karoi road, especially after Chinhoyi. The road needs urgent attention.

Navigating the regulatory landscape

SMEs used to face significant hurdles regarding the regulatory environment in Zimbabwe.

Navigating the complex web of red tape, lengthy registration processes and opaque compliance requirements was a daunting task for many small business owners.

The Zimbabwe Revenue Authority, the Companies and Intellectual Property Office of Zimbabwe, the Procurement Regulatory Authority of Zimbabwe and the National Social Security Authority deserve praise for coming up with user-friendly registration systems, though there is always room for improvement.

The lack of a streamlined and supportive regulatory framework has deterred many entrepreneurs from formalising their businesses, depriving the economy of their potential contributions.

Addressing the skills gap

Furthermore, the skills gap within the SME sector has been a persistent challenge. Many small business owners and their employees lack access to comprehensive training and development programmes, limiting their ability to stay abreast of industry best practices, adopt new technologies and enhance their managerial and operational capabilities.

The skills deficit undermines the competitiveness of SMEs, hindering their ability to adapt to rapidly changing market conditions and capitalise on emerging opportunities.

Impact of Covid-19 pandemic

In addition to these challenges, SMEs in Zimbabwe have also grappled with the lingering effects of the Covid-19 pandemic.

The lockdowns, supply chain disruptions and reduced consumer spending have taken a heavy toll on these enterprises, many of which have struggled to survive and recover.

The pandemic has underscored the need for targeted support and resilience-building measures to ensure the long-term sustainability of the SME sector.

Comprehensive approach to reviving SMEs

To address these pressing challenges and unlock the full potential of Zimbabwe’s SMEs, a comprehensive and multi-faceted approach is required. Policymakers, financial institutions and development partners must work in tandem as they implement strategic interventions that address the unique needs of small and medium-sized businesses.

Improving access to finance

Improving access to finance is crucial. The Government should explore innovative financing schemes, such as credit guarantee programmes, venture capital funds and microfinance initiatives, to provide SMEs with the necessary capital to invest in their growth. Additionally, regulatory reforms that streamline the lending process and offer more flexible collateral requirements can go a long way in empowering SMEs to access the resources they need.

Addressing the infrastructure deficit

Addressing the infrastructure deficit is of paramount importance. Targeted investments in solar energy, water systems and transportation networks can significantly enhance the operating environment for SMEs, reducing their costs and improving their ability to reach new markets.

The Government should prioritise public-private partnerships and leverage on international development funding to drive these critical infrastructure upgrades.

Streamlining the regulatory framework

The regulatory framework governing SMEs must be streamlined and simplified.

By reducing bureaucratic hurdles, simplifying registration and compliance procedures, and providing clear and transparent guidelines, policymakers can create an enabling environment that encourages the formalisation and growth of small businesses.

Investing in skills development

Investing in skills development and capacity-building programmes for SME owners and their employees is crucial.

These initiatives should focus on areas such as financial management, digital literacy, marketing and operational efficiency, equipping SMEs with the tools and knowledge they need to thrive in a competitive market.

Supporting post-pandemic recovery

The Government should consider implementing targeted support measures to help SMEs navigate the post-pandemic recovery.

This could include tax incentives, subsidies and access to specialised advisory services to assist these enterprises in adapting to the new economic landscape and capitalising on emerging opportunities. By addressing these multifaceted challenges, Zimbabwe can unlock the true potential of its SME sector, driving economic diversification, job creation and sustainable growth. As the country navigates the path to recovery and prosperity, revitalisation of the SME sector must be a top priority, paving the way for a more resilient and inclusive economy.

Dr Kudzanai Vere is an internationally acclaimed transformational speaker in entrepreneurship, organisation development, personal development, leadership development and financial forensics. He is the CEO of the Institute of Entrepreneurs Zimbabwe. He can be contacted on: [email protected] or +263 772 592232.