SMEs begin reaping rewards of formalising

31 Jul, 2022 - 00:07 0 Views
SMEs begin reaping rewards of formalising

The Sunday Mail

Oliver Kazunga
Senior Business Reporter

Small to Medium Enterprises (SMEs) say the formalisation programme introduced by the Government is expanding both their local and export markets.

Government, through the Ministry of Women Affairs, Community, Small and Medium Enterprises Development, has embarked on a programme to formalise operations of entrepreneurs in the informal sector.

Under the National Development Strategy 1 (NDS1) – Government’s economic blueprint that guides the country’s development between 2021 and 2025 – unlocking SMEs potential is one of the significant steps towards fostering inclusive economic transformation.

In recent years, SMEs have become dominant players, but most of them still operate informally.

In 2017, Cabinet approved the SMEs formalisation strategy, paving way for the reinforcement of the social contract and creation of sustainable decent jobs.

Bulawayo Chamber of SMEs coordinator Mr Nketa Dlamini said: “Generally, the advantage of formalisation to the SMEs is that you are actually getting to the formal space, meaning you are formally recognised by certain institutions.

“And formalisation simply means you are now registered with the Deeds Office as a company or as a cooperative.

“If you are entering into formal space, you are also registered by statutory bodies like Nssa (National Social Security Authority), Zimra (Zimbabwe Revenue Authority) for taxation purposes and Praz (Procurement Regulatory Authority of Zimbabwe) for those who want to participate in tender projects.”

When one is registered with Zimra, Praz or Nssa, he said, they become eligible for Government tenders, local authority tenders or even international tenders.

“At one time, I think we got a tender via Nust (National University of Science and Technology) for PPE (Personal Protective Equipment) during Covid-19 pandemic.

“People who benefitted from that tender were registered enterprises,” he said.

For example, one of the SMEs that benefited from PPEs manufacturing supplying Government institutions is Bulawayo-based Chemical Technology Africa.

The company produces sanitisers and detergents, liquid soap, liquid hand wash, bleach and degreasers for domestic and industrial use.

“So, we normally encourage our members to get into that space; firstly, it’s a pathway to growth and if you don’t formalise, it will be very difficult for SMEs to grow, and formalisation is one sure way on a trajectory to grow.

“Secondly, it’s easier to deal with a known entity unlike someone who perpetually sits on the informal side,” said Mr Dlamini, adding that at OK Mart Complex, where about 60 of their SMEs are housed, 70 percent of them were registered. In a separate interview, Mrs Virginia Moyo, who owns Women’s Boutique, a clothing manufacturing company in Ruwa on the outskirts of Harare, said she has been able to export some of her wares to countries such as Zambia and Malawi because the business is formally registered.

“Some people smuggle their products to foreign markets in neighbouring countries because they are not formally registered. But, in my case, because I am formally registered with Zimra and other agencies, l haven been able to expand my market share into Zambia and Malawi, where l deal with registered clients there as well.

“So, formalisation is bearing fruit,” she said.

“Formalisation also increases employment opportunities and contribution to the fiscus through taxation, which funds are then used by the Government to bring development into the country at large.”

Mrs Moyo said a lot of work still needs to be done to ensure more SMEs are brought into the formal economy.

While officially launching a partnership programme between Praz and Zimpost at Nkulumane Complex in Bulawayo in March this year, Vice President Constantino Chiwenga said the partnership between the two entities was riding on the vision of President Mnangagwa to close the digital gap through increased participation of marginalised communities in national development programmes.

He said reforms in public procurement aim to achieve an efficient, fair, transparent and competitive public procurement system in Zimbabwe.

This means no eligible bidder contractor or consultant should be left out of bidding for goods or services advertised due to non-registration with Praz as a result of the remote location or lack of access to digital technology.

SME Association of Zimbabwe spokesperson Mr Coustin Ngwenya said quite a number of SMEs in different sectors across the country have formalised their operations, heeding the call from Government.

“A number of SMEs have registered their operations and this has given them some access to Government tenders and even some other institutions like those in Local Government. These registered SMEs include those who are into manufacturing who are now supplying some wholesalers, so this has improved business on the side of the SMEs.

“In other words, this has helped SMEs to broaden their market,” he said.

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