The Sunday Mail
Senior Business Reporter
Small and Medium Enterprises (SMEs) require between US$20 million and US$30 million to retool and are appealing to the Government to subsidise their participation at regional trade fairs.
In recent years, the Government has recognised SMEs as an engine for economic growth and has been encouraging the sector to formalise their operations.
Bulawayo Chamber of SMEs co-ordinator Mr Nketa Dlamini said their last assessment had revealed the sector needs up to US$30 million to retool and improve efficiency.
SMEs actively operate in sub-sectors such as clothing and textile, leather, manufacturing, engineering, printing and Information Communication Technology (ICT), among others.
“In our last assessment which we did, most SMEs were looking at recapitalisation. For example, SMEs in the clothing and textile sector were each requiring between US$7 000 and US$10 000 to recapitalise,” he said.
“Obviously, when we have SMEs who are into printing, they need bigger machines. But I think on average if we can have between US$20 million and US$30 million, we should be in a position to recapitalise nationally.”
If recapitalised, Dr Dlamini said, SMEs could improve efficiency and productivity, which, in turn, creates more employment opportunities and contribute to the fiscus.
“People need recapitalisation . . . Government could create a soft loan or credit line with conditions so that they can access the money and pay later. The money should not be a grant . . . but a soft loan.”
The Government has established institutions such as Empower Bank and Zimbabwe Women’s Microfinance Bank to support women- and youth-led businesses, start-ups as well as SMEs.
The sector can also potentially access funding from the Small and Medium Enterprises Development Corporation (SMEDCO), a parastatal which falls under the Ministry of Women Affairs, Community, Small and Medium Enterprises Development.
Mr Dlamini said issues around collateral restrict entrepreneurs from borrowing.
“Even if one goes to banks such as (Zimbabwe) Women’s Microfinance Bank and Empower Bank, they require collateral, but I think we might need the Government to find another method or issue another instrument to address issues of collateral.”
He said authorities should consider subsidising SMEs to participate at regional fairs to help them secure lucrative markets.
However, ZimTrade, the country’s trade development and promotion body, has been undertaking trade missions to explore markets for local products, including for SMEs.
In May this year, the agency carried out market surveys in the United Kingdom and Ghana.
Meanwhile, SMEs that have formalised their operations claim they have managed to tap into local and regional markets. The Government, through the Ministry of Women Affairs, Community, Small and Medium Enterprises Development, has embarked on a formalisation drive for informal sector players.
Unlocking potential of the sector is one of the key targets outlined in the National Development Strategy 1 (NDS1), an economic blueprint guiding Zimbabwe’s development in the five-year period through 2025.
Speaking at a breakfast meeting organised by the Zimbabwe Institute of Strategic Thinkers in Harare last week, the Zimbabwe Economic Society vice president Mr Misheck Ugaro said his organisation can come up with a formalisation strategy where players in the informal sector can be incubated.
“This (incubation) will incentivise growth of their operations.
“At the moment, those that are not yet formalised see formalisation as a penalty as it comes with taxation,” he said.
