SMEs: Govt must now go beyond lip service

It is gratifying to note that our authorities are now going a tad beyond lip service in recognising the importance small and medium enterprises (SMEs) in Zimbabwe have for economic growth.

Comment by Itai Masuku

Because of the numbers involved in the SMEs sector, the temptation for politicians to want to be seen championing the cause of SMEs for political expediency is too great.

Finance minister Tendai Biti pointed out the SMEs sector accounts for 60% of employment in the country. Looked at in another way, they account for 60% of eligible voters, forming a strong constituency that lags only 5% behind the rural voter, again, using Biti’s figures.

But the best is yet to come: SMEs, according to Finance ministry figures, account for 50% of our Gross Domestic Product.

What an amazing contribution! Yet the minister would not address his stimulus package for the sector during his presentation, leaving it to be read at one’s leisure. But the truth is, it is not everyone that gets a copy of the minister’s speech.

Yes, some media institutions do publish the statement in full, but again, the reach of Zimbabwe’s combined media industry is not enough to cover the entire populace.

The point is, somehow we still have a “wouldn’t it be nice?” approach towards SMEs, hence why the minister did not bother to speak directly to the issues affecting them. We shall split hairs and point out that reference to SMEs accounted for 574 out of the nearly 40 000-word budget speech.

Given that SMEs produce half of GDP, surely half the speech or somewhere thereabouts should have been about them? Given that on average, a person speaks three words per second, it would have only taken him three minutes to speak to the issues he specifically had for SMEs.

Biti pointed out problems the sector faced, which included support in resolving challenges on access to and high cost of financing, lack of appropriate infrastructure and technology, limited marketing and business management skills as well as stringent regulations.

But alas, only US$15 million under the Micro-Finance Revolving Facility was mobilised during 2012, of which a mere US$5 million was from government, the other being from non-governmental institutions that included CBZ Bank. If SMEs produce half our GDP, then half of support to industry should be targeted at SMEs.

Thankfully, more of the big private sector players are beginning to see the light and are channelling resources and support towards this sector.

“CABS and Old Mutual have agreed to avail a total of US$10 million, ie US$5 million each, towards an SMEs Fund. I am in discussions with other players in the financial sector to contribute another US$10 million,” Biti’s written presentation stated.

There are plans to re-organise SMEs into clusters based along line of operations and products like furniture, metal fabrication, household goods, clothing, electronics, among others. Also, incubation centres will be set up in partnership with the government of India to promote transfer of technology to SMEs: Hear, hear. India is a leader in SMEs development.

Biti also said the Small Enterprises Development Corporation (Sedco) will be recapitalised significantly. Let’s hope so.

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