HomeOpinionNothing going on for small businesses

Nothing going on for small businesses

David Harrison
I refer to the well-meaning article entitled Role of State in Entrepreneurship published April 22-28, 2022.

Unfortunately, entrepreneurship is a globally misunderstood source of employment and economic productivity, primarily because only a very small proportion of informal entrepreneurial businesses make the transition into the formal sector.

This is, of course, in contrast to the early stages of production of the United States, Britain, Germany etc. where entrepreneurship was encouraged, and unencumbered by regulations.

Unfortunately, since then there has been a continuous imposition of political restraints upon the growth of entrepreneurship, (including massive lobbying by the wealthy food processing sectors) partly in the belief that regulating entrepreneurship might enhance the collection of taxes.

In fact, there is good evidence to indicate that the existence of regulations and early taxes are huge barriers to the progress of small-scale sector businesses.

Some years ago, I published an article in the book Success and failure of Microbusiness Owners in Africa A Psychological Approach,  Quorum Books,  Frese, M. (2000).  (Read the full article on https://www.theindependent.co.zw/)

In this chapter I point out the difficulties encountered by the Zimbabwean small business person attempting to join the formal sector. Not much has changed!

I can summarise by making the simple assertion the small-scale sector needs to be less regulated. That in itself would be a huge encouragement. Small-scale businesses eventually become large enough to be drawn into the formal sector very easily, as there are various forms of incentive, which can be applied at that stage. But at present formalisation incentives are minimal! I am aware that the above is only a very brief summary of this complex situation.

However, if Zimbabwe is to progress with economic growth and cope with our huge unemployment problem, and 350 000 new entries from the school system into the job-seeking sector each year, enlightened and unusual steps will be necessary to absorb even 10% of the disenfranchised section of the population into formal employment.

Gross Domestic Product of 12% growth would achieve only a 4% net increase of employment!

  • Harrison is the managing director and senior consultant with Human Resources (Pvt) Ltd.— hres@ecoweb.co.zw or hres263@gmail.com. Website: www.hres.co.zw.

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