ZIMBABWE’S micro, small and medium enterprises (MSMEs) have faced several challenges, especially on funding. Business reporter Freeman Makopa (FM) caught up with Women’s Affairs, Small and Medium Enterprises Development minister Sithembiso Nyoni (SN) to discuss strategies implemented by the government to ensure MSMEs remain afloat and comply with various regulations. Below are excerpts of the interview:
Fact file: Sithembiso Nyoni
- She is the Minister of Women Affairs, Community, Small and Medium Enterprises Development.
- Nyoni has a wealth of experience as a government minister who has served in various portfolios including being the deputy minister of Public Works and National Housing, Minister of State in charge of economic Ministries in Vice President Joshua Nkomo’s office, Minister of State in the President’s office – responsible for the informal sector, Cabinet Minister of SMEs and Cooperatives, Minister of Women and Youth Affairs, Minister of Women Affairs, Community, Small and Medium Enterprises Development.
- At the helm of those portfolios, she has been instrumental in developing micro-economic policies that support disadvantaged communities.
- Nyoni has been actively involved in the development of women and youth since her early years as a university student.
- She has also mobilised rural women to set up the Community Foundation for the Western Region, a success story rural community efforts to create alternative funding for themselves.
- She is keen on coming up with programmes that will bridge generational gaps through tapping of knowledge and skills of retired professionals to mentor young women.
- Nyoni has also practically taken up sustainable development through sustainable employment creation as she is the Founder of the Organisation of Rural Associations for Progress (ORAP) and she has sat in over 30 national and international boards.
- In her political career, she has been active since her university days and played a key role during the war of liberation and the operationalisation of the 1987 unity accord.
- She has always participated in helping the disadvantaged and women empowerment where she has held various positions in the party and society.
- She is currently the Zanu PF Secretary for Business Development and Liaison in the Politburo.
- Nyoni is a winner of several awards that span decades, including the alternative Nobel Prize for her outstanding work with communities.
- Nyoni has also received accolades for her contribution to the development of Small and Medium Enterprises in Zimbabwe and for the upliftment of women and SMEs in general.
- She is a researcher in her own right and holds a PhD in Development Studies.
FM: How has the Women`s Bank been performing, and as a ministry, do you feel the bank is serving its purpose?
SN: The Zimbabwe Women Microfinance Bank has performed exceptionally well since its establishment in 2022. The bank has become a vital conduit in promoting financial inclusion and entrepreneurship for women through opening of banking accounts and facilitating provision of business loans.
These business loans include group loans, working capital, capital expenditure and value chain financing. As of the end of 2021, the bank has facilitated the opening of 98 876 accounts for women and has disbursed loans amounting to ZW$224 552 647 (US$539 426. Resultantly, the support has created 123 019 jobs and sustained 153 771 jobs.
FM: How many MSMEs have benefitted from the government funding?
SN: The ministry facilitates funding to MSMEs through Small and Medium Enterprises Development Corporation (Smedco) and the Zimbabwe Women’s Micro Finance Bank. In 2021, a total amount of ZW$405 557 982,30 (US$974 240) was disbursed through Smedco to 281 projects throughout the country in sectors, which include manufacturing, agriculture and retail among others.
The Zimbabwe Women Micro Finance Bank disbursed 11 243 loans worth ZW$134 012 406 (US$321 928) in 2021 to women’s projects in various sectors including agriculture, livestock and manufacturing.
FM: What are you doing to make sure that MSMEs are compliant with the many regulations in the country, especially paying taxes?
SN: MSMEs are obliged to comply with various regulations including business registration, environmental management, labour regulations, tax registration and local authority by-laws, among others. The ministry is undertaking various measures to ensure MSMEs are in compliance with various regulatory bodies and these include:
Awareness and education: A number of MSMEs do not have adequate information on various regulations that affect the operations of their businesses. The ministry is partnering with the Zimbabwe Revenue Authority (Zimra), Department of Deeds and Companies, Environmental Management Agency, local authorities, National Social Security Authority (Nssa) and MSME associations to undertake educational and awareness campaigns on regulations that affect MSMEs. The campaigns have created a platform for stakeholders to appreciate the demand and supply bottlenecks in the existing regulatory frameworks.
Regulatory reforms: The majority of MSMEs have indicated that existing regulations are not favourable for them. The ministry has been engaging the relevant ministries, departments and local authorities to facilitate review and align regulations in line with the growth of the MSME sector in Zimbabwe.
FM: Do you have a system in place to incentivise the transition of SMEs into formal and large companies?
SN: The ministry has numerous programmes to incentivise SMES, the transition of SMEs into formal and large corporates. These are as follows: Business management and entrepreneurship training, the nation is experiencing a number of people starting businesses as a career as well as a means of survival. However, the majority of these entrepreneurs struggle to grow due to lack of access to comprehensive business development services.
In an effort to facilitate the growth of new enterprises into formalised, productive, competitive, growth and export oriented enterprises, the ministry through its provincial and district offices facilitates the provision of business management and entrepreneurship training to upcoming and existing enterprises.
FM: Which organisations are you working with?
SN: The ministry also collaborates with various organisations, including the Standards Association of Zimbabwe, Procurement Regulatory Authority of Zimbabwe (Praz), local authorities, Department of Deeds and Companies, supermarkets and financial institutions to capacity new enterprises with comprehensive business development services including mentorship, coaching (formalisation, standards and product certification, business licensing, taxation) and access to finance.
FM: What would say are the major challenges and what measures have you put in place to address them?
SN: Access to Finance: Lack of access to finance is one of the biggest challenges hindering the growth of MSMEs, especially women. The ministry has established various funding facilities to enhance access to finance for formalised enterprises. These include:
Zimbabwe Women’s Microfinance Bank (ZWMB) – the bank was established to support women and their projects. It offers individual finance, group finance and order financing among other products. They are also supporting contract farming by women. As of December 2021, the ZWMB disbursed 11 243 loans worth ZW$134 012 406 (US$321 928) to women projects in various sectors including agriculture, livestock and manufacturing. Cumulatively, the bank has disbursed 97 423 loans worth ZW$224 552 647 (US$539 426) since June 2018.
Smedco MSME Revolving Fund – The Smedco fund targets Micro, Small and Medium Enterprises, who want to upscale and expand their businesses, especially women. In 2021, Smedco disbursed ZW$405 557 982,30 (US$974 243) with 43% of the funding being disbursed to women entrepreneurs.
The Women’s Development Fund (WDF): The fund was established as a means of addressing the lack of collateral amongst women and the high-interest rates being charged by banks. The fund capacitates targeted groups to transform into formalised and growth-oriented enterprises. In 2021, a total of 111 women projects worth ZW$56,5 million (US$135 725) was funded through the WDF benefitting 535 women across all the sectors of the economy.
Zimbabwe Community Development Fund (ZCDF) – The Fund was established to support community-initiated projects for groups in the communities. The fund capacitates the targeted community groups to transform from informal groups into formalised and growth-oriented enterprises. In 2021, 66 community projects were funded throughout the country to the tune of ZW$28 030 477,07 (US$67 335) with women constituting 55% of the beneficiaries.
FM: Besides the financial assistance, how is the ministry also assisting MSMEs?
SN: Access to Markets – The ministry also facilitates MSMEs access to local markets through supporting their participation at ZITF and other provincial shows. In addition to that, the ministry has partnered with Praz to encourage and facilitate the participation of MSMEs in public procurement. Praz is also in the process of establishing an MSME Desk to enhance access to markets for formalised MSMEs. The ministry is also working with the Standards Association of Zimbabwe (SAZ) to enhance the adoption of standards and product certification by MSMES. SAZ has created an MSME desk and has reviewed its service for MSMEs, a move that will encourage formalised MSMEs to certify their products in line with local standards.
The ministry also assists MSMEs to take advantage of government’s bilateral agreements that allow Zimbabwean products to have preferential treatment in regional markets. MOUs have been signed with countries such as Zambia, Namibia and Tanzania to support MSMEs. Zimbabwe is a signatory to the Common Market for Eastern and Southern Africa (Comesa) Treaty, Sadc Trade Protocol and the Africa Continental Free Trade Area (AfCTA). These agreements allow duty-free access to products originating from Zimbabwe e.g. Comesa Simplified Trade Regime – Facilitates and formalises small-scale cross traders through duty-free trade in products on the agreed common product list between Zimbabwe and Malawi; Zimbabwe and Zambia without the need for a certificate of origin. In 2022, a total of 2 750 SMEs were facilitated to access markets and 1 325 SMEs were linked in sectors such as manufacturing, agriculture, textile, and retail among others in the same year.
FM: What about in terms of workspace support?
SN: The ministry works closely with local authorities and other stakeholders to ensure that formalised MSMEs are provided with appropriate and affordable workspace for their business operations. The ministry in partnership with local authorities and development partners is constructing workspaces for SMEs in Gweru, Gwanda and Chikomba.
In addition, the ministry advocates for the establishment of Public-Private Partnerships (PPPs) in the provision of appropriate MSME infrastructure. In 2021, 3 164 MSMEs were facilitated to access working space throughout the country in collaboration with local authorities and other stakeholders.
FM: What strategies have you implemented to encourage the MSME sector to pay taxes?
SN: The ministry has been undertaking various measures to encourage MSMES to pay taxes and these include:
Education and Awareness Campaigns – The ministry has been collaborating with Zimra and MSME associations to facilitate education and awareness campaigns on taxation requirements and processes. The campaigns have created a dialogue between Zimra and MSMEs to discuss the demand and supply bottlenecks to tax compliance.
Tax Simplification – MSMEs have indicated that the tax registration system is too cumbersome and the tax rates are too high. The ministry together with MSMEs associations and other stakeholders developed a simplified tax system for MSMEs for Zimra’s consideration. The ministry is also engaging the Ministry of Finance and Economic Development to facilitate the review of the tax system for MSMEs in Zimbabwe.
FM: Given that more than 60% of Zimbabwe’s working population is now surviving on vending or other informal sector activities, what is government doing to recognise the trade and ensure necessary safety nets?
SN: Government has recognised the informal sector as a very vital sector in promoting employment creation, women empowerment and inclusive growth. The National Development Strategy 1 outlines the need to facilitate the transition from the informal to the formal economy as a means of mainstreaming the informal sector in Zimbabwe socio-economic transformation trajectory.
Government with support from ILO and UNDP has engaged a consultancy to develop a Formalisation Strategy for the country which seeks to transition the informal economy to formalisation. The draft strategy has been developed and is going through validation.
In terms of providing the necessary safety nets, the ministry is working with the Ministry of Public Service, Labour and Social Welfare to enhance access to social safety nets for the informal sector.