By Daniel Chigundu
ECONOMIST Gift Mugano has called on the government not to put much focus on formalising SMEs adding that the sector will soon fade away.
Zimbabwe has an estimated 3.5 million SMEs operating in various sectors of the economy and it is widely believed that these SMEs are now the main economy.
Some economists are of the view that government should put its all in trying to formalise these SMEs so that it can be able to collect tax from them in the future.
Speaking during the post-budget seminar organised by Parliament of Zimbabwe, Mugano said most SMEs are not worth paying attention to as they are largely by accident.
“I have heard others saying we should focus more on the informal sector, but I have a different view, economists don’t always agree.
“Most of these SMEs are in this sector by accident and will not remain in there for long especially if the economy is resuscitated. Most people are into vending because they lost their jobs and the moment industries start to open you will not find them there, so why should we focus on them?
“I would say let’s focus on the big companies instead and create the necessary value chains, formalisation of SMEs alone is not a solution,” he said.
Unconfirmed claims say there is about US$7billion circulating in the informal sector and not reaching formal money channels as banks and the majority of SMEs are not banked.
SME in Zimbabwe are mostly not registered for fear of being targeted by the Zimbabwe Revenue Authority.
Others are reportedly put-off by the various registration fees demanded by various institutions charged with registering companies or enterprises.
There is also the issue of complex documents that need to be filled and the language used is not user friendly to the SMEs.