By Lucy Tandi
“ZIMBABWE is open for business” is the mantra by President Emmerson Mnangagwa to attract Foreign Direct Investment (FDI). The move has been welcomed by the captains of industry and commerce as an avenue for economic growth.
Small to Medium Enterprises (SMEs) in Zimbabwe are open for business and ready to engage regional and international investors.
SMEs make up more than 70 percent of all businesses; employ 60% of the country’s workforce while contributing above 50% to Zimbabwe’s GDP.
85 percent of Micro-SMEs remain unregistered who include mostly sole traders who fall in the Micro SMEs, dodging contributions to the fiscus.
The Zimbabwe Revenue Authority defines SMEs for capital allowance purposes as a small company employing between 6-40 people with an annual turnover ranging between US$50 000 to US$500 000 and assets valued of between US$50 000 to US$1 million. Medium-sized companies employing between 41 – 75 employees whose annual gross turnover is between $1 million and US$2 million and assets valued between US$1 million and US$2 million.
While the SMEs sector has carried the weight on themselves to sustain the country’s trade and industry, they are falling short of the necessary tools to fully engage in more meaningful business ventures.
The SMEs cut across all sectors of the economy from manufacturing, retail, wholesale, engineering, micro-finance, automotive and motoring, Information, Communication Technology (ICT), agriculture, transport and health.
Skilled trades have become a career for most SMEs, exercising their expertise in fields of welding, carpentry, general construction, plumbing, pipe-fitting, electrical and electronics and metal working.
Areas of investment are plenty. To attract more investment from the International world, the government recently relaxed the Indigenisation and Economic Empowerment Act as a way to liberalise most sectors of the economy, save for diamond and platinum mining sectors that will still be required to have at least 51 percent local ownership.
Zimbabweans in the Diaspora, together with foreign investors are welcome to invest in SMEs of their choice as long they meet the minimum requirements.
Potential areas for investment:
- The Glen View area is packed with SMEs specialising in making furniture using hard and softwood for lounge suites, wardrobes, kitchen units, coffee tables, dining room suites and bedroom suites are among a long list of furniture one can find in this market. When examined closely, most of these furniture pieces are good export quality, with the potential to contribute Zimbabwe’s export earnings.
- The general bottleneck to success for SMEs is a lack or limited funding to increase business output. Investments in micro-finance institutions will greatly capitalise the financial services sectors being run by SMEs who are lacking adequate capital to finance prospective borrowers.
- SMEs associations such as the Professional SMEs Chamber of Commerce and Industry (PSCCI) require partners and investor funding to train SMEs on various business programs on how to run a successful business. Such training programs include entrepreneurship skills, managing business finance, employee retention, ethical business practices and practical lessons.
- Zimbabwe has a good climate for agriculture. SMEs in the agricultural business have sizeable pieces of land that have not been fully used due to limited resources owing to limited funding to purchase agricultural inputs and implements. Major crops include tobacco, cotton, maize, wheat and groundnuts. Livestock breeding for dairy and beef require investors. Poultry for eggs and meat is another huge investment for SMEs in agriculture.
Universities such as the Chinhoyi University of Technology (CUT) introduced practical tools to ensure that after completing an undergraduate program; students will be fully equipped to be their own bosses. They have done this curb the number of unemployed graduates milling the streets failing to secure employment.