By Daniel Chigundu
THE Transitional Stabilisation Program (TSP) October 2018 to December 2020 says it endeavours to remove all the bottlenecks that have been making it difficult for small to medium enterprises (SMEs) from formalising.
According to the FinScope MSME Survey Zimbabwe 2012, there are about 3.5 million SMEs in the country and only 15 percent of them are formalised.
SMEs have since become the mainstay of Zimbabwe’s economy in the past decade accounting for more than 80 percent of employment while at the same time covering about 70 percent of the country’s gross domestic product.
However, despite being a critical sector in the economy most SMEs have been reluctant to formalise due to fear of being heavily taxed by Zimra among other things.
This has seen SMEs choosing to operate from their backyards and keeping low-profiles and not participating at various exhibitions around the country.
Government through the TSP document has acknowledged the challenges faced in trying to formalise and has set itself to address them.
“The program (TSP) acknowledges that the mushrooming of informal markets is predominantly a response to the prevailing economic dynamics that have constrained investment into industrial value addition and beneficiation and, hence growth of viable formal business.
“Hence, the program targets facilitating their full transition to formalisation/semi-formalisation by addressing the very constraints they face.
“These include higher taxes, bureaucratic complexities, including a multiplicity of registration requirements, information asymmetry and lack of opportunities to graduate into the formal sector.
“Furthermore, informal sector market participants face challenges in accessing credit at affordable rates/ limiting their capacity to progress and positively contribute to government revenue,” read the document.
The government in its vision 2030 “envisages a greater role and participation of informal markets which allow farmers, traders, consumers and other actors to participate in business and change processes.
“Exposure to the markets also enables value chasing actors to realise how markets can be vital sources of wealth, prosperity and social values on a larger scale.
“To enhance and embrace the informal market, the Transitional Stabilisation Program will partner business chambers and confederations in facilitating the development of mechanisms for strengthening linkages with formal business,” it said.