THE country’s export promotion body, ZimTrade has urged small to medium enterprises (SMEs) to form viable associations to improve their performance and competitiveness on the export market.
BY MTHANDAZO NYONI
In its latest report, ZimTrade said small businesses and smallholder farmers have a potential to export their products and services but given the nature of their economic activities and economies of scale, they often face competitiveness challenges.
In most cases they end up not participating in global market activities, leading to minimal contribution to Zimbabwe’s export growth.
To address these challenges, ZimTrade said business associations play a crucial role in giving much-needed support to boost exports from small businesses.
“These associations form alliances to work together and improve their business performances and capacities. For example, it might be expensive for a local small business to pay for transporting goods outside Zimbabwe, but if they belong to an association, there is room to pull resources together and fund logistics required to transport goods,” it said.
“This arrangement will ensure that one small business does not bear the huge cost of transporting goods on its own and will be more competitive on the export market.”
ZimTrade said the pulling of resources could also assist small businesses to develop into larger enterprises, through acquisition of capital equipment that improves on efficiencies.
For example, one small business producing 500 pairs of shoes per week might fail to meet a demand for 10 000 pairs per month.
This target can, however, be easily met if five or six similar small businesses all produce the same required type of shoe and export as one consignment.
“This way, small businesses will have an opportunity to take part in the global export market, and over time grow their businesses,” ZimTrade said.
Additionally, entities that are members of business associations have the advantage that their issues are well represented at the level of government and other relevant authorities.
SMEs in Zimbabwe have become the key economic drivers due to the shrinking formal sector.