MICRO, small and medium enterprises (MSMES) can become an engine room of economic development. Germany has led the way in that regard, as has South Africa too.
However, Zimbabwean authorities have a lukewarm attitude towards formalising the sector. Something has to be done urgently.
Last week, government gazetted a statutory instrument that removed the need for an import licence and duty on basic commodities.
The measures were meant to save the country from hyper-inflation and local business cartels that are profiteering at the expense of building a sustainable economic growth.
The suspension of licence and duty would last for the next six months and could be extended depending on the prevailing inflation trends at the time.
This is a double-edged sword. It will temporarily stop price hikes and bring stability, but it will cause more scarcity of greenbacks on the market and more fundamentally, bleed local companies to death.
They cannot compete with goods from South Africa, Botswana, Mozambique, Tanzania and Zambia.
By its own admission, the government through Cabinet on Tuesday acknowledged that: “Since 2021, approximately 3,4 million MSMEs have been in operation, and their distribution comprises 3 242 570 micro enterprises, 114 591 small enterprises and 1 545 medium enterprises. The enterprises are owned by 4,2 million entrepreneurs.
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“The 15 main economic activities which the MSMEs are conducting comprise wholesale and retail trade; motorcycle, motor vehicle repairing; agriculture, forestry and fishing; and manufacturing.”
The Finscope Survey of 2002 revealed that the MSMEs were contributing US$8,6 billion to Zimbabwe’s gross domestic product (GDP).
This is nearly a third of the country’s GDP valued at US$28 billion by the World Bank in 2022.
The MSMEs sector employs 4,8 million persons comprising women (52,1%) and males (47,9%) who are engaged on a full-time basis.
The government reckons that the leading MSMEs hubs include Siya-So and Magaba in Mbare, Glen View 8 and Gazaland in Highfield, Harare Metropolitan province; Kelvin and Makokoba in Bulawayo Metropolitan province; Sakubva in Mutare, Manicaland province.
It is interesting that these hubs are contributing such a significant chunk of Zimbabwe’s GDP.
It is in this light that the government is seeking to formalise them so that they start contributing their fair share of the tax burden.
Let us ponder for a moment and visualise these markets. They are rudimentary, have no shells, no pavements, no sanitary blocks and no running water. It's just people operating in the open.
On employment, while the figures may look impressive (at 4,2 million people) we should be sincere enough to ask the quality of the jobs.
We should question the working environment as well as the welfare of these workers.
The workers have no fixed salaries, no pension and no medical aid. In fact, they have zero-hour contracts and can wake up with no job to talk about.
It is in this regard that government should take the lead in protecting the sector and workers.
This is only possible through laws and regulations that are applied fairly and implemented faithfully and impartially.
So, what are these laws? These are laws that regulate and designate MSMEs locations of business operation.
The law should also describe the minimum structures and amenities in an area.
The second law has to deal with working conditions and minimum wages for workers in the sector.
Third, but not least will be amending the tax law to cater for MSMEs. This would include a different tax bracket than established large companies, tax breaks and access to capital.
These laws, combined, will make formalisation of the sector easy. Law enforcement agents should also be retrained to enforce laws without fear or favour.
They should drive out all illegal vendors from all undesignated sites. All vendors should be licenced and pay their taxes.
The government tried to speak to these issues when it said: “Government is fully aware of the challenges which constrain the operations of MSMEs, among them limited access to finance, antiquated machinery, lack of formalisation, and low business management skills. The nation is therefore being assured that under the National Micro, Small and Medium Enterprises Policy running from 2021 to 2025, robust interventions are being implemented to assist the MSMEs sector which has proven to be a global game changer in socio-economic transformation.”
It further said: “Cabinet has directed as follows: that more incentives be provided for the formalisation of MSMEs; that business regulatory services, including business registration, be streamlined and decentralised in order to accelerate the formalisation process.”
The statement is too broad and the said policy, if it exists, has not been widely shared with the public and stakeholders for their input. It shows government is neither serious nor does it value the sector.
This may seem harsh, but the track record of the administration since 2018 speaks for itself.
These strategies and policies should be de-linked from our electoral cycles.
They should be there all time and implemented whether it’s a year after elections or a year before polls.
Otherwise, they are reduced to electioneering in the citizens and business mind.
It is also important that the players in the sector should be organised to produce policy papers about their industry for discussion.
They should clearly say how they want to operate, which areas of the law they want the government to tweak so that they can flourish.
For good measure, the opposition should also be articulating their economic policies, in particular that sector that is contributing a third of the country’s GDP.
They should have an alternative vision on the formalisation of the informal sector that should be discussed and debated publicly.
Until then, Zimbabwe will continue to stagnate if all players are more interested in the next election than they are concerned about the economic welfare of the country and workers long after they exit the world.
Posterity should be a watch word in our politics and actions, particularly those that deal with the majority of the people.
