As reflected in our previous discussions on the drive for entrepreneurial sustainability, Zimbabwean SMEs are the backbone of productivity, innovation, and employment.
Even in this changing economic landscape, they contribute nearly 70% of economic activity and generate substantial annual revenue.
From this perspective, the SME sector is both a lifeline and a catalyst for national development.
However, as global markets move towards sustainability and ethical accountability, a pressing question arises: how can Zimbabwean SMEs transition from traditional business practices to adopting environmental, social, and governance (ESG) principles?
As a focus of this edition, it is crucial for our business operators across all sectors of the economy to embrace this shift, as it is no longer just a trend but is quickly becoming a necessity.
To begin with, it is important to remind our entrepreneurial businesses to shift from informality towards sustainability.
Historically, most of our potential Zimbabwean SMEs have operated within informal frameworks, adopting a survivalist approach rather than functioning as strategists who work in a structured manner with regard to governance for sustainability.
Weak governance systems, limited regulatory compliance, and constrained access to finance have long characterised this sector.
Here, we should learn from our experiences to lead a brighter future for our SMEs.
With the rise of ESG as an intervention for strategic retooling and structuring, our SMEs have faced challenges.
As mentioned earlier, there is no need to hesitate; rather, join the effort. In its development, ESG serves as a comprehensive framework for assessing how businesses impact the environment, treat people, and govern themselves.
It requires a shift from short-term profit-making to long-term value creation, balancing economic growth with environmental stewardship and social responsibility.
However, some SMEs have engaged in complex business operations in Stordat (Mbare), Chikwanha (Chitungwiza), and Sakubva (Mutare), yet they are surrounded by litter, poverty, and unemployment—just a few of the negative externalities of entrepreneurial activity.
From a global perspective, despite the devastating American and Iranian wars, the momentum behind ESG has been driven by increasing consumer awareness, investor expectations, and regulatory pressures.
In our Zimbabwean context, these forces are gradually permeating the SME ecosystem, encouraging businesses to reconsider their operational models.
Like any other country in the world, Zimbabwe is no stranger to environmental challenges, where both man-made and natural disasters can occur at any level of society.
For example, issues such as climate change, deforestation, and land degradation continue to impact important sectors like agriculture and mining.
For SMEs operating within these industries, environmental responsibility is now essential and no longer optional.
In the same drive, our SMEs should adopt ESG not for external recognition or as a gimmick for existence, but for operational efficiency.
To be specific, this will help in implementing measures such as efficient resource use, waste reduction, and sustainable sourcing, which add to the positive bottom line of the business.
As the main drive to lower costs against increased revenues.
Even if it may seem daunting for resource-constrained SMEs, they offer opportunities for cost savings and resilience.
Evidence from Zimbabwe’s mining sector in Manicaland and other provinces shows that ESG frameworks can help reduce environmental damage while promoting responsible resource management.
Extending such practices to all SMEs across sectors could significantly improve environmental outcomes nationwide.
It becomes a strategic marketing point for the SME and the country at large, potentially branding them as environmentally responsible businesses.
Remember that the modern customer tends to patronise businesses that are compliant with environmental issues, especially the younger demographics who prioritise sustainability.
This shift in consumer behaviour is compelling SMEs to adopt green practices to stay competitive.
The social dimension extends beyond profit, even when simplified to focus solely on the social impact of business activities.
It broadens how companies utilise social intelligence to boost profitability. Here, businesses treat employees, customers, and communities with care, considering both current and future gains.
This concept deeply resonates within the socio-economic context of Zimbabwean SMEs, which are characterised by inequality and unemployment, where our interventions should go beyond mere publicity to include genuine engagement.
This involves fair labour practices, inclusive hiring, community involvement, and customer protection.
SMEs that invest in their workforce and communities often enjoy higher employee retention, stronger brand loyalty, and a better reputation.
Traditionally, this has been the domain of corporates only, contributing to community welfare through formal corporate social responsibility (CSR) initiatives. However, ESG advocates for a more structured and measurable approach by our SMEs.
As the final pillar, governance remains the most challenging aspect for Zimbabwean SMEs.
Many enterprises lack formal structures, clear accountability mechanisms, and transparent reporting systems.
This has been highlighted in our various discussions across all sectors of the national economy.
It’s time to transform governance, which is arguably the foundation upon which environmental and social initiatives rest.
Without sound governance, ESG efforts risk becoming superficial or unsustainable.
It should not be seen as a compliance burden but as a strategic enabler for our SMEs.
Strong governance practices like financial transparency, ethical leadership, and risk management can boost investor confidence and open access to funding.
The reason most of our SMEs struggle to attract new venture capitalists and other strategic partnerships is due to their failure to adhere to this pillar.
This is a pathway to resilience and growth.
The opportunities available for our SMEs through ESG are countless, but as a simple guide, they are as follows:
ESG can open doors to new markets and investment opportunities: Financial institutions and investors are increasingly integrating ESG criteria into their decision-making processes. SMEs that demonstrate strong ESG performance are more likely to attract funding and partnerships.
ESG boosts competitiveness: Businesses that adopt sustainable practices can stand out in crowded markets, build stronger brands, and foster customer trust.
ESG helps reduce risks. By actively managing environmental, social, and governance concerns, SMEs can prevent expensive disruptions, legal penalties, and damage to their reputation.
As we conclude this edition, it is imperative for our business operators to understand that even with its benefits, ESG requires real preparedness as a tool for success.
There are some challenges that need a collaborative effort from individuals, organisations, and policy makers.
These include the following: Limited awareness and understanding of ESG among SME owners.
Many entrepreneurs are unfamiliar with ESG concepts or see them as relevant only to big corporates. Resource constraints pose a significant hurdle.
SMEs often lack the financial capacity, technical expertise, and human resources needed to implement ESG initiatives.
Data and reporting also present challenges.
Unlike large corporations, SMEs usually do not have established systems for tracking and reporting ESG metrics.
This makes it difficult to measure progress and demonstrate impact.
Furthermore, the absence of tailored policies and incentives for SMEs can hinder adoption. While global frameworks exist, they may not always align with the realities of Zimbabwe’s SME sector.
Till then, we leave you to integrate and set the pace for the future. All things are possible!!!
Dr Farai Chigora is a businessman and academic. He is a senior lecturer at Africa University’s College of Management and Business Sciences and a global business modelling practitioner. His doctoral research focused on Business Administration (Destination Marketing and Branding, Major, UKZN, SA). He is involved in agribusiness and consults for many companies in Zimbabwe and across Africa. He writes in his personal capacity and can be contacted for feedback and business at fariechigora@gmail.com, www.fachip.co.zw, or via WhatsApp on mobile: +263772886871.
*Dr Tabani Moyo is an extra-ordinary researcher with the University of North West, South Africa’s Social Transformation School. He holds a Doctorate in Business Administration (Research focus on new media and corporate reputation management, UKZN), chartered marketer, fellow CIM, communications and reputation management expert based in Harare. He can be contacted at moyojz@gmail.com @TabaniMoyo (X) or Tabani Moyo (LinkedIn) .