THE Government will this year group Small and Medium Enterprises into clusters to improve productivity and competition in the sector, a Cabinet minister has said. Clustering is grouping of industries in a related line of business. A cluster can contain a small or large number of enterprises, as well as small and large firms in different proportions.
Clusters and networks can enhance the productivity, rate of innovation and competitive performance of firms and can also allow small firms to combine advantages of small-scale with several of the benefits of large scale.
Small and Medium Enterprises and Co-operative Development Minister Mrs Sithembiso Nyoni said the move would also make it easier for Government to deal with grouped SMEs rather than individual players. "SMEs have two major problems -- funding and lack of infrastructure -- that is why you find them conducting their business all over. To deal with that we are going to cluster them," she said.
Minister Nyoni said the move would require setting up infrastructure to house SMEs with the required funding coming from the proposed SME bank.
"Plans to set up the bank are moving well and we also have an infrastructural policy that was approved by Cabinet last year that we will be implementing to improve the performance of SMEs," she said.
Meanwhile, Minister Nyoni said it was important to increase funding to SMEs since they have potential to drive the economy.
The SMEs sector employs 70 percent of Zimbabwe's population through an estimated three million projects and needs about US$50 million in the short term to revitalise operations. In India, the micro and small enterprises sector plays a pivotal role in the overall industrial economy of the country.
It is estimated that in terms of value, the sector accounts for about 39 percent of the manufacturing output and around 33 percent of the total exports of the country.