Zimbabwe: High Cost of Running Business Choke Zim SMEs

Photo: Capital FM
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17 October 2019

Small to Medium Enterprises (SMEs) are finding the going tough in the current hyper-inflationary environment as operational costs are weighing heavily on viability, 263Chat Business can reveal.

A cross section of business players identifying a litany of viability-threatening challenges that include high cost of capital, increased transportation costs, unsustainable electricity and telecommunications tariffs among others.

Inflation is currently projected around 500 percent.

For Garikai Ziyemba who sells television sets at Gulf Complex, the recent price increases of fuel and data have hit him a double blow.

"We used to make home deliveries of television sets to customers who got in touch on our social media marketing platforms. Over 90 percent of my clients got to know about our services on Facebook platform and we would deliver as far as Mutare once they did their payments electronically without putting an extra charge on transport," he said.

Most SMEs have embraced digital marketing strategies on various social media platforms and the cost of data has not only made it difficult for them to stay online, but also affected volumes of potential clients online.

Yesterday, Econet Wireless increased the cost of data and SMS.

The 180 MB daily data bundle which previously cost $ 9 has now been bundled to 150 MB at an increased cost of $10.

This follows the recent increase of fuel with petrol price raising from ZWL 11. 76 to ZWL14, 97 per litre and that of diesel by 20, 7% from ZWL 12,42 to ZWL 15, 64.

Most affected by the developments in the fuel sector are small players in the transport industry.

"We are really feeling the pinch now. Imagine people have to put up with long winding queues just to access a Zupco bus which has a low cost because they cannot afford the $5 fares charged by kombis. Now imagine myself, as a taxi driver. We are witnessing fewer and fewer clients because we have increased our fares so that we remain afloat," Andrew Jamela, a taxi driver said.

But the cost of business has not pardoned bigger businesses either coupled by exchange rates losses.

Recently, Nyaradzo Life Funeral Assurance Company chief executive, Philip Mataranyika bemoaned the cost of fuel as stifling the company operations.

"In January, we were buying fuel at $1.20 per litre but currently the prices have gone up 10 times. There have been increases on the exchange rates on the foreign currency market and these dynamics have severely impacted on our operations prompting price adjustments," he said.

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