Zimbabwe: Youth-Run Businesses Need Govt Backing

15 January 2020

With the job market having constricted points of entry, young people have resorted to the informal sector.

Beyond the mundane breaking of bulk and reselling, some are utilising their academic qualifications, but on a small-scale basis.

Many families are surviving this way.

A simple stroll in downtown Harare will reveal the proliferation of photo studios, printing houses, advertising agencies and other small business units.

These humble businesses once they capture their clientèle are fairly profitable ventures, which have gone in some way in creating jobs for fellow unemployed youths.

The proliferation of small youth-run businesses has eased pressure on the job market as it provides a viable option for school-leavers who cannot break into a shrinking job market.

Calls for youths to start their own businesses and opportunities have become a chorus from Government, as well as business leaders.

Every platform graced by thought leaders has words of encouragement for youths to take steps towards shaping their future.

The missed nuance is; average Zimbabwean youths may not be coming up with Silicone Valley ideas, but as far as coming up with small entities that serve an existing market is concerned, they are doing their best.

Some have had to forget that they have degrees and opt to hustle out of necessity.

Authorities, on the other hand, seem not to be taking seriously the potential revenue generated by the grey economy.

The taxman's office should direct its focus towards quasi-professional business units because there is a lot of untaxed money exchanging hands.

Everyone who makes money by one way or the other should pay taxes, that is how things should be, without exception.

An amicable approach would be ideal to mainstream the small youth-run companies into the economy.

It should be easy to register companies, if the process is hassle-free there should be increased compliance.

Currently, there are barriers which prevent young people from formalising their work.

It can take more than three months to register a company and youths cannot afford to spend that amount of time waiting.

The fact there are people who earn a living from helping others register companies should be a red flag for the authorities.

According to the book, it should take 12 days to register a company in Zimbabwe, but it is taking more than that, with suggestions that company registry officials benefit from the delays.

Those with deep pockets can "grease palms" to have their papers fast-tracked, while those who register without underhand dealings have to wait for months.

As a result, youths who have had their patience eroded by the waiting period sometimes decide not to formalise their work.

In Rwanda, it takes between 24 and 72 hours to register a company. Online reviews have been indicating adherence to these times.

For a person who flies to Turkey to buy suits and come to Zimbabwe to resell them from a corner office in a derelict building, there should be advantages laid out to them to encourage them to formalise their business.

Access to loans should be easy, especially for businesses with a proven track record.

Capital is a problem with most entities, big or small, access to funds can get entrepreneurs to buy the idea of formalising their work and contributing to the fiscus.

In the past, youth loans have been problematic, the challenge was money was given to those with concept papers at the expense of those running actual businesses.

If the Youth Empower Bank can identify small businesses and grant them loans with forgiving interest rates on condition that they register properly, there will be takers for their loans.

The impact of the loans can also be felt in the economy.

Young people who start small businesses out of necessity sometimes forget to think about growth and expansion.

Government, through the Ministry of Women's Affairs, Community, Small and Medium Enterprises Development should provide business development advice to youth who run businesses.

If the young entrepreneurs exhibit signs of growth, others will be encouraged to register and enjoy the same benefits.

In addition, Government should seek to grow youth-run businesses.

A quota of public tenders should be reserved for youth-run businesses with potential to grow.

Instead of giving money to the same old entities, there should be a bias towards youth-run businesses.

One big tender can change the trajectory of a business, if ambitious youths know they stand a chance to grow their business through Government guaranteed business, they will register to get a share of the cake.

Once they register, it means they have to adhere to the conventions of the formal business world.

This includes paying taxes and levies.

That way, Government benefits through revenue collection and if these businesses are incubated to grow, their taxes grow as well.

They will also employ more people, and as they earn, they will be taxed.

There is economic potential for the country if youth-run businesses in downtown are helped to formalise.

Even if it means giving them tax holidays in the first few years, it will still have benefits when those businesses finally grow.

Zimbabwe needs to tap into the cash-rich downtown economy and including young entrepreneurs in the mainstream economy is one way of doing it.

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