Policymakers should prioritise the initiatives to protect and grow small to medium enterprises (SMEs) to ensure new job creation, drive economic growth and anchor its stability as the sector is now part of the backbone of the economy, analysts say.
SMEs remain largely unsung heroes but have become vital cogs to the growth and development of this economy while employing hundreds of thousands across the economy.
Notably, there has been a significant change in the Government's attitude towards the SMEs sector. The SME sector is increasingly viewed as an important engine for employment creation and economic growth.
This has been necessitated by the increasing awareness within the Government that large projects in the industrial sector are less likely to generate the requisite employment opportunities. Interventions in support of the sector have included the creation of an enabling legal and regulatory environment, investment promotion, financial assistance, market promotion, technology and infrastructure support, entrepreneurship, management and skills development, targeted support, and institutional reforms.
According to the latest 2023 Fourth Quarterly Labour Force Survey the Zimbabwe National Statistical Agency (ZimStat), said 79,3 percent of the working population in Zimbabwe is employed in either the formal or informal sector, dominated by SMEs.
"The Informal sector (Non-Agriculture) comprised 43,7 percent of the employed population, and the agriculture sector, 22,3 percent," ZimStats said.
The informal sector's contribution to Gross Domestic Product (GDP) is estimated to be just below 50 percent, which translates to about US$17 billion, according to the 2023 third-quarter gross domestic product (GDP) figures.
ZimStat recently pointed out that 77 percent of domestic expenditure is done in foreign currency, which also means that billions of transactions are done in hard currency and are mostly conducted in the SMEs or informal sector. Economist Tinevimbo Shava said, "With the informal sector employing such an amount of people, it means it can drive growth in the economy with the formal sector anchoring it. We need to move forward as a country and be innovative to include the sector in most of our planning as a country and reap rewards.
Another analyst, Gladys Mutsopotsi-Shumbambiri said authorities needed to determine the size of the sector and how much it contributes to fiscus.
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"The informal sector is proving to be huge and the treasury has to come up with ways to tax the sector even if it means giving them super discounted tax rates to encourage them to pay and boost our purse as a country. This will result in other sectors facing reduced taxes that are overburdening them," she said.
Economist Dr Prosper Chitambara believes that one of the key reasons SMEs are vital to Zimbabwe's economic fabric is their ability to adapt swiftly to market changes.
"Unlike large corporations that may struggle with bureaucracy and rigid structures, SMEs can pivot quickly, identifying and seizing emerging opportunities. This agility not only promotes entrepreneurship but also fosters a culture of innovation that is essential for sustained economic growth," he said.
Farai Mutambanengwe, chief executive officer of the SMEs Association of Zimbabwe (SMEAZ) said to pull the SMEs into the mainstream economy there was need to ensure supportive policies to drive sustained growth of businesses.
"We need to lighten up the costs of taxes and regulations such that we loosen up the complexities of laws in the formal sector which scare those in the informal sector. Without those adjustments the country will continue to lose potential revenue to the heavy informalisation of industry," he said.
SMEs are renowned for their ability to generate employment on a large scale given their adaptability to change across diverse sectors, including manufacturing, services, and technology.
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Their role in providing entry-level positions and promoting inclusivity within the workforce cannot be overstated.
"By fostering job creation, SMEs become instrumental in alleviating poverty because they empower individuals with the means to support themselves and their families, contributing to a more equitable distribution of wealth. As SMEs flourish, the ripple effect extends to local communities, driving economic growth from the grassroots level," Mrs Mutsopotsi-Shumbambiri added.
Recognising the pivotal role of SMEs, the government should increasingly implement policies to support their growth. Access to finance, streamlined regulatory frameworks, and targeted incentives are crucial elements in fostering a thriving SME sector.
The analysts and economists agreed that safeguarding SMEs in Zimbabwe is not merely a matter of economic policy but it is an investment in the nation's future. As the largest employers and the engine of the economy, SMEs play an indispensable role in shaping a prosperous and resilient Zimbabwe and are vital for the attainment of Vision 2030.
