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Minister Sithembiso Nyoni

Oliver Kazunga Senior Business Reporter
FORMALISING small and medium enterprises (SMEs) and setting up a bank to cater for their needs are some of the initiatives government is embarking on to tap into an estimated $7,4 billion circulating in the informal sector. Small and Medium Enterprises and Co-operative Development Minister Sithembiso Nyoni told Business Chronicle on Monday that the measures should direct the small businesses into the banking system and assist in easing a biting liquidity situation currently affecting the economy.

Formalisation of SMEs operations entails registering and licensing of their economic activities to ensure that they have addresses, registering them as private limited companies and sole traders or partnerships.

This would see the SMEs meeting statutory obligations such as paying presumptive tax and sales tax in the process widening the government’s revenue base.
“As government, we have three programmes that we will soon be embarking on to tap into the more than $7 billion circulating in the informal sector,” said Nyoni.

“First is to formalise the operations of SMEs by ensuring that they are registered, secondly is ensuring they get organised and form savings and credit unions from which they can borrow and thirdly is to formulate an SME bank.”

This, she said, would go a long way in bringing back money circulating in the economy through informal channels into the formal sector.
Minister Nyoni said the formation of the SME bank was one of the priorities the new Small Enterprises Development Co-operative (Sedco) board led by Professor Kingston Kajese would look into.

“I’ve set a new Sedco board and it will look into the setting up of SME banking. We have also realised that SMEs are not growing because they are not supported enough. Financing is also critical for business growth, so through the SME bank we hope, will go a long way in financing SMEs operations,” she said.

The SME sector, Minister Nyoni said, was critical in economic development adding that at the time of Royal Bank closure last year, a funding arrangement for SMEs was about to be concluded between the financial institution and government.

A World Bank survey on SMEs conducted in 2012 shows that about 5,7 million jobs have been created from 2,8 million small businesses, while 800,000 small businesses employ 2,9 million people in Zimbabwe.