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The Minister of Women Affairs, Community and Small and Medium Enterprises Development, Dr Sithembiso Nyoni, made an impassioned plea on Monday for small and medium scale enterprises (SMEs) and informal businesses to apply for assistance under the recently unveiled economic stimulus package.

On May 1, President Mnangagwa announced the $18 billion fund to support various sectors of the economy to recover from the adverse impact of the Covid-19 pandemic. Of that amount $500 million was set aside for SMEs and informal businesses, who are among the worst affected due to the outbreak. Because of their small sizes, SMEs and informal businesses tend to live a day at a time with little to no savings to take them through rough patches.

The national lockdown, which resulted in all businesses in non-essential sectors being compelled to stop operations is one such rough patch. The restrictions have, however being relaxed. The Government realises that even large companies could struggle to lift themselves out of the lockdown impact, hence the stimulus package. If large companies could struggle, SMEs and informal traders must be worse off, indicating that it is probably these businesses that need the package the most. At the same time, the Government recognises that as the formal economy is shrinking, provision of more support to small, emerging businesses means getting the larger part of the economy back on its feet.

However, Dr Nyoni’s plea, as we reported yesterday, shows that some SMEs are failing to qualify. Having failed to qualify to benefit under the fund, some operators, she said, are taking to social media to express their unhappiness.

“All I am saying is SMEs must start applying, if they face problems, they must not go shouting on the social media, they must come to the ministry and we solve problems so that they benefit from what the President has done for them,” she said.

“I still want to say today, there are a lot of people that are still suffering as a result of the lockdown, and they should register and go to the Ministry of Labour and Social Welfare for the cushioning fund. When they get there they would be vetted, we don’t want our people to suffer silently because Government is there. Secondly, the President put a $500 million fund for our SMEs, and it will go through my ministry and the Women’s Bank. Let me announce that SMEs must not suffer alone, we are here for you. We have worked with the Women’s Bank and put funds into three tiers, one the green field, if there are SMEs that have lost everything out there, go to the Women’s Bank, they will retrain you, re-orient you and restart you. The second one is the informal sector. There are some that hang in there but the funds are depleted. We also had a slot for them, to fund them, to resuscitate and grow their sector. The last one is the SMEs, these are registered companies with a fixed abode. They should also come and apply.”

Reasons why some SMEs and informal businesses are failing to qualify for assistance under the package can be many. It can be that they are not in good standing with the taxman, their registration papers are not in order and so on.

If both factors are among the reasons, we don’t think it would be prudent for the Government to support SMEs that do not pay tax. Doing so would be to perpetuate an illegality as paying tax is a legal obligation for all businesses. To go round that challenge, we implore such SMEs to approach the Zimbabwe Revenue Authority (Zimra) to work out payment plans. Our experience is that Zimra recognises the prevailing economic challenges and is always amenable to negotiating payment plans with all duly registered companies if a need arises. Payment plans will enable the SMEs to pay taxes over an agreed period of time and in sums they can afford.

To get round the registration challenge, we encourage the relevant SMEs and informal businesses to work harder to regularise their operations. We assume that SMEs do not want to continue being SMEs; they aspire to grow bigger to become formal businesses. For them to be able to do that, they must register in terms of national laws and also pay taxes when they fall due.

In addition, SMEs and informal traders need to understand that the Government recognises their role in growing the economy and as such is willing, through its agencies such as Zimra and the Women’s Bank, to discuss with them in case they face unique challenges. They also need to understand that the $500 million is exclusively earmarked for them.

We therefore encourage them to quickly get their papers in order and apply for assistance under the stimulus package so that they get working again.