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Perm Sec in the Ministry of SMEs Evelyn Ndlovu addresses a formalisation workshop at a Bulawayo Hotel yesterday. Following proceedings (from left) are panelists Energy Majazi and Godfrey Chikowore

Business Editor

MORE resources should be channelled towards supporting micro, small to medium enterprises (MSMEs) and cooperatives as the sector holds the key to meaningful economic growth and employment creation, a Cabinet minister has said.Officially opening the SMEs formalisation strategy and cooperative policy review workshop in Bulawayo yesterday, Small to Medium Enterprises and Cooperative Development Minister Sithembiso Nyoni, said the country was yet to realise full benefits from the sector due to existent financial and policy gaps.

Nyoni said formalising the informal sector has been inhibited by regulatory, administrative, labour laws, corruption, social and cultural, fees and financial requirement barriers.

“It’s disappointing to note that only 15 percent of MSMEs businesses are registered (licensed) with local authorities. This figure shows that 85 percent of these businesses aren’t registered, reflecting high levels of informality,” said Nyoni in a speech read by ministry secretary, Evelyn Ndlovu.

“Therefore, it’s imperative that we take the driving force to formalise the informal MSMEs to promote the growth of the sector.”

The Formalisation Strategy and Cooperative Development Policy (2005) review is in line with the government’s blueprint — the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset). The blueprint aims to improve the quality of government expenditure, increase revenue, raise overall productivity, reduce financial sector vulnerabilities, increase the competitiveness and improve the business environment.

Nyoni said Zim-Asset clearly recognises the important role of MSMEs and cooperatives in sustainable employment creation, poverty eradication and economic recovery. The FinScope MSME Survey Zimbabwe 2012 report depicts that there is an estimated total of 5,7 million jobs created by the informal sector.

Of these 2,8 million are business owners of 3,5 million small businesses. The survey has shown that 800,000 of these small business owners employed, 2,9 million people excluding themselves. The figure could be higher to date.

Statistics also indicate that a majority (71 percent) of the owners do not employ anyone.

During the period under review there was an estimated $7,4 billion MSMEs turnover, which includes only those small businesses that presented their reports.

“This is a clear indication of how entrepreneurial our people are. They’ve the power to create their own wealth, generate employment and should be assisted to enter the formal market wherein they’ll contribute to national economic development and growth of our country,” Nyoni added.

The minister acknowledged the change over the years in the overall cooperative movement, which presents new challenges to MSMEs in Zimbabwe.

The new challenges include economic liberalisation as a result of the economic structural adjustment programme and globalisation, which exert pressure, problems and opportunities for cooperatives.

She said the cooperative movement was failing to respond to these changes due to among other things rigid policy and legislative frameworks.

It is hoped that the by reviewing the Cooperative Development Policy (2005) the country will be able to address these challenges and contribute to improved livelihoods.