Informality limits export opportunities for MSMEs Dennis Choguya

Nokuthaba Brita Ncube, [email protected]

A significant number of micro-small to medium scale (MSMEs) businesses are unable to tap into the export opportunities and financing from banks due to failure to register and formalise their operations.

This emerged during a two-day export capacity building training workshop for SMEs in Bulawayo, which was hosted by the United Nations Development Programme (UNDP) in partnership with the Ministry of Women Affairs, Community, Small and Medium Enterprises Development.

While the country has a vibrant SMEs base with more players embracing digital technology enhancing innovations, a lot of SMEs remain unregistered.

During engagements it emerged that most MSMEs players were not even aware of the registration processes and how critical registration is in building a sustainable business.

Speaking at the workshop, business consultant, Mr Dennis Choguya, pointed out that most of MSMEs tend to focus on their daily operations and neglect the formalisation of the business that can make them thrive, as well as the protection and benefits that come with registration.

United Nations Development Programme (UNDP)

“When a business is not registered, the enterprise loses opportunities such as funding from potential investors. However, when one is registered there is access to bigger customers, participation in Government tenders, as well as business stability,” he said.

It has since emerged that some enterprises fail to register their businesses due to the misconceptions that the processes and requirements of registration can be complex and expensive.

This is a particular issue where educational levels are low and entrepreneurs have to engage help in completing the paperwork required, said the participants.

In 2021, the MSME survey by Zimstats revealed that only 14 percent of Micro, Small and Medium Enterprises (MSMEs) are registered or licensed with the business regulatory authorities, despite their being the country’s biggest employer with 4,8 million people engaged on a fulltime basis.

However, the Government is developing a formalisation strategy, which is expected to guide interventions by various stakeholders so that the transition to formality is accelerated.

Some of the key elements of the strategy include the creation of an enabling environment for doing business by small to medium enterprises (SMEs) and simplification of registration procedures.

Affordable fees, provision of social protection schemes and mainstream employment across all sectors of the economy are also part of the strategy.

The interventions are expected to transform the economy and MSMEs where they will have access to loans and access to a decent working environment conducive for their businesses.

Zimbabwe’s economy is largely dominated by MSMEs that contribute in total more than US$8,6 billion to the gross domestic product and employ 4,8 million people full-time.

The exports readiness training is pivotal to MSMEs as it imparted more understanding on the importance of formalising their businesses.

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