SMEs urged to formalise business

Source: SMEs urged to formalise business | Herald (Business)

Michael Tome Business Reporter
SMALL to Medium Enterprises (SMEs) have been challenged to formalise their businesses to enable them earn economic benefits that include getting stake in public procurement processes, according to Zimbabwe Revenue Authority client care services acting supervisor Marvelous Chigwanda.

The SMEs sector plays a key role in the development of the country’s economy as it contributes over 60 percent to GDP and employ over 75 percent of the total workforce.

A number of SMEs operate informally therefore are by-passed by government or big businesses’ procurement procedures, in the process translating to minimal contribution to the fiscus.

Addressing participants at the Buy Zimbabwe SME breakfast meeting Mr Chigwanda said the economic environment was tilting in favour of SMEs hence the need for formalisation and compliance by the sector.

“SMEs form the current backbone of the local economy and the economic play-field in Zimbabwe has shifted from large enterprises to small to medium enterprises, which means that SMEs business need to formalise.

“Being compliant gives people the opportunity to participate in the economic field, for instance if you are tax compliant you automatically qualify to offer service to the Government, you will not be discriminated against in tender selection process,” said Mr Chigwanda.

Formalisation has been identified as a key to growth and brand creation the SMEs as it also helps in the curbing of corrupt tendencies by business enterprises.

The meeting implored SMEs to be formalised to benefit from Government initiatives that are targeted at the sector.

Speaking at the same event director in the Ministry of Small and Medium Enterprises Development Francis Gondo, hinted that SMEs were receiving limited support thereby presenting barrier to their chances to conform to tender procedures and maintaining standards.

“According to RBZ annual report 2018 SMEs have limited access to finance, with only 3, 94 percent of total bank loans having been advanced to the sector in 2018.

“SMEs still use antiquated equipment and technology, they face hurdles to comply with standards and technical regulations related to their trades compounding the challenge of limited access to local markets as well as public procurement just to mention a few,” said Mr Gondo.

Held under the theme “Growing SMEs market share and building durable brands through certification” the breakfast meeting was meant to close the gap between quality expectations and perceptions from consumers and quality assurance from the SMEs through traceable certification process.