Farai Mabeza, Senior Staff Writer 
FINANCE minister Mthuli Ncube says micro, small and medium-scale enterprises (MSMEs) in the country should be harnessed to boost value addition despite the serious operational challenges being faced by the sector.
Speaking at the launch of the inaugural national survey report on manufacturing MSMEs last week, Ncube said that the sector had significant potential which could benefit the economy.
This comes as the survey, done by the Technological and Commercial Information Promotion System (TIPS), a department in the Office of the President and Cabinet administered through the Scientific and Industrial Research and Development Centre (SIRDC), reported that 72 percent of manufacturing MSMEs are not formalised.
Finance Minister, Mthuli Ncube
“The survey reveals that most SMEs are operating informally, thereby not contributing optimally to the mainstream economy. They are facing a number of challenges that include lack of finance, access to markets, inadequate workspace, skills gaps, obsolete technologies, high operating costs and insufficient social amenities and utilities,” Ncube said.
“The SME sector can play a huge role in the value addition of our abundant natural resources. It has the potential to export and earn the country foreign currency. However, SMEs are generally associated with low quality products which are not competitive and therefore fail to penetrate mainstream retail shops and the lucrative export market.
“It is therefore imperative for the sector to adopt modern technology and engage standards bodies such as Standards Association of Zimbabwe, Trade Measures, and the National Metrology Institute of SIRDC. These are internationally recognised bodies that can assist SMEs to improve on systems and quality of their products, making them attractive on the global market,” Ncube added.
The survey also found out that the sector was also male dominated, had limited accessible infrastructure for people with disability and lacked safety, health, environment and quality systems, among other issues.
Meanwhile, the manufacturing MSMEs indicated that there was a lot of corruption from officials in charge of customs, tax, local authority and company registry which they said was a major hindrance to any attempts to formalise their operations.
“Regularisation of MSMEs results in a more formal economy, widens the tax base and improves working conditions. It is, therefore, important to simplify the registration process, make it less cumbersome and introduce incentives for compliance with authorities such as ZIMRA, local authorities and NSSA,” the survey recommended.
“Formalisation processes need to be shortened and less stringent. Regularisation processes should be decentralised so that they are widely accessible.”
The survey also cited compliance fees as prohibitive.
“Flat fees that relate to tax and licensing need to be progressive in nature. It is recommended that the smaller the firm the less the applicable fees,” the report said.
The report also recommended targeted support to help manufacturing MSMEs gain access to different markets.
“Marketing channels should be opened to allow MSMEs to penetrate both local and international markets. There is a need for incentives that encourage exports by MSMEs and earn the country the much-needed foreign currency. The incentives include, but are not limited to, favourable raw material import tariffs and foreign exchange retention levels,” the report said.
TIPS began operating in 1986.
It was formed by the United Nations Development Programme (UNDP) and the United Nations Fund for Science and Technology (UNFSTD) who designed its original project. In 1996, the UNDP handed over TIPS to the government of Zimbabwe and resultantly currently, TIPS Zimbabwe is a unit housed under SIRDC.
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