(NEWZIMBABWE, XINHUA) New SME-based economy emerges: govt
27/12/2013 00:00:00
by Xinhua
We now have a new economy ... Samuel Undenge
DEPUTY Finance Minister Samuel Undenge said Friday a new economic model was emerging in Zimbabwe driven mainly by small-scale players in key sectors such as farming and mining.
Speaking at a post-budget breakfast meeting, Undenge said small-scale miners and farmers had played an increasingly bigger role in the economy in recent years, hence the need to acknowledge the changing dynamics.
“It is true that we are now having a new economy. In the past we had 2,000 tobacco farmers but now we have 90,000 farmers and much of the tobacco production is done by small-scale farmers. So a new economic model is in the making and we need to recognize and support it,” he said.
Zimbabwe’s economy is principally driven by agriculture and mining with tobacco the major agricultural export earner while gold is the leading mineral export earner.
Undenge said the new economic mode sought to decriminalize operations of small-scale gold miners so that they sell their gold through formal channels and contribute to national economic growth.
What was needed, the minister said, was for strict enforcement of environmental lawsto ensure the small-scale miners do not degrade the environment.
While presenting the 2014 national budget Thursday, Finance Minister Patrick Chinamasa revealed that he had secured a 100 million U.S. dollars line of credit to support artisanal miners.
He said the money would be primarily used to purchase basic equipment for artisanal miners.
Chinamasa also said last week that the old economy was dead and that a new one was emerging based on the activities of small-scale players in key sectors of the economy.
Small-scale miners once contributed 50 percent to total gold produced in the country in 2004 but this had declined to 20 percent due to viability and operational challenges.
The country’s sole gold refinery resumed operations this week after five years of closure and the development was expected to significantly improve operations in the gold industry.
With government banning raw gold exports with effect from next month, all small-scale miners would have no option but to sell their gold to state-owned Fidelity Printers.
In the budget, Chinamasa reduced the royalty paid by small- scale miners from 7 percent to 3 percent to boost their operations.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), LAND REFORM, SAMUEL UNDENGE, SMEs
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(HERALD ZW) SMEs are major job creators
December 11, 2013 Musah Gwaunza Business
Kudzi Sharara, Business Correspondent
THE Zimbabwean economy is currently struggling for recovery from more than a decade of decline. Different policies have been crafted to try and revive the economic quagmire the country is in. Some of the policies that have been crafted include the Growth with Equity (1980-1990), Economic Structural Adjustment Programme (1991-1995), Zimbabwe Programme for Economic and Social Transformation (1996-2000), Zimbabwe Economic Millennium Recovery Programme (2000-2002), National Economic Recovery Programme (NERP, 2003), Macroeconomic Policy Framework (2005-2006), the National Economic Development Priority Programme and Short-Term Economic Recovery Programme, Medium Term Plan (2011-2015), Recently, we have heard of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset).
Sadly, though, not much has been said about the role of Small to Medium Enterprises in Zimbabwe.
Yes, we have the ministry responsible for SMEs, but there seems to be limited scope of co-operation and linkages with other economic-related ministries like the Ministry of Finance, Ministry of Commerce and Industry, Ministry Economic Planning and Investment Promotion, and the Ministry of Indigenisation and Economic Empowerment.
It’s high time Government realises that growth, jobs, and innovation are largely driven by small and medium-sized enterprises and there is need to craft policies with SMEs in mind.
The “power of the small” is evident across the globe. They are major job creators and they tend to be efficient and innovative, and therefore prod large businesses to improve their own operations, making the economy work better overall.
And, of course, today’s small businesses are tomorrow’s corporate giants (think Facebook), so they offer a special set of opportunities for investors.
Thus, the performance of the SME sector of an economy is a good indicator of its overall strength and future prospects.
In the United States and other developed markets, SMEs commonly account for half or more of gross domestic product, as opposed to less than 30 percent elsewhere.
A recent study from the European Commission indicates that SMEs generated 85 percent of all new jobs in the European Union from 2002 to 2010.
In Germany, almost all of the 1,8 million new jobs created during the last five years came from SMEs. Economic growth in developed countries such as Japan, Korea, Taiwan and many others, was significantly generated by SME activities.
The percentage contribution of SMEs to GDP)/Total value added ranges from 60 percent in China, 57 percent in Germany, 55,3 percent in Japan and 50 percent in Korea. Closer to home, in South Africa it is estimated that 91 percent of the formal business entities are SMEs and they contribute between 52 to 57 percent to GDP and provide about 61 percent of employment.
In China, SMEs account for 99 percent of all enterprises, and create 75 percent of the new jobs in urban areas. Of the existing 20 500 000 companies in Europe in 2007, all but 43 000 were SMEs.
The other advantage of having a vibrant SME sector is that they can act as a cushion in times of crisis. This is so because a smaller share of SMEs is export oriented.
Contractions in global demand thus affect SMEs to a lesser extent than they affect larger enterprises.
Moreover, SMEs are more sensitive to local variations and medium-term development. Innovations tend to start in SMEs.
As the economy becomes even more based on innovation, SMEs will continue to play a more significant role. This is evident enough that as we seek to revitalise the country’s economy, we must look to small and medium-sized businesses to drive a significant proportion of innovation to fuel growth. Government must start crafting policies that help SME growth.
There is need for Government to ease the procedures of accessing finance by SMEs, build human capacity base, and provide a long-term strategy, marketing assistance.
Other countries like South Africa are already implementing strategies to prop up SMEs. Recently, the country created a Small Enterprise Finance Agency, which intends to invest R2 billion over three years.
This is expected to offer some reprieve for small businesses which have been struggling to secure cash. Launched by the SA’s Minister of Economic Development Ebrahim Patel, SEFA falls in line with the stated ambitions of the government’s New Growth Path which seeks to bolster job creation through the support of the small and medium enterprise sector.
“In a lot of cases the banks don’t have the appetite for the risk,” to lend to small medium enterprises , according to SEFA’s acting MD, Willie Fourie, “that is why there is an institution like SEFA, to take on the risk that the banks don’t want”.
Access to finance is still regarded as the major obstacle to get into business and to finance businesses. In Zimbabwe it is a mountain to climb to get access to finance.
Hopefully, Government will put initiatives that will make it easier and open some doors for existing entrepreneurs and those that would like to get into the market.
To quote former RBZ Governor Gideon Gono: “It is high time we have one consolidated legislative piece that looks into the welfare of SME as well as the informal sector and ensure that the informal sector and interests of those are captured by all economic actors.”
The former central bank chief urged lawmakers to craft a harmonised law that encouraged growth of small enterprises after it emerged that only 5 percent of the US$2,8 billion loans advanced during 2012 went to SMEs.
Disclaimer: The writer is primarily responsible for this article and certifies that the opinion on the subject or any other views expressed herein reflects the writer’s personal views. The writer has taken all reasonable steps to ensure that the information in the article is correct and no liability is accepted for any loss arising on reliance on it. All opinions and estimates expressed in this report are (unless otherwise indicated) entirely those of the writer.
* For feedback and comments email — kudzies1310@gmail.com
Labels: ESAP, SMEs, ZDERA
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Seyuba asks financial firms to help SMEs create wealth
By Vincent Chilikima in Solwezi
Fri 15 Nov. 2013, 14:00 CAT
NORTH Western Province permanent secretary Augustine Seyuba has urged financial institutions in the province to tailor products that will enable local SMEs to create wealth.
Speaking during a meeting at his office for 11 financial institutions operating in Solwezi, Seyuba implored the managers to support the government's policy of reducing the cost of doing business.
He said the booming mining activities in the province required a vibrant and innovative banking sector that would tailor its products to accord an opportunity for local SMEs to create wealth.
"I do not subscribe to 'poverty reduction' but to 'wealth creation' because certain terminologies tend to maintain a status quo. So your cost of borrowing should not discourage SMEs in doing business," he said.
Seyuba cited invoice-discounting as one of the services that may be relevant to SMEs that conduct business with the mines, adding that banking institutions should focus on stimulating economic activities of the local people.
He further implored bankers to innovate localised bank products that take into consideration the disparities of poverty levels between the rural and urban dwellers adding that bank managers should feel obliged in helping the province to develop.
"You need to appreciate the locally available skills and resources so that you come up with relevant financial empowerment programmes. For example, we can develop our timber industry to produce world class furniture and products," he added.
Seyuba further called for relevant corporate responsibility projects that improve the social wellbeing of the people in the province such as support to agriculture, education, health and the welfare of the girl child.
Meanwhile, chairperson of the newly formed North Western Financial Institutions Forum, Davy Maibale, commended Seyuba's initiative of bringing bankers together and for providing a forum that would link them to government policies and operations.
Maibale, who is also Zanaco Solwezi branch manager, said the forum would be meeting quarterly to review how each financial institution was incorporating government and stakeholder suggestions in their operations.
He said banks would be considering product expansion such as ATMs to all the districts and social responsibility infrastructure development programmes such as borehole provision and youth development programmes.
Amongst the financial institutions present at the meeting include: Zanaco, NATSAVE, Barclays, FNB, Stanbic, Finance Bank, Stanchart, Cavmont, Investrust, Focus and ABI.
Labels: AUGUSTINE SEYUBA, BANKING, SMEs
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Zanaco to continue lending to agriculture, SME entrepreneurs
By Chiwoyu Sinyangwe
Mon 04 Nov. 2013, 14:00 CAT
ZANACO says it will continue to focus on lending to agriculture and small and medium entrepreneurs. As at end of August, its agricultural loan book represented over 25 per cent of Zanaco's total loan portfolio.
"We are proud that our goal and objective to be the biggest agricultural financier by value and to have the largest number of clients in Zambia by 2015 will be kept alive with the boost the facility will make on our loan book," said Zanaco managing director Martyn Schouten.
Last week, Zanaco signed a long term senior debt agreement with the Deutsche Investitions und Entwicklungsgesellschaft DEG.
Zanaco is expected to receive US$15 million as first payment of US$25 million while the second part of the long term senior debt of US$10 million is scheduled to be disbursed by October next year.
"We are also glad that we will now be able to adequately provide working capital and capital expenditure requirements for our customers and corporate customers," Schouten said. "In this regard, we are grateful to DEG for making it possible for us to make long term lending which is very important for economic growth."
Schouten said Zanaco supports the largest Zambian food and agriculture corporations and commercial farmers whose financing needs were complex.
"We also support more than 10,500 smallholder farmers," said Schouten. "With the largest number of SMEs in the market, Zanaco remain steadfast to ensure the 13,000 SMEs we serve continue to be active players in the growth of our economy. A substantial portion of the DEG facility will be targeted at SMEs."
Labels: MARTIJN SCHOUTEN, SMEs, ZANACO
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(SUNDAY MAIL ZW) Gvt calls for financial inclusion of SMEs
Sunday, 21 July 2013 00:00
Stories by Prince Mushawevato
A lack of affordable funding has remained a major challenge for small and medium-scale enterprises (SMEs) as financial institutions’ confidence in the sector remains low, a Government official has said.
Speaking during the Zimbabwe SME Banking and Micro Finance Summit, the Minister of Small and Medium Enterprises and Co-operative Development, Sithembiso Nyoni, said SMEs were failing to expand operations due to high interest rates and stringent lending conditions.
The sector has proved to be the country’s economic pillar as most big companies continue to struggle.
“There is need for banks to avail more loans and support for small and medium-scale enterprises, as the country is increasingly becoming reliant on these businesses,” she said, adding that Government research has shown that the sector is performing relatively better than the formal sector.
“Compared to day-to-day office workers, SMEs are performing way better in terms of revenue generation and employment creation.
“And this is why we say development of the sector is a key condition in promoting equitable economic development,” said Mrs Nyoni.
She also noted that success of small and medium businesses was not only premised on the availability of funds, but also on the genuine involvement of various stakeholders that had direct and indirect influence to the sector’s operations.
In his presentation at the summit, United Nations Development Programmes (UNDP) Zimbabwe economic advisor Mr Udo Etukudo said it was important for developing countries to promote financial inclusion.
“Banks need to find a more progressive way to support smaller players. SMEs play a big role in developing economies; they provide some services that big industries cannot. The banks are the fuel and without them, there is no development for the sector.
“Creative changes take place and we need to be adoptive to them. Small and medium firms need access to finance to improve their productivity and subsequently export rates.
“At the same time, big companies and SMEs need to co-operate, not view each other as competitors,” explained Mr Etukudo.
Market watchers contend that SMEs need to formalise their operations through registering with Government so as to get recognition from financial institutions.
The sector’s major source of funding includes Government, through the Small Enterprises Development Corporation (Sedco), family and friends.
Countries such as China, India and Iran have also supported.
Last year, the Chinese government made available a US$30 million facility through the Infrastructure Development Bank of Zimbabwe (IDBZ).
It is estimated that close to US$2 billion generated by SMEs is circulating outside the formal banking channels.
It is believed that SMEs are the largest employer after Government, and will be critical in generating a $100 billion economy by 2040.
A Government-commissioned scientific Small and Medium Enterprises Survey 2012 report, compiled with the assistance of the World Bank, revealed that the informal sector has created nearly six million jobs in the country and contributes US$7,4 billion to the economy.
Labels: BANKING, FINANCING, SMEs
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UNWTO assembly will benefit SMEs - Tomas
By Gift Chanda and Edwin Mbulo
Fri 29 Mar. 2013, 14:00 CAT
ZAMBIA and Zimbabwe should work hard towards making the UNWTO General Assembly a success because of its benefits to the two host countries, a senior UNWTO executive has said.
Helder Tomas, the UNWTO deputy director for Africa region, said the general assembly in August stood to boost the small and medium enterprises (SMEs) sector in Zambia and Zimbabwe as well as give the two countries an opportunity to market themselves as ultimate tourism destinations.
The two countries will co-host the 20th session of the UNWTO General Assembly from August 24 to August 29 in Victoria Falls Town and Livingstone.
"We are expecting delegates from all over the world. From America, Asia, the Middle East…all of them heading to Zambia and Zimbabwe and all of them are to be transported, entertained, fed and accommodated and that brings along a number of opportunities for Zambia and Zimbabwe's SMEs," Tomas said on Wednesday.
"It also gives a unique opportunity for the promotion of the Victoria Falls, the promotion of Zambia, Zimbabwe and Africa as a tourism destination. Therefore, we need to really work together to make this event successful."
On the just-ended regional media workshop, Tomas said the UNWTO was satisfied that the objectives of highlighting to journalists the deeper meaning of tourism were achieved.
A Nigerian delegate, Ikechi Uko said participants had been enriched with a paradigm shift in tourism reporting.
Meanwhile, information deputy minister Mwansa Kapeya urged the media in Africa to take a leading role in telling the continent's success stories to the outside world.
Kapeya said there were many good happenings in Africa which unfortunately had largely gone untold and, therefore, unheard.
He said the international media's perception of Africa had often focused on the negative side of the continent such as poverty and crime.
"The lesson from this is that the world owes us no obligation to market our continent, hence it is Africa's duty to tell its own story to the outside world. I therefore implore the media on the continent to lead the way in telling Africa's success stories," said Kapeya.
He, however, noted that the media could not tell stories and educate the public unless they were informed and educated first.
Labels: HELDER TOMAS, SMEs, UNWTO
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Let's turn our attention to small enterprises
By The Post
Fri 28 Dec. 2012, 10:00 CAT
Everything big starts with something small. Nothing great is created suddenly. Nothing can be done except little by little. People who think they are too big to do little things are perhaps too little to be asked to do big things. Small opportunities are often the beginning of great enterprises.
With a little thing lies a big opportunity. Small things make a difference; therefore, do all that it takes to be successful in little things.
When we are faithful in those small opportunities, God says to us, "You have been faithful in handling this small amount…so now I will give you many more responsibilities. Begin your joyous tasks I have assigned to you."
You never do great things if you can't do small things in a great way. All difficult things have their beginning in that which is easy, and great things in that which is small.
One of the major differences between people who have momentum and those who don't is that those with momentum are growing by taking advantage of small opportunities. The impossible, many times, is simply the untried.
Small and medium enterprises in Zambia have difficulties in growth due to lack of finance. They hardly grow beyond start-up stage. Others go out of business at a very early stage.
And as Bank of Zambia governor Dr Michael Gondwe has correctly observed, there is need for the establishment of venture funds in the country to ease access to funding of small and medium businesses who still have great difficulties accessing finance from commercial banks.
Small and medium businesses have few alternatives of accessing finance other than relying on their retained earnings to finance their investments.
Lack of access to credit is a major constraint inhibiting the growth of small and medium enterprises in our country. The issues and problems limiting small and medium enterprises' acquisition of credit include lack of tangible security, coupled with an inappropriate legal and regulatory framework that does not recognise innovative strategies for lending to small and medium enterprises.
Limited access to formal finance due to poor and insufficient capacity to deliver financial services to small and medium enterprises continues to be a constraint in their growth and expansion.
Our commercial banks generally perceive small and medium enterprises as high-risk and commercially unviable. As a result of this, only a few small and medium enterprises access credit from commercial banks in the country.
There has been political pressure on our commercial banks, urging them to lend to small and medium enterprises. But this pressure has not yielded much. There are serious challenges commercial banks face in lending to small and medium enterprises.
In addition to lack of security, there is also a serious culture of not paying back debts in our country. Those from the small and medium enterprise sector who happen to have access to commercial bank credit often fail to pay back. Some of them misuse, misapply the credit. They use the money they have borrowed for business on non-business expenditure - they buy expensive automobiles, construct mansions and engage in other wasteful spending. And this leaves very little money for the business activities the funds have been advanced for.
And it is time we started to address, as a nation, the conduct of business under limited liability status. If this culture of not paying debts is not seriously addressed, even venture funds will fail to rescue or provide finance to our small and medium enterprises.
The government is right in trying to pay special attention to the development of small and medium enterprises. Countries throughout the world are nowadays turning their attention to small and medium scale enterprises. This is because attempts to promote economic progress by establishing large industries have usually failed to improve the lives of the majority of the populations concerned.
Therefore, small and medium enterprises are now viewed as important in even and equitable development. Small and medium enterprises are not only seen as providers of goods and services but also as drivers in promoting competition, innovation and enhancing the enterprise culture, which is necessary for development and industrialisation. Small and medium enterprises seem to be efficient and effective in responding to the challenges of creating productive and sustainable employment opportunities, promoting economic growth and poverty eradication.
There is no doubt that, if well nurtured, small and medium enterprises will play a significant role in contributing to our national goal of wealth creation and making Zambia a middle-income country by 2030.
Therefore, access to finance by small and medium enterprises is an important ingredient to development. And the financial constraints being faced by small and medium enterprises are likely to affect business creation and improvement. We cannot continue with this situation where small and medium enterprises in Zambia have difficulties accessing both credit finance and equity.
Venture capital is one source of non-commercial bank financing options for financing small or start-up businesses. Venture capitalists are organised providers of financing for winning but risky business proposals by small and medium enterprises that have a promising, yet unproven idea.
If the venture capitalists are convinced that a business idea is promising, they will take an ownership stake in the business whose growth has been constrained by shortage of capital or increased cost of borrowing and provide the necessary finance.
There is no doubt increased venture capital finance will have a significant impact on the development of small and medium enterprises in our country. And we shouldn't forget that small businesses don't remain small forever, they grow. And small businesses have been and are the stepping stone of industrialisation.
And as we have already pointed out, lack of finance has been a major contributor to the small and medium enterprise failure in Zambia. The encouragement, by the government and the Bank of Zambia, of venture capital finance will greatly help increase the number of small and medium enterprises in our country and help Zambia achieve its 2030 vision.
Continued reliance on commercial banks to finance small and medium enterprises will not achieve much positive result. It may help consolidate the few well-managed and established small and medium enterprises who have accumulated some assets to pledge as security for credit but it will certainly not do for start-up ones. Initiatives are needed for the setting up of venture funds. And the government should start serious work in the creation of the necessary environment and incentives for the establishment of venture funds.
The Development Bank of Zambia, which the government wholly owns and controls, has not functioned that much as an effective venture fund. And in the process, it has lost a lot of money by trying to lend to very risky undertakings without positioning itself as a venture fund.
And the other schemes, such as the Citizens Economic Empowerment Commission, have been a disaster because they have not been lending in a manner that can be said to be prudent. And moreover, they did not also have the discipline and structure of a venture fund and, as a result, and also given our culture of not paying debts, have not done well and have lost money.
What is needed are more venture funds. And these institutions are necessary in bridging the levels of access to finance, and they should be top of our government and Central Bank's priority.
Labels: SMEs
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COMMENT - Working hard and telling people to work hard are two different things. When you have a government that can't be bothered about collecting all the taxes due to the people, including minister Chikwanda, they have no moral highground from which to tell other people to work hard. I want to hear from the government that they are working hard every day to secure a new Windfall Tax, or show that their taxation collects as much if not more taxes than the Windfall Tax would. Personal responsibility is not something other people take - it starts at home. And no more lecturing - let's see some results.
'Don't expect much from govt, church'
By The Post
Sun 16 Dec. 2012, 11:10 CAT
"We expect too much from the government. Yes, they can provide education, they can provide health, but people should realise that they have to do a lot on their own in order to succeed in life. A lot of people have a negative attitude towards life; they give up before they even try.
People don't want to work, they do not want to use initiative, they don't want to do anything at all. And to change that kind of mindset is the challenge that we have as a country. We need to institute programmes at an early age where we instil in the minds of young people virtues of entrepreneurship...people who claim to be poor, some of them have something to offer, but they have not encouraged themselves to do something.
Some people have even been to school, but because of high unemployment levels, they just sit back and decide to go on the street. The government, the Church can only do so much, in the end it's up to the individual to apply themselves in order to get out of the poverty trap," says Maxwell Sichula, the former executive secretary of the Zambia Chamber of Small and Medium Business Association.
And we agree with him because it would be very unreasonable to understand the sad situation of poverty that the great majority of our people today find themselves in as something alien, which some distant relative bequeathed us. On the contrary, we have to accept this sad legacy as a sin we committed against ourselves. If we accept it as such, we will understand that it is up to us all, and up to us only, to do something about it.
We cannot continue to blame others for our sad legacy of poverty; not only would it be untrue, but also because it could blunt the duty that each of us faces today to do something about it, to make a contribution towards its eradication.
As Max says, "the government, the Church can only do so much, in the end it's up to the individual to apply themselves in order to get out of the poverty trap". The best government in the world, the best president, the best political representatives, cannot achieve much on their own. And it would also be wrong to expect a general remedy for our poverty from them only.
Moreover, democracy includes participation and, therefore, responsibility from us all. If we realise this, then this legacy of poverty will cease to appear so terrible. If we realise this, hope will return to our hearts.
Government and church intervention only works when the people concerned seem to be keen for progress, for the eradication of poverty. The government, the Church can only provide certain limited things. But the responsibility for the rest will depend on mobilising the sweat equity of the people themselves. You cannot build an economy or a society purely on the basis of entitlement from the government.
Every citizen has to make a contribution; people have to make a contribution and have a sense of ownership which they don't get from being given things they don't even know where they are coming from, things which they don't own, which they don't have a stake in and haven't helped in producing.
This is the type of talk our people should be made to listen to. Alexander Chikwanda, our Minister of Finance, has said something similar on this score. More and more voices need to be heard on this issue.
We have heard and we know what government says it would do. And all this is there in government budgets and economic development programmes. What we need to hear now is what the people will do; what every one of us intends to do to bring progress and prosperity to our country, to our neighbourhoods, to our families and to every citizen of this country.
[Well I haven't heard about the government's budgets and development programmes. And I consider myself pretty well informed. Perhaps it is a failure to communicate and demonstrate what the government is doing that is the problem? - MrK]
And, of course, we want to hear more and more government telling people what it is not going to do for them as it tells them what it's going to do for them. We feel it is very important for the government to tell our people what it will not do for them, what they need to do for themselves. There is no need to patronise them.
They should instead be challenged and told that if they want to continue living in poverty, without food and good clothes, they should continue being lazy, not wanting to work, but drinking every day. They should be told that if they want to move out of poverty, if they want better things, they must work hard and that government cannot do it all for them; they must do it for themselves.
And this is in line with the true meaning of democracy - a growth in the confidence in the power of ordinary people to transform their country, and thus transform themselves; a growth in the appreciation of people organising, deciding, creating together.
The poverty the great majority of our people are in is not an easy thing to eradicate. It is a very difficult problem for any government to face, but to solve it, we need hard-working and public-spirited politicians, we need people of courage who will defend the truth and demand justice for the poor, for the ordinary and others. We also need individuals who will tell our people, including the most affected, the truth.
Everyone, in one way or another, needs to work. This is so because work is an essential element of human dignity. Through work, we cooperate with the Creator in bringing to fulfilment the created world; we exercise our God-given abilities and talents as co-workers with God in the great task of transforming the material world. As such, work is not simply an onerous necessity, coincidental with our physical existence, a burden which we should try to escape.
It is a vital part of our humanity, the manifestation of our creativity, an opportunity for our growth and fulfilment. Indeed, work is nothing less than a constituent dimension of the purpose for which the world was created and for which we ourselves were brought into being. To live is to be active; and for a human being, this means the exercise of one's faculties of mind and body. Where this activity is directed towards winning a livelihood or improving one's mode of life, it normally involves fatigue and is called work.
In our present state, as children of Adam striving against odds to attain security and liberty, work is indispensable. It is imposed upon us by God; since without fatigue a human being cannot now, as God decreed, fill the earth and bring it to serve the needs of human being; "all the days of your life you shall win food... with toil" (Gen 3:17).
Work does not detract from the dignity of a human person; rather it increases the person's worth, for it is the means whereby the person overcomes the defects and limitations of one's fallen nature and reaches the goal that God has fixed for that person. The true value of work is communicated to it by the worker, so that there is no such thing as degrading work since even the meanest chore is elevated and ennobled by the dignity of the person. Think, for example, of Christ in the humble workshop of Nazareth!
Of course, we know that our President is very desirous of every citizen having a quality job. But every job has dignity in itself. What is needed is those involved in every job to give it their best. If your job is to clean offices, homes, hospitals and so on and so forth, what you are doing is a noble job; it is something very dignified and you have a duty to do it well.
Ending where we started, don't expect much from government, Church; "they can only do so much." In the end, it's up to you.
Moreover, who is government? Government is you; it's us. We can eradicate poverty, but we can only eradicate it by working together with government, Church. We must do it together. We must combat it together because this can only be done together. Leaders lead, but in the end, the people govern. Let's use hope, hard work and imagination as weapons of survival and progress. We must never surrender to poverty. Don't give up. We know it's tough sometimes. Bu
We understand what poverty can do to the confidence, pride, dignity of an individual, but don't give up. It gets dark sometimes, but the morning comes. We will, somehow, by God's grace, change things for the better if we work together - government, Church and us all. We can manage to take away poverty, despair and give our people prosperity and hope. We can do it together and by the grace of God.
Labels: MAX SICHULA, SMEs
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Building effective SMEs support in Africa
Sunday, 14 October 2012 00:57
Dr Francis Neshamba
This is the first time such a conference has been held in Africa. The role of business support institutions to small and medium enterprises (SMEs) is increasingly becoming complex and government policy will always have a role in shaping the support offered to SMEs.
The key requirement is the need for business support institutions to be more sensitive to client needs and to be more client-driven.
There is a need for business support institutions in Africa and their advisers to develop a more transformational approach when working with business clients by becoming more dedicated towards supporting SMEs and truly understand the complex needs of SMEs and can increase effectiveness and take-up of support.
Small businesses and the management skills of owner-managers are critical for economic growth and employment creation in Africa and elsewhere.
However, a high proportion of owner-managers of small businesses do not see small business support institutions as offering “real” solutions to their business problems — hence the low up-take in management development programmes.
This is a clear and real challenge to small business support institutions, most of whom are providers of formal management development programmes to owner-managers of these firms. Very little is known about the effectiveness and quality of the management development programmes offered by small business support institutions.
There is little empirical research evidence as to how to build effective and results-oriented small business support institutions in Africa and elsewhere.
This includes the degree to which these institutions are capable of giving effective and results-oriented management development programmes and advice other than that which is given in pursuit of their own relatively “narrow” goals.
The research results indicate that business support institutions’ programmes should be delivered in ways which suit the clients or SME owner-managers and not the small business support institutions themselves.
In other words, the programmes should be “customer-driven” and not “supplier-led”. The results also indicate that owner-managers of SMEs often learn better from networking and from transactional relationships with family, friends, trusted advisers, customers, suppliers, bankers, internal staff and from experience of their peers or other entrepreneurs.
This involves learning effectively by a process of doing, experimenting and making mistakes, copying others and watching competitors, solving problems and discussing with friends and relatives who are in business.
Contribution
The low uptake of structured management development programmes or formal training among SMEs has triggered numerous studies to investigate the reasons that prevent or hinder owner managers of small firms from participating in these programmes.
Previous studies indicate that owner-managers’ small firms rely heavily on informal management practice-based learning such as peer groups, networks, family, friends, trusted advisors, suppliers, customers and other entrepreneurs. Whilst it appears there is a great deal about a variety of factors associated with business support institutions in Africa and elsewhere, however, very little, if anything, is known about the effectiveness of the small business support institutions.
Also very little is also known about the actual causes for low uptake of the small business support programmes or services by owners and managers of small businesses; the types of services available ; the delivery methods used and how the low take-up can be overcome.
Who needs to learn ?
Research found out that very little is known about how much the SBSIs themselves know practically about running a SMEs and the degree to which they are capable of providing effective advice other than that which is given in pursuit of their relatively “narrow” goals.
Very little is known about the direction and quality of the service provided by SBSIs. The results of this research indicate that this is one of the major reasons why most owner-managers do not participate in the management development programmes.
Contrary to the above, the research also established that owner-managers of small firms tend to be reactive and not pro-active in their learning process. This means that they cannot plan in advance and always want specific information to solve a specific problem when it has already occurred and not general information about future problems.
Owner-managers also want the management development programmes to be presented in the context of the environment in which they operate. They do not appreciate examples of foreign-owned companies who are usually subjected to completely different business environment. They want to learn from their own peers or other entrepreneurs who have experienced situations similar to theirs. Thus, they prefer to be trained by other entrepreneurs or their peers whom they can refer to as “role models”.
The policymakers’ role is to facilitate or promote programmes that build the relationships between owner-managers and their friends, mentors, trusted advisors, suppliers, customers and other entrepreneurs.
Finally, for business support services to be effective and beneficial to small firms, there is a need to put in place support services which improve the skills of owner-managers of these firms to learn better from their transactional relationships with customers, suppliers, bankers, internal staff and from experience of their peers through networking.
In other words, there should be greater intimacy between the owner-managers of small firms and the providers of these services.
Even if the owner-managers were not from the same sector, the results show that there is very little difference in the nature of the problems and experiences they face.
Recommendations for building effective and results-oriented business support institutions (BSIs) for SMEs in Africa:
1. Ensuring that BSIs offer or solves specific business problems (such as accessing resources, coping with competition, making it easier to deal with stakeholders and so on);
2. Relying as much as possible on peer recommendation for attracting attendance;
3. Using entrepreneurs’ own networks by working with them and getting them to endorse formal business support programmes;
4. Establishing greater intimacy between SMEs and BSIs. Exciting them by offering Know Who — chance to meet people useful to them that they would not normally have the opportunity to meet;
5. Promoting an enterprise culture and ensuring that the macroeconomic environment is not hostile but friendly to the SME sector;
6. Recognising the contrast between “the world of owners and managers of SMEs and that of corporate or bureaucratic world” — some support institutions often incorporate the corporate business model into the life of small firms during training;
7. Using knowledge and experience acquired by trainers or advisors from large firms may be helpful but at times is counter-productive as the knowledge may not be easily transferred to SMEs;
8. Recognising the experience of owner-managers and give meaning to that experience. It is possible for all of us to have the experience but can miss the meaning.
9. Pedagogical competency and targeted programmes — “teaching” entrepreneurs can be problematic. A classical entrepreneurial “teacher” should be a facilitator of learning rather than deliverer of knowledge.
10. Providing “specialised” and targeted rather than general training programmes — participation is higher if the business support programmes are viewed as relevant and targeted at owner-managers who indicate high degree of interest towards learning.
11. Working closely with established trusted networks of business advisors and peer mentors — could include developing effective Personal Business Advisors (PBAs).
12. PBAs should be individuals who own or have previously operated their own businesses — helps in building confidence as they will see PBAs as ‘one of their own’.
13. Recognise that effective delivery of management development programmes result from ‘learning-partner relationships’ between owner-managers and small business institutions or support agents.
14. Work closely with owner-managers and recognise their firms as ‘learning organisations’.
15. Must not assume that all small firms would like their firms to grow — should find out what owner-managers’ personal motivations are and their long term aspirations.
16. Should not assume that owner-managers are unprofessional amateurs who have nothing to teach or have no interest in learning.
17. Must appreciate the need for multi-skilling in order to manage all elements that impact on SME ventures.
18. Serendipity — delivering programmes when the owner-managers need the services at the right time and at the right place.
This is often difficult to determine when and what type of support is needed as owner managers tend to be reactive and not pro-active in their learning process
19. Reputation of business support institutions crucial — in terms of credibility and professional standing e.g. profile of individual business advisors or presenters during business development programmes.
20. Supplying sufficient and relevant information on real value and benefits of the services to their business, is beneficial and can arouse interest to participate;
21. Avoiding ‘supply-led’ or ‘product-driven’ services rather than ‘needs-based’. Support institutions tend to offer what they have rather than conducting market research to determine what the actual needs
for small firms are.
22. Staff of Business Support Institutions should acquire appropriate professional skills which can effectively support the needs of SMEs.
The Certificate and Diploma in Business Support are comprehensive qualifications for business advisors, coaches and consultants who operate in public or private sectors.
Conclusion
It is also important to take note that the ‘success’ of management development programmes is dependent on: serendipity; reputation of the training providers; availability of information to owner-managers; methods of delivery and presentation style.
Due to the fact that most of the programmes offered by business support institutions to SMEs appear or are viewed as not ‘needs-driven’ but supply-led, they often receive a low value and not seen as a priority in the estimation of the owner-managers of small firms. It is important for BSIs involved in developing programmes for SMEs to build effective and results-oriented support institutions.
The programmes should not be packaged, developed and delivered as a duplicate or parody of corporate sector training in large organisations, but as a way of spurring entrepreneurial motivation and improvements in SME business processes.
* This paper was presented at the 37 th International Small Business Congress held at Sandton in Johannesburg, South Africa from October 15 to October 18.
Dr Francis Neshamba is a senior lecturer in Strategy and Entrepreneurship at Nottingham Trent University’s Business School and holds a PhD from Cranfield University’s School of Management (UK). He has international experience in working with SMEs and can be contacted on Francis.Neshamba@ntu.ac.uk or Francis.Neshamba@btinternet.com
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IMF should focus on SMEs - Kasese-Bota
By Henry Sinyangwe
Sun 14 Oct. 2012, 14:50 CAT
THE International Monetary Fund should focus and encourage the growth of small and medium scale enterprises to improve people's lives, says Ambassador Dr Mwaba Kasese-Bota.
Speaking when she addressed the Economic and Financial Committee (or Second Committee) of the United Nations at the Headquarters, Ambassador Kasese-Bota, Zambia's permanent representative to the UN, said SMEs had direct and greater impact on the lives of ordinary people.
This is according to a statement released by first secretary for press at Zambia's permanent mission to the UN, Chibaula Silwamba.
Dr Kasese-Bota reaffirmed the importance of reforming the World Bank, the IMF and UN so that they serve humanity better.
"The systemic problems facing us will only be resolved through the reform of the global financial system and architecture," Ambassador Dr Kasese-Bota said.
She said the multilateral trading system should be more equitable in order for developing countries to equally benefit from global trade.
"We must make progress on the Doha Development Round of Trade negotiations that have remained in a stalemate," she said "I also wish to call for the operationalisation of the Green Climate Fund and ensure ready and equitable access to the fund for developing countries so as to enhance the development of sustainable energy."
Ambassador Dr Kasese-Bota urged UN member states to urgently find effective responses to the global economic crisis.
Ahead of the 2015 deadline of the millennium development goals (MDGs), Ambassador Kasese-Bota noted that most Least Developed Countries (LDCs), including Zambia, were not on track to achieve goals.
"Zambia is still committed to attaining the set goals," the envoy assured.
Ambassador Dr Kasese-Bota said developing countries and cooperating partners should work in a coherent manner to ensure that the post-2015 development agenda takes account of successes, concerns and challenges of the MDGs and build on them.
Zambia's acting deputy permanent representative to the UN Irene Tembo, Ministry of Finance deputy director for regional planning Esnart Mpokosa and Ministry of Commerce's trade and investments promotion officer Phyoka Nkunika accompanied Ambassador Kasese-Bota to the meeting.
Labels: AMBASSADOR, IMF, MWABE KASESE-BOTHA, SMEs
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Relax collateral policies on lending: analysts
By Professor Tshuma at October 5, 2012 | 4:01 PM
CALLS have been made by economic and business analysts for the relaxation of collateral policies on lending of money so that the major sectors that drive local economy can be revived.
Renowned economic analyst and President of Great Africa, Mr. Rutendo Rutendo said the low economic growth being experienced by the country was a cause for concern which needed emergency attention.
He said the Small to Medium Enterprises (SMEs) should be fully funded and there was need to come up with SMEs fund or bank which will solely concentrate on bailing out the sector as it has proved to be a major contributor to the economy.
He said his organization, Great Africa, was calling for a shift in approach so as to witness meaningful growth.
The country is experiencing a low economic growth is a cause for concern and as Great Africa, we are calling for a shift in the approach if we are to witness any meaningful growth going forward,” he said.
“The engine of the economy which is the SMEs, has been relegated to the bottom of the pyramid yet they are the ones oiling the engine of this economy.”
He said it was uncontestable to argue against the point of view that majority of Zimbabweans are running SMEs and in light of this, it was prudent to channel resources towards the upliftment of SMEs.
Mr. Rutendo said SMEs were the major employers in the country and there was need to give priority to them so as to stimulate growth.
He also called for a deliberate policy to empower the SMEs if the nation is to achieve a double digit growth rate.
“There has to be a deliberate policy to empower SMES if this nation is to achieve double digit growth.”
He said financial institutions were tabling stringent lending policies which require collateral, adding that this was mitigatory to the success of SMEs.
“Financial institutions have also made it difficult for SMES to access funding.
“The stringent lending policies which require collateral are mitigatory to the success of SMEs and it is high time
Government chip in and guarantee viable SME projects as the majority of these entrepreneurs have no access to immovable property.”
He further on said it was absurd for anyone not to take seriously the contribution of SMEs to the Gross Domestic Product.
Labels: BANKING, RUTENDO RUTENDO, SMEs
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Govt urges SMEs to make full use of funds
Saturday, 30 June 2012 23:42
Prince Mushawevato
Government has urged Small to Medium Enterprises (SMEs) to increase uptake of the available loan facilities and efficiently use the money to boost operational and productive capacities.
Players in the sector have over the years indicated that a lack of funding was negatively impacting on operations. However, Small and Medium Enterprises and Co-operative Development Minister Mrs Sithembiso Nyoni said players were not approaching financial institutions that handle their funds to secure loans.
“All small to medium enterprises should make full use of funds availed to them through banks and the Small Enterprises Development Corporation (Sedco). The players in the sector need not rely on Government since it is only a facilitator of a certain percentage of the funds,” she said.
She indicated that although the Chinese government had made available a $30 million facility through the Infrastructure Development Bank of Zimbabwe (IDBZ), only a few of the players in the sector had applied for the loans.
“The Chinese government gave $30 million to Zimbabwe through IDBZ. The money is open to any registered small to medium enterprises, but the uptake has been low despite it attracting a small percentage interest.
“Players in the sector seem to be waiting for the ministry to give out funds to them,” she said, adding, “We have always referred those that have come to our offices in search of start-up or operational capital to banks for loans.”
SMEs, which employ a significant number of people, have been cited as an important sub-sector in the drive to increase productivity and contribute to the creation of a $100 billion economy by 2040.
The minister said Government continued to scout for funds to assist the players.
“It is difficult to state the exact figure that needs to be raised. The money is determined by the performance of the economy and the funds availed by the finance ministry. However, we are constantly in touch with our SMEs so that we help them as and when necessary,” she said.
Minister Nyoni said Government has increased training programmes in order to create a vibrant SME sector.
“The development of SMEs is a key condition in promoting equitable and sustainable economic development,” she added.
The training programmes, besides imparting financial knowledge, include lessons on how to fully use modern equipment and tap into international markets.
Local SMEs are the largest employer after Government.
The sector sustained the country in the decade of economic contraction when huge companies suffered and most folded.
According to figures from the United Nations (UN), the sector and other informal trades currently employ over 80 percent of the working population.
China, the world’s second largest economy, has a sound policy that supports the development of SMEs.
Labels: CHINA, CREDIT FACILITIES, SMEs
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COMMENT - Finance is the problem. There is a liquidity gap (difference between savings rates and lending rates) across the continent. How difficult would it be to push money into the economy through loans to MSMEs? However, it is not happening. And by the way, the IMF and World Bank like it this way, because they keep imposing conditionalities that are against the creation of a local middle class. If the PF can change this, that would be a huge step forward (it doesnt' mitigate the infusion of $1.4 billion into the economy through properly collected taxes and dividends from the mining sector though).
Chikwanda urges financial system oriented towards local entrepreneurs
By Kabanda Chulu
Mon 18 June 2012, 13:25 CAT
ZAMBIA can make an improvement in the development of the economy if the financial system is oriented towards local entrepreneurs, says finance minister Alexander Chikwanda.
Officiating at the strategic forum on the role of finance in unleashing the potential of local Zambian businesses in Lusaka, Chikwanda yesterday said the failure by most Zambians to take advantage of the immense income generating activities and the natural resources could be attributed to
limited access to finance.
He said domestic credit as a percentage of GDP has averaged about 18 per cent over the last three years.
"This is lower compared to other countries in the region such as Namibia at 45 per cent and Malawi at 29 per cent. This situation further goes to explain the growing imbalances between local and foreign enterprises that usually source their investible capital funds from financial institutions outside the country at lower cost," said Chikwanda.
"There is therefore a need for banks to address the cost structures that contribute to limiting financial outreach and I expect this forum to discuss and suggest practical solutions of how this situation can be improved as the need to promote wider access to financial services through innovative financial products by various market players cannot be over emphasised."
And Bank of Zambia Governor Michael Gondwe said there was need to strategise on ways of addressing the challenges of growing local businesses aimed at facilitating income generation and job creation which were critical for poverty eradication.
And World Bank Zambia manager Kundhavi Kadiresan challenged government to develop policies and institutions that would allow the private sector to have confidence in SMEs.
"We have a keen interest in leading forward this issue of unleashing the potential of SMEs and we shall work with stakeholders not only in terms of providing money but knowledge and supporting you in every step of the way...we want to be a key player in developing SMEs in Zambia," she said.
Labels: ALEXANDER CHIKWANDA, BANKING, SMEs
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Prioritise SME development, ACCA urges governments
By Gift Chanda
Wed 13 June 2012, 13:24 CAT
GOVERNMENTS need to take a broader approach in addressing challenges of small business financing, urges the Association of Chartered Certified Accountants.
In its latest Global Agenda on Access to Finance for SMEs, the ACCA Global Forum for SMEs called on global leaders to offer more support to Small and Medium Sized Enterprises (SMEs) in gaining access to finance by ensuring that a broader approach is taken to policy development for the SMEs sector and that there are greater levels of co-ordination at a global level.
It observed that more coordinated and consistent efforts were needed when it comes to SME financing policy.
The ACCA's call for increased financing to small businesses comes ahead of the G20 summit which will be held in Mexico between June 18 and June 19, 2012.
Mexico, which holds the Presidency of the G20 for 2012, has put fostering financial inclusion to promote economic growth among its five priorities for the G20 this year.
The Global Forum's agenda outlines the challenge facing the G20 in the area of financial inclusion, and that official 'SME' or 'enterprise' policy forms only a small part of the actual policies relevant to the development of SMEs.
The Global Forum argues that more attention ought to be given to how central government departments impact on SMEs who may have more influence on how SMEs access finance than the departments or agencies responsible for business and enterprise.
"For example, those departments responsible for fiscal policy, justice or employment law may well have a bigger effect on SMEs' access to finance - through their decisions on tax policy on equity funding, setting up or developing better access to efficient credit information facilities right through to well-functioning property and contract law frameworks," ACCA stated.
To reduce SMEs defaulting on loans, the Global Forum advised leading institutions such as banks to actively get involved in their SME clients' businesses by offering professional advice.
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Multinational banks urged on serving SMEs
By Flavia Nalubega (email the author)
Posted Friday, June 8 2012 at 00:00
Multinational banks with a presence in Uganda must integrate SME banking in their service menus, according to Ms Maria Kiwanuka, The Finance Minister.
Such banks, Ms Kiwanuka said at the ceremony to mark
Citibank’s 200th anniversary in Kampala on Tuesday must consider formulating products that appeal to a growing SME market that is currently characterizing Uganda’s market.
Multinational banks usually shy away from creating products including soft loans and working capital that usually appeal to SMEs.
Over 75 per cent of Uganda’s economy is characterised by SMEs. According to a 2010 Enterprise Uganda report, Uganda has about 800,000 SMEs employing over 80 per cent of the population.
Ms Kiwanuka said: “Much of Uganda’s businesses are composed of SMEs. These are the future of Uganda’s economy, so multinational banks should build products to support them (SMEs).”
She said there is need to extend services to the unbanked population, especially in agriculture, which is the country’s backbone.
However, Citibank Uganda with a current capital account of about Shs155 billion, has according to Mr Chinedu Ikwudinma, been involved in both corporate and low income financing.
This, Mr Ikwudinma said is one of the bank’s core value that has supported the growth of its Ugandan operations.
fnalubega@ug.nationmedia.com
Labels: BANKING, SMEs, UGANDA
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Wanted: Value creating SMEs in Zimbabwe economy
09/06/2012 00:00:00
by Tafirenyika Makunike
ZIMBABWEANS wherever they are located, are by and large political animals. If you really want to get them going, just throw them a political bone. Before you know it, they would be all scrambling all over to mauling it.
For the large Zimbabwean diaspora community, the advent of technology means much of this mauling is largely an intellectual armchair engagement. It is orchestrated on the social network and in chat rooms but ultimately change is linked to what actually happens on the ground.
Like the rest of my country folks, I am also quite passionate about politics too but over the years I have tended to see it as a decoy to keep us away from the real livelihood issues. Politics is important but it is not the answer to all things.
One route which leads to a better life to many people is enterprise development. In a country with a widening gap between the rich and the poor, I believe it can be activated in that widening gap between the rich and poor to create fruitful economic activity.
It is good that in Zimbabwe we have a ministry of Small to Medium Enterprises (SMEs) but that in itself will not bring the desired result. Unfortunately, as a nation, we never made sufficient definitional demarcation of what constituted an SME in the Zimbabwean context. How then can we promote something we have not defined?
It is not surprising then when Sithembiso Nyoni, the Small to Medium Enterprises and Co-operative Development Minister, spends a good part of her time having bilateral engagement with Killer Zivhu of the cross-border traders fame all in the name of SMEs.
It strikes me that we are not willing, or unable to clearly define the animal we are dealing with – one moment we refer to small, medium and micro enterprises (SMMEs) and the next we are talking about small to medium enterprises (SMEs) interchangeably. For the sake of perspective, when I write about SMEs in the Zimbabwean context, I am referring to formally registered distinct business entities with full time employees ranging six to 80, operating in any sector of the Zimbabwean economy and with an annual turnover falling between $100,000 to US$5 million.
It is unfortunate that multilateral organisations and a myriad of donor organisations have steeped us in this poverty alleviation mindset. Zimbabwe is crying out for favourable conditions for enterprise development. Enterprise development is not a poverty alleviation lever but wealth creation. Poverty alleviation is a social function.
A sole trader at Mupedzanhamo selling second hand clothing (maziche) is not really an SME, but a survivalist. If we have to take our economy from a survivalist economy to a growth economy, then the mindset has to change.
I understand in Zimbabwe SMEs now have a legal framework to guide emerging businesses following the gazetting of the SMEs Act. While everyone acknowledges the crucial role of SMEs in the creation of decent work opportunities and overall success of the economy, our actions are not supportive. SMEs provide a vehicle for people with the lowest income and formal training to gain access to economic opportunities and lift themselves from poverty.
The flexibility of small businesses allows them to respond quickly to challenges and take advantage of opportunities. Zimbabwe needs to provide a framework which simplifies the procedures for forming a company; reduces the cost of forming a company and maintaining its existence; promotes innovation and investment by providing for flexibility in company formation and operation; provides for a predictable and effective regulatory environment; encourages transparency, efficiency and high standards of corporate governance; and makes company law compatible with best practice internationally.
There is a need to promote collaboration between SMEs and large producers to create joint ventures, market access and buy-back arrangements, as well as promote skills transfer, technology development and marketing expertise. This will increase small business access to procurement opportunities and include them in the government supply chain. These opportunities will provide experience and income for local small businesses and thus enhance their potential for growth, development and employment creation.
I looked through the results of the largest sugar producer in Zimbabwe listed on the Zimbabwe Stock Exchange which is part of a larger JSE listed entity. There is a tacit acknowledgement that a growing number of small to medium sugar farmers are contributing significantly to the bottom-line and are going to be an important part in future growth.
Our last national budget mentioned the Old Mutual supported US$30 million Youth Empowerment Fund, and another proposed jobs fund. The Distressed and Marginalised Areas Fund (DiMAF) – a five year collaborative Facility with a seed capital of US$40 million from the Government and Old Mutual Zimbabwe, of which both parties are contributing US$20 million – was also thrown into the mix. NASSA also had its own.
In the last budget speech the minister of finance Tendai Biti identified potential for development clusters such as diamond processing, cutting and polishing; soft and hard wood cluster; resources base; livestock cluster; cotton, sugar and ethanol clusters; iron ore cluster; energy and hydrocarbon clusters; gold; tourism cluster and offshore financial hub; and horticultural hub.
To date, how many SMEs have been created by these initiatives? We are not getting enough direct taxation mainly due to the limited number of formal enterprises registered with ZIMRA. To expand the tax base in future, it is important to actively nurture a culture for enterprise development.
We have to promote SMEs that will actually create and add value. We need SMEs that will manufacture and beneficiate agro-products. Assuming a national budget of $3.5 billion of which 60% is allocated to personnel costs, it would leave $1.4 billion as a national procurement lever. How has it been spent in 2012? If we just dedicate 30% of this budget to SME procurement spend, then we would have $420 million supporting businesses in the forgotten middle of the economy.
The government has to put its money where its mouth is. They can start by dedicating all procurement below $15,000 to Zimbabwe-registered SMEs registered as tax payers with ZIMRA. Another way to accomplish this is to publish statistics across all government departments on the money spend on our own SMEs.
Eventually, this can be extended to other parts of the economy. As the SME base widens this middle ground can be the future bedrock of Zimbabwe’s accelerated economic growth.
Tafirenyika L. Makunike is the chairman and founder of Nepachem cc (www.nepachem.co.za), an enterprise development and consulting company. He writes in his personal capacity
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Small, medium-scale enterprises bank on cards
Saturday, 02 June 2012 18:55
Praise Runyowa
The Government intends to soon open a bank that will exclusively provide loans and other financial services to small and medium-scale enterprises (SMEs). The initiative is part of efforts to empower the entrepreneurs, most of whom were failing to access loans at conventional banks owing to lack of collateral.
In an interview last week, Small and Medium Enterprises and Co-operative Development Minister Cde Sithembiso Nyoni said her finance counterpart, Mr Tendai Biti, was already working on providing funds for the establishment of the financial institution.
She said the project would ultimately leverage the sector and encourage joint work among beneficiaries.
“The bank will enable those already in business as well as aspiring entrepreneurs to access capital,” she said.
“They will become self-reliant; we want investors to come from within the country. We are hoping the bank will benefit them a great deal because they would have a better way of saving money.”
Cde Nyoni said Government efforts to develop SMEs would ensure the sector contributes significantly to the country’s economic growth.
She said entrepreneurs were not paying tax because “they are not being taken seriously”.
“In my discussions with the Minister of Finance, we realised that SMEs must be taken seriously and be involved in marketing.
“They account for 85 percent of the business economy, and the process of involving them in marketing is at an advanced stage.
“The Glen View Complex for SMEs and Mbare Flea Market “Mupedzanhamo” (both in Harare) need specific infrastructure. My ministry will grade them according to standards.
“I am putting emphasis on togetherness. A lot of people who work together are benefiting. There is need for co-operation.
“Everybody has a right to development. Capitalism has failed, even in Western countries. It is time for us to work and create employment for others. Be owners of businesses and shareholders.”
Mbare Flea Market chairman Mr Frank Cheure commended Government for recognising SMEs.
“At the moment, capital is the biggest challenge for everyone in this sector. We promise to pay back the money as soon as we start generating profits,” he said.
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Mwaliteta explains ‘More money in your pockets'
By Edwin Mbulo in Livingstone
Tue 27 Mar. 2012, 12:59 CAT
SOUTHERN Province minister Obvious Mwaliteta has explained that the more money in your pockets promise meant creating an enabling environment to allow individuals make more money to sustain livelihood.
And International Labour Organisation (ILO) director Martin Clemensson said major economic activities in Zambia were informal as 90 per cent of the country's labour force was in the informal economy.
In a speech read on his behalf by Southern Province deputy permanent secretary Alfred Chingi at the dissemination workshop on the Law Growth Nexus II Project (LGN) at Chrismar Hotel, Mwaliteta said the PF did not mean it would be dishing out money to people.
"The government is committed to job creation and I'm delighted to learn that the ultimate beneficiaries of the Law Growth Nexus II Project are owner-managers of growth-oriented micro, small and medium-scale enterprises (MSMES) and their workers," Mwaliteta said.
Mwaliteta appealed to local entrepreneurs to enhance productivity and aim for world-class processes and systems so that their products and services compete on the global market.
And Clemensson said the majority workers in small businesses do not have social protection or basic rights compared to those that work in government.
"Zambia Business Survey of 2012, the characteristics of SMEs in Zambia is such that many MSMES are more akin to home-based, income-generated activities than to clearly structured businesses. Most MSMES are in rural areas (81 per cent), and operate agriculture production (70 per cent) or wholesale and retail trade," Clemensson said.
He said many entrepreneurs choose to stay informal to avoid the burden of heavy labour legislation.
[Heavy taxation too, I'll bet. - MrK]
"With this result, their workers have no social protection and more often than not, do not receive a decent wage. So the challenge is to find a balance between cost of regulation and the rights of all workers to have basic protection and decent conditions," he said.
Clemensson said the LGN project will make an input to the review of the labour code which he described as rather complex, expensive and difficult.
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SMEs squeezed by Chinese invasion
07/01/2012 00:00:00
by Stanley Kwenda I IPS
ALEC Marembo has built his family fortune making bricks in Dzivarasekwa, a sprawling high-density suburb north of the capital of Zimbabwe. But due to the economic crisis of the last decade, his fortune started crumbling. Although he could break even when the downturn started, he finally gave in to competition from the Chinese.
"I don’t understand how our government can allow the Chinese to come here and take over small jobs that we consider family ventures and pass them on as investment," Marembo told IPS as he gazes into the distance where a new Chinese brick factory lies.
The government introduced the "look east" policy in 2004, after top government officials and state companies were slapped with sanctions by the UK, the United States and other western countries for alleged human rights abuses.
The policy has encouraged China and other Asian countries to invest in Zimbabwe, which they have done without attaching any conditions in the manner of trading partners in the west.
Times have been hard for many Zimbabweans due to the closure of a number of industries caused by the crippling economic crisis.
So when Chinese investors started arriving they were welcomed with open arms. But the trade relationship is now raising questions.
"The Chinese, like any other investors, are welcome but they have to come and build industries which will offer people employment," Thulani Mkwebo, a small shop owner in downtown Harare, told IPS. "If I had a choice I would drive them out."
Resentment against the Chinese can be felt in many parts of Zimbabwe.
Recently there were wildcat strikes at several Chinese-run business ventures. Last month some 600 Zimbabwean construction workers employed by a Chinese construction and mining company, Anhui Foreign Economic Construction Company (AFECC), downed their tools.
They were protesting bad labour practices ranging from physical abuse to irregular working hours and low wages pegged at four U.S. dollars a day – far below the rates set by the Zimbabwe National Employment Council (ZNEC) for the construction industry, which are between 1.00 and 1.50 dollars an hour.
The company is building a 98 million dollar military college just outside Harare, financed with a Chinese loan to be repaid with diamonds.
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AFECC is mining diamonds in eastern Zimbabwe, in partnership with the Zimbabwean military, according to the Ministry of Mines.
The Chinese have many interests in the country. But the retail sector, mining for diamonds and minerals, construction, manufacturing and agriculture are the main attractions.
According to a 2011 report by the Zimbabwe Economic Policy Analysis and Research Unit, Zimbabwe's exports to China rose from 100 million dollars in 2000 to 167 million dollars in 2003, but fell to 140 million dollars in 2009.
Imports from China, meanwhile, climbed from 30 million dollars in 2000 to 197 million dollars in 2007, before taking a dip in 2008.
This country's exports to China are largely in the form of raw materials, with tobacco and minerals being the main products, while Zimbabwe receives loans and various finished products - most of which are popularly referred to here as "ZhingZhongs" (poor quality products).
But this has not deterred the Chinese, who have set up small businesses pushing locals, particularly cross-border traders, out of business as they cannot compete with cheap Chinese products.
Mara Hativagone, a former president of the Zimbabwe National Chamber of Commerce (ZNCC) and chairperson of the Zimbabwe Investment Authority (ZIA), said the Chinese should not compete for the downstream industries traditionally reserved for locals.
"We want to see more technology transfer from foreigners. They must not come here and do all sorts of funny things, taking advantage of the existing relationship between the two countries," Hativagone told IPS.
"There is no way Zimbabweans can compete with the Chinese, because they use cheap labour and mass produce while half the time we have no water and electricity in our industries to produce," she said.
She also accused the Chinese of being cheats. "Sometimes the Zimbabwe Investment Authority gives them manufacturing licenses, but they go and open restaurants under such big Chinese names as Wing Wah International Hotel and Shangri-la," she said.
Zimbabwe's ambassador to China between 2002 and 2007, Chris Mutsvangwa, who now runs MONCRIS, a consultancy firm which helps people from China set up businesses in Zimbabwe, said he does not expect the Chinese to flood business opportunities reserved for locals.
"Any end of the industry anywhere in the world should be reserved for locals. I would not expect Zimbabweans to go to China to compete with the Chinese in small businesses, and I don’t expect the Chinese to do the same," Mutsvangwa said.
"The Chinese have to come and exploit other areas where we have a shortage, but we should not completely bash them but look at other things that they have done for us. They have helped offer competition for the Americans, and now the girlfriend has another boyfriend."
After the government's land reform programme began in 2000, U.S. business interests left in droves to relocate to neighbouring South Africa, depriving Zimbabwe of millions in potential foreign exchange earnings.
Beijing is aware of the jitters and has warned against undoing the existing relationship.
"China understands the need for indigenisation and empowerment but we hope Zimbabwe will protect the legitimate right of Chinese businesses in the country," Chinese Vice Premier Wang Qishan told the media during a visit to Harare last year.
But there is also popular support for the Chinese doing business here.
"The Chinese are welcome, we love them, they bring us cheap goods, and whoever says they don’t want them should first create jobs for us," said Zvikomborero Moyo, a hair and clothing boutique worker in downtown Harare.
"With Chinese help, we can start businesses, we buy from them very cheaply and resell in the suburbs and that way we are able to make a living.
Labels: CHINESE, FDI, NEOLIBERALISM, SMEs
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Zim ready for SMEs stock exchange
Friday, 30 December 2011 00:00
Conditions in Zimbabwe are now ripe for setting up a stock exchange for Small and Medium Enterprises (SMEs) since they are major players in economic development, a Cabinet minister has said. Calls to set up an SMEs stock exchange have been growing since the adoption of multiple foreign currencies and formation of the inclusive Government in 2009. Before that, economists had advised against setting up of the bourse arguing that the Zimbabwe Stock Exchange was facing liquidity challenges.
Recently, economic analysts have indicated that an SMEs stock exchange would strengthen the economy as the country has few formal jobs due to lack of capital to resuscitate local industries which were crippled by sanctions that Western countries imposed.
Small and Medium Enterprises and Co-operative Development Minister Sithembiso Nyoni said SMEs make up 60 percent of the Zimbabwean population thus it was prudent to establish a stock exchange for them.
"We are ready for an SMEs stock exchange but the process is taking too long and further suppressing the growth of the sector," she said.
Minister Nyoni said the economy was growing as a result of the contribution of SMEs.
She said her ministry had entered into partnerships with some private players to fund SMEs projects and enhance skills requisite in the informal trade and manufacturing. Zimbabwe plans to set up a second bourse by 2013, mainly for SMEs.
The bourse is expected to position SMEs well on the local and international market due to regulated marketing and free publicity. - New Ziana.
Labels: SITHEMBISO NYONI, SMEs, STOCKMARKETS
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