ONLY 45 small to medium enterprises (SMEs) were formalised in Bulawayo in 2022 amid calls to intensify engagements to support more informal businesses to formally register their operations.
Following the closure of most established industries since the turn of the millennium due to reasons linked to sanctions imposed on Zimbabwe, SMEs have become a dominant economic player.
The world over, small-scale businesses are becoming key economic players possessing huge transformative potential.
Economic experts, however, warn that continued informal operations limit the sector’s capacity to grow as unregistered businesses fail to access lines of credit or get lucrative supply tenders, as well as suffer a lack of adequate social security cover.
As part of efforts to foster inclusive growth, the Government has come up with a formalisation strategy aimed at unlocking the potential of SMEs to contribute more to the economy through job creation and taxes.
Bulawayo Chamber of SMEs coordinator, Mr Nketa Mangoye Dlamini, said only 45 young businesses were registered last year. He said as an association they were not happy with the slow pace of SMEs formalisation and urged more players to embrace the drive.
He said as the chamber they will be working with their members to scale up awareness campaigns to educate young businesses about the advantages of being formalised.
Mr Dlamini said many SMEs were reluctant to formalise as they hold misconceptions about paying taxes and other regulatory requirements without seeing the bigger benefits.
“I’m not very happy with the number of formalised SMEs because it’s very low. A majority of the SMEs are not entrepreneurial in terms of skills, as they are in business because of a basic need.
“So, they try to remain small as they see no need to grow, that’s what we are currently grappling with to say how do we push people to go big,” said Mr Dlamini.
“People think that if they get formalised the Zimbabwe Revenue Authority will come after them. So, we have sessions at times to talk to them telling them that Zimra is percentage-based and SMEs will get more profits if they get formalised.”
Mr Dlamini said after being formalised, SMEs can be able to get tenders from central Government and local authorities, as well as school tenders, which will help improve their profits and grow their businesses.
He also said they are trying their best to increase the number of formalised SMEs by removing the fear of taxation and making entrepreneurs appreciate that they need to contribute to the fiscus for the economy to grow.
“The chamber targets to formalise more than 60 SMEs by the end of this year. It’s not that Zimra is totally fleecing them or taxing them to the bone, but they just take a small percentage,” said Mr Dlamini.
In December last year, Minister of Women Affairs, Community, Small, and Medium Enterprises Development, Dr Sithembiso Nyoni said the Government was facilitating the formalisation of about 300 informal businesses in the first three months of 2023 while training and awareness campaigns continue to be rolled out countrywide to capacitate budding businesses to operate legally.
The minister said many small businesses were not aware of the benefits and importance of formalising their operations hence the need to scale up awareness campaigns. She said many SMEs are not formalised because they lack knowledge as they do not know how to do it and how much is needed to register a company. – The Chronicle
