THE CHARACTERISTICS OF SMESs IN ZIMBABWE
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NAMATAI MOYO 3 NOVEMBER 2017
By: Namatai Moyo
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Zimbabwean Government definition of SME by number of employees. Source: MoSMED Policy Document 2009

! Sector / Sub-Sector
Size
Max Number of Full time Employees
Agriculture, Manufacturing and mining
Micro
5
Small
50
Medium
100
Construction, transport, Micro retail, tourism, catering, arts and crafts, Small wholesale and fisheries Medium By: Namatai Moyo
5 30 50 2
Factors affecting Growth of SMEs in Zimbabwe
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" A research study done by Oswald Musavengana Chiwara for period 2009 to 2015, An Evaluation of the factors Affecting Growth of SMEs in Zimbabwe in Harare . From the 272 SMEs sample he did, the findings showed that access to financial resources, the regulatory environment and skills shortages in entrepreneurship and management were the main factors affecting SME growth in Zimbabwe, with the regulatory environment having the highest influence. " Recommendations for policy makers to develop tailor made training programs to capacitate SME operators with appropriate skills for managing SME businesses and implementing targeted policies to stimulate growth of SMEs thereby improving the regulatory environment were done. He also recommended that financial assistance programs must also be made available to SMEs to facilitate and accelerate growth. Links: 1. 2.
h t t p : / / i r . u z . a c . z w / j s p u i / b i t s t r e a m / 1 0 6 4 6 / 2 9 2 5 / 1 / Chiwara_An_%20evaluation_of%20_the_%20factors_%20affecting_%20growth_%20of_%20small%20_and_%20medium_%20enterprises.pdf https://drive.google.com/file/d/0B74DpOTFQcBURlJ1ZjdzREUyczg/view?usp=sharing
By: Namatai Moyo
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Factors affecting Growth of SMEs in Zimbabwe
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" The legal framework is also another aspect that deters the development of the SME sector. Even for SMEs that are already operational, they are unable to produce statements of accounts and produce tax returns - conditions necessary to access formal credit from financial institutions. Ndhlovu (2002) claims that compliance with the taxation laws in Zimbabwe require huge business resources in the form of personnel and time, most of which are very costly to SMEs. Such conditions not only limit the performance of SMEs but also encourage them to remain small and informal in an effort to avoid regulations. By: Namatai Moyo
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Tax Accounting in SMEs ! " The government of Zimbabwe values contributions made by SMEs in terms of GDP, employment, PAYE, VAT and import duties. In Zimbabwe, the tax authority, ZIMRA, introduced a presumptive tax system which covers all SMEs and informal traders not registered for tax. The Zimbabwe Value Added Tax (VAT) systems require businesses to keep and maintain proper books of accounts including the filing of tax invoices. Most SMEs qualify, to compulsorily register for VAT under Section 23 of the VAT Act, (Chapter23:12). " VAT Act Link:
h t t p s : / / w w w . g o o g l e . c o . z w / u r l ? sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwi25tH2r4 bXAhWGB8AKHeMmCAUQFgguMAI&url=http%3A%2F%2Fwww.zimra.co.zw%2Fin dex.php%3Foption%3Dcom_phocadownload%26view%3Dcategory%26id%3D23%3Ale g i s l a t i o n % 2 6 d o w n l o a d % 3 D 6 4 3 % 3 Av a l u e - a d d e d tax%26Itemid%3D1&usg=AOvVaw158GDdOHNX0BousoElFRNC By: Namatai Moyo
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Sectors Reserved for Domestic Investors
! Agriculture Forestry Grain milling and bakeries Agriculture primary production
Tobacco grading and packaging
Transportation
Tobacco processing
Estate Agencies
Advertising agencies
Retail and wholesale Marketing and trade distribution Milk processing
Employment agencies
Provision of local arts Hairdressing and and crafts beauty salons By: Namatai Moyo
Source: http:// corporatecounsel.co.zw/wpcontent/uploads/2015/07/ Doing-Business-inZimbabwe-2015.pdf " Therefore, Foreign Investors would have to partner with domestic investors in order to operate in the above – mentioned reserved sectors. Once project approval has been obtained, a reserved sector compliance certificate is issued. 6
Investment Regulations ! The ZIA Acthttps://www.icaz.org.zw/imisdocs/zia.pdf ZIA has introduced a “One Stop Shop� for processing investment proposals. This includes the Ministry of Youth Development, Indigenization and Economic Empowerment; the Registrar of Companies; Zimbabwe Revenue Authority; and Ministry of Mines and Mining Development and other relevant government departments that one needs to obtain approvals/permits from. By: Namatai Moyo
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CURRENT ECONOMIC SITUATION
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• Liquidity crises (No cash) Link: http://www.financialgazette.co.zw/bank-queues-cripple-firms/ The country is experiencing a liquidity crunch. Bond notes (surrogate currency) introduced in November 2016 to ease the liquidity crunch ha not changed anything much. Actually they have worsened the situation. In September 2017 The surrogate currency has lost more than 50% of its value on the illegal market, (Newsday, 12 September 2017). People spend hours in queues in a bid to get cash. Shops have introduced a three tier pricing system based on the mode of payment (with a different price for an electronic payment, mobile money or cash payment) . By: Namatai Moyo
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