Bulawayo, (New Ziana)–There is urgent need for legal and policy reforms to protect small and medium enterprises (SMEs) in Zimbabwe from regional competition, especially under the African Continental Free Trade Area (AfCFTA), an expert has said.
In interview on the sidelines of stakeholders to review the SME Act on Tuesday, business consultant Tangani Tazvishaya said despite being the majority of the businesses in the country, SMEs continue to face a myriad of challenges, including severe financial exclusion and lack of access to critical support systems.
“The access to bank loans remains less than 5 percent as of 2022 reports, and the current one, it improved from 5 percent to 7.5 percent. Again, it is a very small portion, given that SMEs constitute 90 percent of the businesses in the country, but accessing only 7.5 percent of the total loans each year from all the banks. The majority of the businesses are getting the lowest component of finance, and the smallest component of businesses are getting the largest chunk of financial resources,” he said.
Tazvishaya further noted that 92 percent of SMEs are unaware of organizations that provide support or advisory services, leaving them vulnerable to collapse due to lack of guidance.
He said another major hurdle is unreliable electricity, which forces SMEs to rely on costly alternative energy sources, making their products uncompetitive.
“Almost 30 percent have access to electricity, but those that have got access, remember, this is what we call electricity at the moment. It’s very erratic and unstable. So you need to understand that. They are using costly energy, and this pushes their cost and their price to become very uncompetitive,” he explained.
Tazvishaya argued that the current SME Act, enacted in 1980, is not adequately equipped to handle modern challenges such as digitalization, climate change, and regional integration.
“Since 1980, when this Act was promulgated, the environment has not been static. Digitalisation was not there when the Act was created. Today, we have to understand that it is very difficult to operate a business in a digital economy. Now we are starting to talk about the digital economy, but do our SMEs have access to such technologies so that they can compete on a level ground?” he queried.
He also raised concerns about climate change risks and whether SMEs have the capacity to adapt.
Tazvishaya highlighted the looming threat of regional competition under AfCFTA, warning that without strengthening local SMEs and businesses, they could easily be outcompeted.
“I fear that if our SMEs are exposed to the African Free Trade Area before they are properly capacitated, and I say this not as a prophet, but as a futurist, the consequences will be dire. Once borders open under AfCFTA, most of our businesses will struggle to compete. Instead of thriving, we risk being overrun by South African firms dominating the market,” he warned.
He cited the pharmaceutical sector as an example, where it is cheaper to import medicines from Zambia than to buy from local manufacturers due to high production costs.
Tazvishaya urged the government to overhaul the SME Act to align it with current economic realities, emphasizing the need for skills development, digital marketing, and access to broader markets.
“It is now necessary that the government of Zimbabwe’s legal and policy approach to supporting SMEs should respond to these major issues and trends. This will enable SMEs to enhance their contribution to Gross Domestic Product (GDP) and employment,” he said.
The push for an urgent review of the SME Act comes as the government conducts nationwide consultations to gather input from stakeholders, ensuring an inclusive and representative policy overhaul.
The proposed amendments aim to align the legal framework with the rapidly evolving economic landscape, prioritizing inclusive growth while addressing the pressing challenges faced by entrepreneurs and business owners.
Key focus areas include modernising the 1983 legislation to embrace digital transformation, bridge critical funding gaps, and enhance opportunities for women, youth, and rural entrepreneurs, groups historically marginalised in economic participation.
So far, the consultative meetings have been held in Harare, Bindura, Marondera, Chinhoyi, and Gweru, with further engagements planned across the country.
New Ziana
