Innovate or face extinction, SMEs told

Small to medium companies (SMEs) need to continuously innovate their products and services to remain relevant and competitive, speakers at a recent business seminar said.

With the ever-changing preferences of consumers and global competition, the survival and growth of small to medium businesses hinge on the ability to innovate their offerings.

The speakers from Government and academia were speaking at a seminar for SMEs in Manicaland hosted by the National Competitiveness Commission (NCC) last Thursday.

“Innovation is a continuous process,” Harare Institute of Technology pro-vice-chancellor Dr Talon Garikayi said. “You cannot remain relevant because you did something last year. It’s no longer about the price or quality…innovate or perish.”

According to the World Bank, SMEs play a major role in most economies, particularly in developing countries. SMEs account for most businesses worldwide and are important contributors to job creation and global economic development.

The businesses account for about 90 percent of businesses and 50 percent of employment worldwide.

In Zimbabwe, SMEs are defined as businesses with an asset base of between US$250 000 and US$2 million; annual turnover of US$500 000 to US$3 million, and employ between seven and 75 people.

According to Finscope’s Micro, Small and Medium Enterprises (MSME) Survey Zimbabwe 2022, MSMEs contribute US$8,6 billion out of US$28,37 billion in gross domestic product. The total employment from the sector is 1,8 billion according to World Bank’s estimates. Zimbabwe’s labor force is 6,2 million.

The statistics, which do not include the informal sector, show that the MSME sector is contributing roughly a third to the economic development of the country.

Dr Garikayi noted three major conditions necessary for firms’ competitiveness including sustainability, which focuses on long-term performance. This also involves relativity, concerning how competitive a firm is when compared with other players.

The other factor is controllability, a condition related to the various resources and capabilities of a firm rather than simply the favorable external conditions leading to superior performances.

In addition, dynamism provides the company with the ability to continually create new forms of competitive advantages, said Dr Garikayi.

Manicaland Secretary for Provincial Affairs and Devolution Mr Edgars Seenza said the need for competitive products had been exacerbated by the country’s membership to the African Continental Free Trade Area (AfCFTA), which would affect both small and large corporates without considering their scale of operations.

He said the AfCFTA offered market opportunities, only for competitive local industries. As such, competitiveness in the globalized village was no longer a priority, but a necessity.

“As a country, we must concentrate on our areas of competitive advantage and then perfect those areas so that we have a niche market in the continent,” he said.

“For example, in Mutare, we are well known (for) for timber, papermaking, commerce, and food processing among other things.

“It is no longer time to have ordinary but produce efficiently, with the expected quality and price for the intended market. This, therefore, calls for us as a nation to identify the needs of the market and be solution providers to stay on top in terms of competitiveness.”

Mr Seenza said the seminar’s main agenda provided a platform to discuss different areas affecting SMEs’ competitiveness. “There is no space for uncompetitive industries in the global market, otherwise we end up a supermarket.

“The best way to survive is for this important sector (is) to start the processes to compete with the giants.”

NCC chief economist (domestic competitiveness) Mr Sibanda said despite the significant dominance of SMEs in the economy, the sector was facing a plethora challenges including limited access to finance, inadequate and costly workspaces, lack of proper technologies and machinery, inadequate skills among others, resulting in the high cost of doing business and high level of informalisation.

“The commission will continue to engage SMEs in identifying existing and emerging challenges in the sector in order to enhance competitiveness,” he said.

“We look forward to continuing working together in enhancing the competitiveness of our products or services through improved quality and reduced cost of production thereby meeting the expectation of the customers both locally and internationally.”-herald