CZI to use Sadc Industrialisation Week to promote SMEs

CONFEDERATION of Zimbabwe Industries (CZI) says it will use the upcoming SADC Industrialisation Week (SIW) to push for the promotion of entrepreneurship and internationalisation of Small and Medium Enterprises (SMEs).

SIW is slated for a week between July 29 to August 2, 2024 and will focus on a number of key areas including manufacturing investments, nurturing of start-ups, agro processing, high tech manufacturing and production of intermediate goods.

Development Finance Institutions (DFI) local banks, private equity firms and venture capitalists from the region will also partake at the weeklong event.

According to CZI, there is need to pay special attention to the SME segment of the economy given its growing contribution to the local and regional economies.

SMEs contribute significantly to the economic growth of both developed and developing countries.

For instance, Germany SMEs represent 99 percent of all enterprises, employing 63 percent of the working population and contributing 55 percent of the Gross Domestic Product translating to a significant contribution to the global economy.

This economic segment has lately shown immense potential and is going to be a vital cog in driving the country’s industrialisation agenda.

According to a recent FinScope survey, SMEs contributed US$8, 6 billion to the Zimbabwe’s GDP and employed more than 5, 9 million people in 2022.

The SME annual turnover was dominated by agriculture at US$4,6 billion, wholesale and retail (US$4,6 billion), natural resources and mining at (US$1, 6 billion), construction at US$915 million, tourism (US$748 million) while the manufacturing sector contributed US$500 million.

The MSME sector remains a vital segment of the Zimbabwean economy considering that the country has over 3 million SME players of which 15 percent are formally registered.

However, internationalisation of SMEs remains a tall order for Zimbabwe which still battles to standardise the sector.

The sector is still plagued by a plethora of challenges that negatively impede their growth, the major one being limited access to ‘patient’ capital raising options.

Some SMEs have not been able to borrow due to lack of requisite collateral and unfavourable legal environment required for the segment to thrive.

Some SMEs do not need money at all but a friendly environment that allows them to grow.

Observers say responsible authorities need to plan and train this important segment of the economy through provision of workspaces and other critical requisites like markets, technology, financing, and linkages for them to grow.

Another school of thought say more focus should be directed on capacity building encompassing basic business operations like bookkeeping, accounting and the importance of paying taxes.

Speaking at the recently held SIW update, CZI chief executive, Sekai Kuvarika, said the platform will deliberate on how regional governments should create policies and support structures to internationalise their small and medium enterprises.

She said the forum conversations will be around how regional SMEs can be assisted to invest in each other’s countries and how to create an entrepreneur driven ecosystem to support each other to grow.

Kuvarika said the event will also be a platform to learn from Germany entrepreneurs whose enterprises have become renowned international firms.

“One of the SIW highlights will be on the internationalisation of SMEs. SADC region is known to have a significant stock of SMEs and start-ups and we are aware that other economies have managed to grow on the back of SMEs which have gone on to become international businesses.

“And for that reason, we are having sessions on the internationalisation and promotion of SMEs and entrepreneurship because we recognise that the SADC economies are becoming increasingly entrepreneur-driven economies. So, we need to pay special attention to this segment which is really going to drive industrialisation.

“We are aware that the Germans have got a very good history of internationalising their SMEs which are across the globe as we speak. So, the Association for SMEs in Germany is also going to come and share their lessons with the SADC entrepreneurs and SMEs and our policymakers on how this can be made possible. So, we are going to have entrepreneurial speakers coming from Germany,” said Kuvarika.

Indian Franchise Association will also grace the event to give incites about growing business beyond local borders.

“We are also expecting the Indian Franchise Association that will present opportunities to entrepreneurs who may want to get into franchising. The event will look at investment promotion for manufacturing, so that we can maximise the opportunities for manufacturers across the region,” she said.

Weighing on the issue Dr Vere said internationalising SMEs was a good frontier as it goes in tandem with the dictates of the Africa Continental Free Trade (ACFTA) which seeks to boost SME sector capacity and production.

Dr Vere said the local SME space had become an area where everyone does what they want and anyhow given the lack of strict policies and monitoring.

He emphasised that strict policies and monitoring should be instituted in the SME space to ensure quality output and avoid unmonitored operations in the segment.

He implored responsible authorities to work hard towards capacity building of the sector within Zimbabwe to formalise, normalise and standardise the small and medium enterprises.

“SMEs contribute almost 60-70 percent of GDP across Africa but the biggest challenge is our SMEs lack internal capacitation in terms of standardisation of processes and their systems. They need to be capacitated with the necessary information they need.

“I am happy that the Ministry of Industry and Commerce now has a blueprint and strategy that speaks into quality issues within the SMEs. As much as it is a good idea, there is a lot to do within the borders internally first, before we try to engage beyond, because internationalising a substandard SME sector brings in challenges of incompatibility in terms of international standards and their requirements,” said Dr Vere.

He implored institutes such as Institute of Entrepreneurs Zimbabwe and local universities, to put up deliberate strategies to get into spaces where they inform SMEs on how businesses are started, supported and sustained to succeed.

“These should speak into our quality control mechanisms and structures. There must also be policy support in terms of standard checks and processes, follow-up monitoring for internal functionaries within our borders or for outside export,” said Dr Vere.

Small Medium Enterprise Association of Zimbabwe (SMEAZ) chief executive, Farai Mutambanengwe, said it remained a mammoth task for a country like Zimbabwe to start talking about regional or international expansion at this particular point in time after recent surveys which show productivity challenges and a struggling capacity utilisation.

“Obviously businesses should be able to grow and expand into the region and even internationally but practically, it’s another story altogether. Never mind SMEs, let us look at even the big companies. You will find that very few are actually venturing out into the region and the obstacles are known.

“The challenge starts from even expanding locally because if you look at countries that developed and become international giants, it starts locally.

“They start by increasing their manufacturing base, productivity locally, and then expand into the international markets. But in our case, that is not happening because of the policy environment, which is very stifling,” said Mutambanengwe.

He highlighted some of the barriers hindering growth in the local SME sector saying that it was a far cry for some local SMEs to extend their operations beyond local borders.

“There are a lot of things that are hindering businesses we have challenges around things like currency, power, policies, corruption and so on. In fact, a lot of businesses are now informalising right now, instead of operating along formal channels, they are now moving to operating informally because of the environment,” he added.

SMEs are a critical segment of the economy as they promote economic diversification by creating new industries, products, and services which reduces reliance on larger companies that dominate the market.

They create new markets, promote competition, and stimulate productivity, leading to the overall growth and development of economies.

Local and foreign companies are showing huge interest in attending the SADC Industrialisation Week, which will take place in Harare from July 29 to August 2, 2024.

Statistics from the portal, created for delegates to register shows that more than 120 participants had registered to attend the conference in just 18 days after the web based portal went live.

While local individuals and institutions dominate registrants, there has also been growing interest from the 15 member SADC countries and beyond.

According to Confederation of Zimbabwe Industries chief executive officer, Sekai Kuvarika, interest is not only restricted to SADC countries but also to other jurisdictions.

“We are getting inquiries from China, Turkey and Egypt among other countries,” Kuvarika said.

The CZI boss said the SADC Industrialisation Week (SIW) will also be graced by a representative from the German SME Association to present on internationalisation of SMEs.

She said the SADC Industrialisation Week will provide an opportunity to learn from the Germans in terms of “how they have managed to deliberately create policies and support structures to internationalise their small and medium enterprises.”

Kuvarika previously said the aim in bringing the expert from German is to understand how the country can work on internationalisation of SMEs.

“We are aware that other economies have really managed to grow on the back of SMEs which have gone on to become international businesses.

“And for that we are having some sessions on the internationalisation and promotion of SMEs and entrerprenuership,” Kuvarika told SADC Ambassadors to Zimbabwe at a recent SIW awareness luncheon in Harare.

“For that, we are also going to have a speaker coming from German. We know that the Germans have a very good history of internationalising their SMEs which are across the globe.

“So the association of SMEs in German is also going to come and share their lessons with the SADC entrerprenuers and SMEs and our policymakers on how this can be made possible in our region,” Kuvarika said.

She said the Indian Franchise Association is also expected to present opportunities to entrepreneurs who may want to get into franchising.

“We are also looking maybe to bring some entrepreneurs from South Africa and other SMEs that are coming from the region are going to participate in that forum.

Other delegates expected to attend the conference include players from the private sector, industry experts, small and medium enterprises (SMEs) and foreign business delegates from outside the SADC region among others.

Recently addressing regional Ambassadors at the SIW awareness luncheon in Harare, Ministry of Industry and Commerce Permanent Secretary, Dr Thomas Utete-Wushe said the convention would target participation by private sector players particularly those involved in the agro-processing, mineral beneficiation, pharmaceutical, financial, consumer, capital goods and infrastructure sectors.

“The SADC Industrialisation Week is targeting 300 participants, mainly the private sector, as well as other stakeholders from the public sector, academia, and development partners. For the exhibition, the target is 150 companies.”

Out of these, a total of 100 stands will be reserved for local companies, innovation hubs, SMEs, women, and youth exhibitors whilst 45 will be reserved for the other 15 member States, with each member State allocated at least three booths.

The SADC industrialisation week (SIW) serves as a platform that brings together a wide range of stakeholders who are dedicated to advancing the industrialisation agenda in the region.-ebusinessweekly