Govt to formalise SMEs for revenue collection sake

By Nyasha Mukapiko

The portfolio committee on Small to Medium Enterprises (SMEs), a few weeks ago tabled a report before parliament in which they set December 2016 as deadline for the ministry of Small to Medium Enterprises and Cooperative Development to come up with a National Formalisation Strategy to help government generate more revenue.

The report revealed that 85% of (SMEs) were operating in the informal sector, outside the laws and regulations of the country prejudicing treasury and other revenue collecting agencies from non-remittances of taxes.

Zimbabwe Revenue Authority (ZIMRA) was cited as the major hindrance blocking some SMEs to formalise after its ruthless revenue collection endeavours soon after the pronouncement that US$7,6billion was circulating in the informal sector. The report noted animosity was created between the sector and the agency.

Zengeza West MDC-T legislator Simon Chidhakwa lambasted government for its bad policies that had resulted creation of SMEs which now constitutes 75% of the working population in the country.

“Inasmuch as they are contributing to the unemployment rate in the country, they are not contributing any meaningful contribution to the fiscus because of the reasons such as the conditions which are put forward by ZIMRA which are so complex that it is very difficult for most of our SMEs to understand how ZIMRA system is operating. There is need for ZIMRA to simplify their method of collecting taxes”, Chidhakwa indicated.

Chidakwa continued to say SMEs were contributing immensely to the unemployment rate in the country since there were no industries operating.

“It must be noted that it is not everybody who is now an informal trader by design. Some are forced to be informal traders because of the harsh economic conditions in the country. There are no jobs. There are some graduates who could be employed in formal employment but they have no choice and end up being informal traders”, Chidhakwa reiterated.

The report also unearthed  challenges which were being faced by SMEs among them financial help in securing loans as they sometimes lack collateral security required by financial borrowing institutions.

According to the report, in 2015 SMEs through its financial arm of Small to Medium Enterprises and Development Cooperation (SMEDCO) only managed to receive US$150 000 out of its total allocation of US$1,9m, this year the parastatal had been allocated US$2,4m which was yet to be disbursed as of March 2016.

Legislator Sabina Mangwende lamented on the deplorable conditions in which SMEs where operating from without proper infrastructure and poor hygienic conditions.

“We are appealing to the City of Harare to fully shoulder its responsibility because in some of these areas where SMEs are operating from there are no toilets. We have 53% of women who are getting a lot of assistance from participating in these SMEs and they are able to take care of their families, sending children to school and feeding them. A lot of people are benefiting from these SMEs because of unemployment in the country”, Hon Mangwende said.

The SMEs registers a sharp growth in 2008 after the country went through severe economic pressures, characterised by hyper-inflation, leading to job losses on the formal market.

Currently the Ministry of SMEs and Cooperative Development do not have a national database on SMEs that are in existence.

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