Zim SME's Face Extinction As Government Imposes Tough Legislation

Due to lack of revenue the Zimbabwe government has deliberately unleashed various key institutions vital to the operations of SME's to enact a plethora of harsh operational and licensing requirements for SME's doing business in Zimbabwe.

The Ministry of  Small to Medium Scale Enterprises and Cooperative Development led by Honorable Cde. Sithembiso Nyoni, the Ministry Of Primary and Secondary Education led by Honorable Lazarus Dokora, the Ministry of Housing And Local Government led by Dr Ignatius Chombo and the Ministry of Environment and Water led by Honorable Savior Kasukuwere, are likely to put most small business enterprises in Zimbabwe into an economic 'jumping castle' spell as it is most certain that new legislation and licensing requirements will be introduced this year.

It is now commonplace that the government will now resort to tough legislation as a desperate measure to generate revenue in order to sustain its already depleting national financial reserves, currently facing a liquidity crunch, a move that will leave most SME's defunct.

Environmental Management Agency (EMA) has recently introduced heavy spot fines of up to US$600.00 to motorists whose vehicles emit heavy exhaustion smoke and that a certain fee has been pegged for all new residential stands while SME's in the timber economy shall also be taxed.

The Forestry Commission is also trailing behind demanding that all timber oriented SME's pay an annual fee as a measure to repopulate the forest with new trees. This has resulted in most businesses paying more than 7 revenue accounts annually at an average of US$150.00 each, a charge which is beyond the reach of most SMEs. On the other side property owners have also drastically hiked rental charges to exorbitant heights.

The honorable minister who is now heading the Ministry of Environment must not so quickly forget that he was the brains behind government's draconian indigenization policy. Most companies have shut down operations while others had to heavily down-sized their labor force resulting in many being retrenched. In most cases retrenched workers have had to go for years or even months without being compensated regarding their retrenchment packages. Others have been forced to accept small retrenchment packages far below their official ones. In most cases retrenched workers have accepted these unofficial packages. The situation forced them to do so as they had debts of accruing bills at home to settle and in order to put a meal on the table. The disbursement process of the retrenchment packages is painfully gradual and in most cases ends up in the Labor Courts.

Most SME's have since shut down operations and most of the bosses find themselves in the merciless hands of debt collectors. In some sad cases some even find themselves behind bars.

SME's generate 60% of GDP, which is around US$7.4billion dollars, that is about US$20million per day is generated by SME's outside the banking sector.

The Zimbabwe Chamber of SME's chairperson, Mr Daniel Chinyemba said that 15% of SME's are banking their finances while only 2% receive credit facilities.

'Government legislation, the SME's registering process and the disorganization of the SME's has made most financial institutions to shun business with SME's.' said Chinyemba.

Registering an SME's is around US$680 thus causing many SME's to remain unregistered. Meanwhile Nyoni announced this week the new SEDCO board and Professor Kingston Kajese was nominated the new board chairman.

There is dire need for ruling party to follow up on its election mandate to Indigenize, Empower, Develop and Employ the already ailing economy of Zimbabwe. It is time to 'laissez-faire' our economy so that players in industry and commerce my find grace to beef-up their already skeletal operations.

It is true that the economic climate in Zimbabwe is tightening up and will result in a great outcry from the hard-hit SME sector. This will have a dominal effect resulting in increased corruption and money laundering activities. More people will leave the country for greener pastures either in neighboring Botswana, Namibia and or South Africa. More and more marriages will be weakened and in some instances broken as a result the worsening business climate.

SME's are a source of livelihood for the majority of the Zimbabwean populace. The continued attack on SME's poses a serious challenge to many households. Such a move also impacts adversely on the role of women in trying to meet the needs of their families.

After the 2013 harmonized general elections most Zimbabweans were hoping that the newly elected government of Cde Robert Mugabe was going to loosen its grip on taxes and try to slash out some licensing requirements for small businesses as a way to boost their operations.

The Zimbabwean economic climate is hit by a liquidity crunch, a move seen by economic analyst as needing the introduction of a multi-currency system in order to quail it down. SME's have become the backbone of the economy of Zimbabwe, yet government has done nothing to address the economic plight of SME's. It looks like the government is not in a long way going to address the outcry of the small scale businesses mushrooming in Zimbabwe. Former President of Uganda Idi Amin once said in a press conference to defend his move of expelling Asians from his country. He said, 'The British want to milk the cow that they are not feeding.'

Government legislation is expected to ease up if an equitable environment for economic growth is to be availed in commerce and industry. SME's are expected to create close to 570 000 new jobs in the next 10 years.