Half of Zim population are businesspeople

ZIMBABWE'S economy has gone informal with approximately half the population of the country being entrepreneurs amid revelations that there are 5,7 million people working in the Small and Medium Enterprises sector.

Speaking on the sidelines of the launch of the Finscope Zimbabwe 2012 Small and Medium Enterprises survey report last week, Kingdom Bank founder and Zimbabwe Investment Authority chairman, Mr Nigel Chanakira said the driving factor in this sector is need for survival and it is a poverty alleviation thing.

"If you look at it, it's 5,7 million people working in that sector and that is unusual because ordinarily in a normal economy it's 1 in 10 that is an entrepreneur whereas here we are looking at possible half and a significant portion of our adult population," said Mr Chanakira.

He said although people are going out in business to eke out a living, they were not really surviving as what they are deriving is for sustenance and way below the poverty datum line.

Zimbabwe's PDL for a family of six is between $550 and $600.

"The level of income in this sector is another striking factor, they are earning less than US$200 a month so it means while entrepreneurship is interesting, what they are deriving is for sustenance purposes," he said.

Small to Medium Development Minister Sithembiso Nyoni said the launch of the survey report would help in the creation of informed policies and strategies to guide the development agenda of small businesses.

"There was a gap in the Micro, Small and Medium enterprises for effective planning and policy development hence this scientific research will create an enabling environment for growth of SMEs," said Minister Nyoni.

Minister Nyoni said SMEs played a vital role in the economy and their existence was fuelled by the misfortunes that befell large firms and the sector has a significant number of skilled people.

"Skilled people were retrenched when companies closed down and these people started their own small enterprises. SMEs significantly contribute to employment creation, poverty alleviation and livelihood enhancing of the people," she said.

The Finscope Zimbabwe 2012 MSMEs survey report is the first micro small and medium enterprise survey done at national level.

Spearheaded by the ministry of SMEs, it encompasses the statistics office as well as the World Bank.

According to the study about 43 percent of MSMEs have no access to financial services and 50 percent use informal mechanisms to manage their businesses while only 18 percent of business owners are formally served, including both banked and other formal non-bank products/ services and only 14 percent of business owners are banked.

"Limited (financial) resources and information preclude the possibility of spreading policy initiatives to include the entire micro, small and medium enterprises sector," the FinScope study noted.

The study also noted that in total 85 percent of all MSMEs are not licensed and 15 percent are registered.

The study recommended promoting registration.

"In order to promote registration, MSME owners need to understand the process of registering their business as well as the benefits that come with it. It is important to ensure that the process is transparent and easy, and that the cost is affordable."