SMEs now employ 5 million

Zimbabwe's Micro, Small and Medium Enterprises (MSME) sector has become the country's largest contributor to economic activity, accounting for about 60 percent of gross domestic product (GDP) and employing more than five million people, according to the government.

The latest figures indicate significant growth from the 3.3 million people employed by the sector recorded in the 2022 FinScope MSME Survey, highlighting the expanding role of small businesses across agriculture, mining, manufacturing, retail, transport and service industries.

MSMEs have also become the dominant force within Zimbabwe's informal economy, providing livelihoods for millions while contributing to industrialisation, innovation and rural development.

Women's Affairs, Community, Small and Medium Enterprises Development Minister Monica Mutsvangwa said the government was stepping up efforts to strengthen the sector through improved access to affordable finance, modern equipment, markets and business infrastructure.

"The MSMEs and cooperatives are the powerhouse of this economy. When the Minister of Finance speaks about GDP growth, 60 percent of that growth comes from MSMEs and cooperatives. They are employing more than five million people, while the country also has more than 3,000 cooperatives," Mutsvangwa said.

She acknowledged that limited access to affordable financing remains one of the biggest challenges facing entrepreneurs.

To address the funding gap, the government is expanding concessionary lending through the Zimbabwe Women's Microfinance Bank, the Small and Medium Enterprises Development Corporation (SMEDCO), the Women's Development Fund and the Community Development Fund.

Mutsvangwa also revealed that the government had secured a US$6 million financing facility for SMEDCO from the Arab Bank for Economic Development in Africa (BADEA), with almost half of the funds already disbursed.

"I attended a conference in Seville with the Minister of Finance, Economic Development and Investment Promotion. After presenting Zimbabwe's MSME success story, BADEA approved a US$6 million facility for SMEDCO, and almost US$3 million has already been drawn down," she said.

According to the minister, women own approximately 56 percent of Zimbabwe's MSMEs, making them the largest participants in the sector.

She said government was strengthening entrepreneurship, digital literacy and e-commerce capabilities to enable small businesses to benefit from opportunities created by the African Continental Free Trade Area (AfCFTA).

Mutsvangwa said MSMEs continue to play a critical role in strategic sectors of the economy.

She noted that smallholder farmers now account for the bulk of Zimbabwe's tobacco production, which has exceeded 300 million kilogrammes, while small-scale miners contribute about 60 percent of the country's annual gold production of approximately 51 tonnes.

To improve productivity, government is working with stakeholders to expand irrigation infrastructure, increase industrial workspace, modernise production equipment and improve insurance coverage for small-scale miners.

Mutsvangwa said continued investment in MSMEs and cooperatives would play a central role in driving industrialisation, employment creation and economic transformation under the National Development Strategy 2.

"The MSMEs will turn around this economy faster than anybody can think," she said.

Economic commentator Wendy Mpofu said the sector's continued growth reflected the resilience and entrepreneurial spirit of Zimbabweans but stressed that future progress would depend on improving competitiveness and productivity.

"The growth of MSMEs demonstrates the resilience and entrepreneurial capacity of Zimbabweans. However, the next stage of development should focus on improving productivity, technology adoption and business formalisation," Mpofu said.

"A large MSME sector is positive, but sustainable economic transformation depends on enterprises evolving into more competitive, productive and value-addition-focused businesses."