RYAN CHIGOCHE
Authorities should incentivise and rationalise the registration process of micro small and medium enterprises in Zimbabwe (MSMEs) as most of their problems are stemming from their informal status, a recent report has shown.
The inaugural report, State of Manufacturing Micro, Small and Medium Enterprises in Zimbabwe, launched last week Showed that on average 29% of MSMEs enterprises are tax compliant while 28% have got local authority licences.
This shows that the MSMES are not contributing optimally to the mainstream economy amid calls for authorities to offer incentives and make the registration process less difficult to widen the tax base.
“It is evident that SMEs can contribute significantly to the mainstream economy. The major impediments to the operations and growth of the SMEs was related to non- formalisation. Formalisation of the SMEs will create a whole tax base thereby increasing revenue for the fiscus. It is therefore important to rationalise the process of formalisation make them less cumbersome and introduce incentives for their registration and compliance with ZIMRA, local authorities and NSSA requirements,” the report said.
The Scientific and Industrial Research and Development Centre launched the report that emanated from a survey that was done by its subsidiary Technological and Commercial Information Promotion System.
According to the report many firms reported that they encounter underhand impediments when obtaining legal and official documents, especially in company registration, licensing by local authorities and tax and customs payments.
However, as firm size increases the proportion of firms that are tax compliant also increase, as 46% of medium sized pay tax compared 31% of firms in the small category and 11% micro giving an average number of only 29% of SMES comply with tax requirements showing that the businesses must be assisted to grow.
In December last year the government through the Ministry of Public Service, Labour and Social Welfare moved to expedite the formalisation of informal traders with efforts to grow the sector by coming with a formalisation strategy.
The Government has already carried out consultations with stakeholders in the informal sector across the country and the Zimbabwe Chamber of Informal Economy Association secretary General Wisborn Malaya told Business Times that the process is on course as the government is currently validating the first draft.
“Currently there is validation of the first draft. We are looking forward to be called for the process as we demanded that we must be involved in any process towards the strategy. We are keen to keep monitoring the presence of our input into the strategy so that it maintains the target group ownership,” Malaya said
The findings of the 4774 firms surveyed across the country provided and in depth understanding of operations of MSMEs and the challenges they face in regularising their businesses, infrastructure and accessing utilities and amenities.
