Role of startups in Economic recovery

Startups are supposed to be nimble footed and are known to introduce new products and services that in most cases create new value in the economy. Startups create completely new ways of doing business in most economies, and Zimbabwe is no exception. Tech Hub Harare is excited to be part of the Zimbabwean Startup Ecosystem in a new chapter of our economy for  a number of reasons, the most important being that the country has many challenges that are begging to be addressed and there are many entrepreneurs ready to launch ventures to solve them. For startups and those looking to enter the Zimbabwean startup scene, this is indeed an exciting time.

At the time of writing this article the new President of Zimbabwe had just delivered a speech, following his inauguration, indicating that his government would focus on doing the following to rebuild the economy;

  • Implementing radical economic reforms targeted at attracting and facilitating foreign and domestic investments
  • Speeding up the efforts to improve the ease and cost of doing business and economic competitiveness
  • Correcting the fiscal imbalances (widening budget deficit financed through borrowing)
  • Eliminating spiralling cash shortages and the distortions plaguing the foreign currency exchange market
  • reviewing the Bilateral Investment Promotion and Protection Agreements, to promote and encourage investments from across the world
  • Accelerating industrialisation, modernisation and mechanisation, with greater emphasis on market driven policies
  • Building on the achievements in agriculture, mining, manufacturing, infrastructure and tourism
  • Implementing the Constitutional provisions with regards to the devolution of Government powers and responsibilities.
  • Setting up incubation hubs and encouraging innovation and inventions to ensure that our education sector speaks to the present and future socio- economic, technological and scientific needs of our country
  • Facilitating a more coherent SME framework to strengthen production links across businesses and industry

For many of us working in the local  startup scene, the last two points are very important and we are hoping that these will create closer ties between line ministries and the the local Startup Ecosystem. There is certainly going to be a lot of work ahead for everyone, especially for those in the private sector. The country has lost a lot of ground and is playing catch-up, however there is potential to leapfrog ahead if we focus on quick wins using available technology and partnerships.

There are many pointers in the President’s speech and it’s no secret that entrepreneurs both local and foreign will be  looking to play their part in taking advantage of the renewed focus on reviving the economy driven by attractive returns. The government appears keen to attract investors from all over the globe in the hope that  this will create new jobs in the economy. For us the promise of the devolution and empowering of provincial structures will bring in more focused attention to localised startup development.

As Tech Hub Harare we welcome these moves and want to share some of our thoughts on how startups can play a part in resuscitating the Zimbabwean economy. To understand the Zimbabwean economy one must look no further than the structure our current macroeconomic environment, where Agriculture  still plays a very important role. Our country is heavily dependent on Agriculture and has always been owing to its great climate and good soils. It must be noted that in recent years owing to renewed focus on the sector, the economy has begun to recover as the country agriculture output continues to rise.

Increased cotton, tobacco and maize output have raised incomes in many rural communities. It’s exciting to note that many people are eager to contribute to the development of the economy judging by the number of startups that are sprouting up all over the country. At Tech Hub we have met with a number of entrepreneurs who have registered their companies with the Registrar of companies and pushing ahead with product and service development. What most of these entrepreneurs lack is training and access to markets and of course expansion capital. There are currently no incentives for startups and the government will do well to provide seed funding and training support for some of these startups.

It’s no secret that the most innovative people thrive in the least controlled markets and economies and as Tech Hub we are hoping that the government will keep its promise of making sure that this remains a reality. It also follows that the government must encourage open innovation and only step in when it is absolutely necessary to correct inefficiencies. Without this approach fewer startups will be formed and this will delay the recovery of the economy. When starting companies, individuals invest their own capital and attract new capital into the economy when their startups gain traction and prove that they have found a scalable business model.

As we have indicated in our recently published articles, startups are developed to address problems and Zimbabwe has quite  a number of these. On the flip side these problems are actually attractive opportunities. Here is a list of some of the problems that are being faced by our economy which are begging to be solved:

Inadequate

Water supplies and Sanitation

Poor road networks Inadequate Electricity supply Expensive Banking services Lack of access to Capital for SMEs
High Graduate Unemployment Air and water pollution Extreme polarisation Corruption Education
Vocational training Bureaucracy Low productivity Not enough value addition of primary output Underdeveloped Tourism infrastructure and products
Inadequate Agricultural inputs Inadequate modern Skills & development Financial Literacy Not enough focus on Export development Not enough Mineral Exploration

 

There are some largely unexplored or underdeveloped opportunities that can lead to the establishment of new businesses for those who are willing to apply their minds to developing working business models. That, the government is promising to assist by providing a conducive environment where there is improved ease of doing business is encouraging and helpful to new entrepreneurs. If it’s easy to startup many more entrepreneurs will stick their necks out and venture into business.

For technology driven entrepreneurs this is also the best time to be innovative and focus on developing supporting applications and business models that help the government measure its progress. In the past the economy has suffered because progress or lack of it has not been easy to track. For example, the ease of doing business committees have been at it for sometime now and while they have done a lot of work, sometimes it’s not easy to track our progress or measure its impact. Without the right measuring tools it is difficult to push for more reforms.

Startups have also complained about how difficult it is to access public information that is important when sizing up the market and deciding the best route to go to market. The Government is encouraged to come up with an open data policy that allows access to information which will enable startups to do quick market surveys and allow for the creation of useful products and services in the economy. Just to give an example, crime statistics are collected and stored by the Police, if my startup wanted to develop a platform that helps the Police control crime or accidents in a certain area, it will be very difficult to access such information if there is no clear policy or platform to access such data.

There is a lot that the government can do to help startups deal with some of the biggest challenges facing the economy. Here are some examples;

Problem Possible Government Action Result
High Unemployment – Incentivise the formation of new startups

– Support Hackathons

– Make it easy to setup startups

– Make it easy to learn coding and entrepreneurship

– More jobs created

– Attract skills from diaspora

 

Cash Shortages – Make it easy for the formation of more fintech companies

– Encourage Partnerships of  existing institutions

– Encourage the development of APIs by Banks, Mobile Network operators

– Make USSD access universal and cheap

– More payment channels

– Cheaper payment channels

– Increased use of multiple payment channels

– Less reliance on cash

 

If you have more contributions to make on how the government can help the country develop more problem solving startups please contact us at www.cowork.co.zw or email us at hararehub@gmail.com.

 

Related Articles

Leave a Reply

Back to top button