In Zimbabwe, various institutions, including government and commercial banks, are available to support the growth of small businesses. Small businesses are defined as independently owned, operated, and organized for profit, without dominance in their respective field. The government provides financial support to small businesses through the general incentive policy, offering incentives to both local and foreign small firms investing in land, buildings, plant, and equipment. This aims to promote small and medium-sized manufacturing and facilitate increased employment opportunities.
The government provides various support services, including business loans offered by commercial banks like CBZ and CABS. These loans are available to businesses that meet the criteria set by financial institutions. The goal of this scheme is to provide lending or loans to small businesses. Another scheme known as seed loans aims to provide initial capital for new organizations to start their portfolio and fund operational expenses for a specific duration. The Industrial Development Corporation (IDC) administers most of the capital project assistance.
The cooperation offers various services such as legal assistance, new company registration, research for potential opportunities, construction of factory buildings, auditing services, and policy guidance. The banking industry has undergone deregulation and continuous revision of regulations to foster increased competition in the financial sector. Interest rates are determined by the market. Training programs for the growth of small businesses in Zimbabwe feature the Indo-Zim Technology Centre (IZTC), which comprises a Technical Training Centre (TTC) associated with small and medium enterprises (SMEs).
The IZTC, located at the Harare Institute of Technology in Belvedere, Harare, receives assistance from India in the form of precision high technology machines and measuring instruments for training and manufacturing tools and dyes. Precision CNC machines are provided for training purposes and to serve as a common facility for small and medium enterprises (SMEs). Additionally, SMEs have been supplied with modern equipment in areas such as carpentry, sheet metal welding and fabrication, and machine shop. These resources are used by the Common Facility Centre established by SEDCO and for modernizing vocational training centers throughout Zimbabwe.
Indian Experts in Zimbabwe offer training equipment for PCB manufacturing as well as seminars, conferences, and courses in entrepreneur development and general management. They also provide access to information through the Government of Zimbabwe’s Information and Technology and Internet policy, which is a comprehensive framework for sustainable national development using ICTs (Information and Communication Technology).
The National ICT Policy Framework includes provisions for the establishment of various organizations such as the national information and communication technology authority, national information and communication technology converged regulator, and e-government. The e-government agency is responsible for developing, promoting, and coordinating the use of ICTs in government, specifically for exchanging information and delivering services. The national ICT authority regulates the development of communications networks and facilities, addressing matters such as licensing, charges and tariffs, standards, and consumer protection.
The National ICT authority advises the Government on national ICT requirements and policy matters, and also helps to coordinate the accelerated development of ICTs in the country. Additionally, small businesses have found value in participating in business and industry networks. These networks provide forums where businesses within the same industry or trade can come together to discuss industry-related topics. These forums enable small businesses to benefit from the sharing of skills and knowledge, helping them to better equip themselves through these valuable networks.
For instance, small businesses in the tourism sector were able to benefit from the Sanganai /Shanganani tourism forum that was held in 2012. It is essential for businesses in the same trade to organize forums about the industry in order to equip small businesses with necessary skills and knowledge. Additionally, there are gaps and overlaps in the provision of business development services for small businesses in Zimbabwe, particularly in financing.
Small businesses face challenges accessing finance services due to a lack of collateral security. As a result, only a limited number can benefit from the government’s provision of finance services through commercial banks. Moreover, small businesses encounter reluctance from commercial banks when seeking seed loans and other financial services. Additionally, the high interest rates imposed by commercial banks further hinder their access to finance services. Consequently, borrowing costs become exorbitant, with rates soaring up to 30% per year, making it unaffordable for most small businesses.
Corruption is worsening the challenge for small businesses in accessing loans from commercial banks. Nepotism contributes to this issue, as some small businesses can only obtain loans through personal connections with bank employees. Moreover, this practice is not widely recognized by small businesses. The absence of training services provided by institutional support further exacerbates the problem, as not all small businesses have access to these services. Additionally, the expensive cost of training services limits their availability and benefits to a privileged few.
Insufficient awareness about available training services for small businesses, particularly in rural areas, has led to uneven access to these services. In addition, Zimbabwe’s current institutions have not effectively supported small businesses with technology and information. Financial limitations have hindered these institutions from acquiring and utilizing the new technology utilized by foreign counterparts.
The lack of collateral makes accessing loans from banks an even bigger drawback. Banks were expected to provide support to small businesses with their information technology services. However, Zim College in Bulawayo has been unable to adopt new technology due to financial problems. This has affected the college’s ability to upgrade its information technology systems, which it offers to small businesses like Cheff Jiff restaurants.
Small businesses are experiencing failure because they are being excluded from business and industry networks. This exclusion stems from the stereotype that SMEs lack knowledge and skill in the industry. For instance, in the retailing industry, larger retailers may choose to exclude small retailers from events such as business forums because they believe that small businesses have insufficient knowledge to contribute.
Based on the provided information, there exists multiple gaps and overlaps in the provision of business development services to small businesses in Zimbabwe. In order to address these issues and create an optimal operating environment for small businesses, it is imperative to take corrective measures and rectify these gaps and overlaps.
Reference List
David, S (2010) Small business management and Entreprenuarship,New Delhi : Prentice Hall
Justine (2006) Small business management, New York : Thompson South western
Richards (2001) Effective Business management, London: Fortworth
Mary (2009) Small business management, New York: Mac Graw Hill
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