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SMEs susceptible to corruption

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SMEs susceptible to corruption

By Byron Mutingwende

Small to medium enterprises (SMEs) are susceptible to corruption due to the fact that the majority of them are informal traders who are not fully aware of the policy legislative and institutional frameworks that exist to govern their sector, Transparency International Zimbabwe (TIZ) has said.

In a speech read on her behalf at a meeting held by the Harare Chamber of Small to Medium Enterprises (HCSME) in partnership with the ministry of small and medium enterprises and cooperative development at Holiday Inn Hotel on Friday, Danai Mabuto, TIZ legal officer said most SMEs did not know their rights as informal traders and the significance of their economic contribution to the nation.

“It thus becomes important to mobilize and organize the sector to protect it against corruption and advocate for the rights of this group which has become central to the Zimbabwean economy. This will ensure that they can operate free and unfettered by s corrupt malpractices and ensure maximum productivity,” Mabuto said.

It emerged that SMES were skeptical of government’s motive towards formalisation. This was evident given the fact that the ministry’s parent act does not recognize the informal economy as a subsector of the country’s economy.

Speaking on the same occasion, the Chairperson of HCSME, Taurai Marembo called for the establishment of a specific budget allocation towards the informal sector and the nned to support SMEs with training and infrastructure development. Marembo said that the National Social Security Act does should recognize the informal sector for providing them with social security.

“We need gender and youth sensitive institutions that represent informal sector players. There is a need to discard unprogressive laws that are archaic in nature and do not evolve with time hence Government should speed up the alignment process.

“This should run together with abolishing of privatisation of infrastructure by land and space barons so that traders and vendors can trade in a place that has reasonable fees and is conducive. The creation of a one-stop shop system is highly recommended especially when there is a comparison with the countries that have adopted the system. Examples include Thailand and Singapore. This system speeds up the registration process and cancels all sorts of red tape that is characteristic of administrative systems. This promotes efficient operations.”

The national Chairperson of the Chamber of SMEs, Rabson Hove said that there should be standardized infrastructure from which traders can operate so that they are taxable.

“It does not make any sense to want to tax a vendor who is selling their wares on a street pavement. We need affordable trading licenses. Authorities should categorise tax according to the trade. We need progressive taxation, simplification of registration and licensing and capacity building trainings for our members. The formalisation of the informal sector should bring with it tangible benefits and guarantees for traders. There is the need for affirmative action against exclusionary culture which includes the requirement for pay-slips when wanting to access lines of credit,” Hove said.

The Member of the House of Assembly for Harare South Constituency, Shadreck Mashayamombe said that the SMEs were the biggest contributor to the economy and encouraged the sector players to visit other countries to learn best business experiences.

“Over and above that, SMEs must adapt to new technologies. I was in Indonesia recently where I was amazed by a very small grinding mill that can produce equally the same number of tonnes of maize meal per day that is produced by the large Blue Ribbon factory here in Zimbabwe.

“We should move from using obsolete equipment which require a lot of capital and human labour. We should look at new other ways of reducing the production cost and be able to preserve our products if we are in the food industry,” Mashayamombe said.

The legislator reiterated the importance of satisfying customer requirements by producing quality goods, the creation of special economic zones and the construction of incubation centres like the one along Simon Mazorodze Road in Harare.

The Zimbabwean economy continues to face liquidity challenges, which are compounded by the influx of foreign products as currencies in the neighbouring countries continue to decline against the United States dollar. This puts pressure on manufacturing sector, which has to content with the declining market of local products as they face stiff competition from exports.