3.2 T HE E VALUATION F RAMEWORK
3.2.2 Appropriateness
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Table 3. 1 Objectives of the National Policy and Strategy for SMEs in Zimbabwe
Objectives Description Policy Action
Overall
Creating an enabling environment for the growth of SMEs in Zimbabwe
Deregulation of licensing procedures
Generate sustainable jobs, reduce poverty and stimulate growth.
Investment promotion
Specific
Ensure coordination of different policies and programmes at national level.
Ministry of SMEs to oversee all National efforts for SME development
Provide an appropriate institutional mechanism to facilitate SMEs development efforts.
Setting up the MinSMECD
Set priorities and the appropriate allocation of limited public resources.
Enabling legal and regulatory environment.
Delegate tasks, responsibilities and accountability. SEDCO (Financing), ZimTrade (Trade Facilitation)
Adapted from the National Policy and Strategy for SMEs in Zimbabwe (2002)
Table 3.1 shows that objectives are divided into overall objectives and specific objectives. The table also shows the policy actions that will achieve the set objective. Policy actions are the measures that will be taken by the government to achieve the objectives of the policy. Among these is delegating responsibilities to other government departments like SEDCO. Rationale was also included in the Questionnaire by setting question items that ranked respondents’ view of the different policy actions and objectives.
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ascertaining if the programme addresses an objective that can be clearly related to policy rationale in terms of market, policy and government failure. This section will highlight the market failures identified by the Government of Zimbabwe and then determine if the identified market failures are addressed by any of the objectives thus determining appropriateness.
Market failure impedes the efficient allocation of productive resources, goods and services (Gonzalez, Rivera and Tijerino, 2010:3). An instance where market failure exists is when financial institutions make decisions to lend based on collateral and track record rather than the viability of a business (Blackburn, 2012:9). Gonzalez et al. (2010:3) argue that government intervention is necessary to address market failure in order to achieve a pareto optimum, that is, a situation in which no single economic agent or group can be better off without making somebody else worse off. SMEs are disadvantaged because in most cases they have to compete with large corporations that have enough resources. SME policy, therefore addresses such market failures.
Gonzalez et al. (2010:15) argue that policies should consider the specificities of the economy and address, with precision the origin of market failure and the case for microeconomic intervention. Storey (2008:4) shows that microeconomic policy interventions involve training, information, advice and cultural change programmes. The responsibility of the government therefore, is to identify the market failure that needs to be addressed and developing policy points that specifically correct that market failure.
The areas that necessitate government intervention through SME policy include hostile regulatory environment, limited access and cost of finance, inadequate management and entrepreneurial skills and lack of information (National Policy and Strategy for SMEs in Zimbabwe, 2002:3). All these concerns exist because SMEs are disadvantaged in these areas in comparison with large corporations with whom they compete. The OECD Framework for the evaluation of SME and Entrepreneurship policies and programmes (2007:17) asserts that SME policy evaluation is often thought of in terms of tackling market failures that reduce economic efficiency such as inadequate availability of finance, skills, advice and technologies. These are the areas that necessitate government intervention in Zimbabwe.
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There are complexities of the regulatory environment and multiplicities of bureaucratic requirements which impede the efficient functioning of the SME sector (National Policy and Strategy for SMEs in Zimbabwe, 2002:7). The process of getting a license as well as the cost of compliance are a major deterrence to SMEs therefore in this sphere the market is skewed against SMEs. The policy and strategy framework for SMEs is thus in place to resolve this failure. The strategies focus on the simplification of complex regulations, improved access to information and centralising and streamlining procedures (National Policy and Strategy for SMEs in Zimbabwe, 2002:7).
Additionally, some practical measures that were identified and set to be initiated included deregulation which involves legal reforms which remove legal impediments of starting and growing a business (National Policy and Strategy for SMEs in Zimbabwe, 2002:8). This practical measure is in line with one of the objectives of the policy which is to provide an appropriate institutional mechanism to facilitate SME development efforts. In this light one can argue that the policy is appropriate as one of its objectives addresses an existing market failure.
Inadequate management and entrepreneurial skills have been identified as a barrier to SME development in Zimbabwe (National Policy and Strategy for SMEs in Zimbabwe, 2002:3).
Muzari and Jambwa (2012:1708) note that one of the major constraints facing SMEs in Zimbabwe include the lack of managerial, marketing and technical skills. Without these skills SMEs are disadvantaged in an economy that has large corporates which are endowed with skilled personnel. Shaku (2011:51) argues that any SME owner or manager possessing some financial management skills will be better positioned to obtain a bank loan. Therefore, the inability of most SMEs to access loans could be a result of the lack of skills.
Entrepreneurial and management skills development programmes have been lined up in the process to assist SME owners in acquiring the prerequisite skills for the development of their enterprises (National Policy and Strategy for SMEs in Zimbabwe, 2002:11). Muzari and Jambwa (2012:1708) argue that to address skills shortage several key areas of focus in training and skills upgrading include basic book-keeping, project planning, accounting and finance. The National Policy and Strategy for SMEs in Zimbabwe (2002:11) shows that the government sought to
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engage institutions of higher learning, technical colleges, vocational training centres and the private sector in efforts to provide skills to SMEs. This intervention strategy is in line with the policy objective of committing the growth of SMEs over the long term rather than dependence on quick fix solutions. Table 3.2 shows appropriateness.
Table 3. 2 Appropriateness of the National Policy and Strategy for SMEs in Zimbabwe
Market Failure Policy Objective Solution
Limited access and cost of finance
Delegate tasks, responsibilities and accountability.
SEDCO
Government Credit Guarantees
Lack of access to Land Co-ordinate resource mobilisation strategies.
Inappropriate technology Provide an appropriate institutional mechanism to facilitate SMEs development.
SIRDC
Centre for Innovation and Enterprise Development
Lack of Information Ensure coordination of different policies and programmes at a national level.
Publications by experts across different fields with information relevant to SMEs
Lack of marketing skills and market knowledge
Delegate tasks, responsibilities and accountability.
ZimTrade
Business Linkages
Lack of Infrastructure Set priorities and the appropriate allocation of limited public resources
Adapted from the National Policy and Strategy for SMEs in Zimbabwe (2002)
Table 3.2 summarises the appropriateness of the National Policy and Strategy for SMEs in Zimbabwe, showing the market failures that have been identified by the Government of Zimbabwe and that are addressed by the policy. The table shows the identified challenges, the objectives that addresses the challenges and the solutions to the challenges. This is done to determine whether or not the policy addresses the challenges faced by SMEs. To measure
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appropriateness, question items in the questionnaire included the challenges faced by small businesses and the solutions offered.
The table shows that solutions to the lack of access to land and the lack of infrastructure were left out in the National Policy and Strategy for SMEs in Zimbabwe. However, it is important to note that the government undertook the Land Reform Programme that created access to land. In this case a solution to the lack of access to land was offered although it was excluded in the policy.
Chivasa (2014:4) notes that the MinSMECD is building selling shelters for small buildings as a solution to the lack of infrastructure.