2.5 M EASURES TAKEN BY THE G OVERNMENT OF Z IMBABWE TO CREATE A CONDUCIVE ENVIRONMENT
2.5.1 SME Policy Index: Analysis of the Policy and Strategy Framework for SMEs in Zimbabwe . 45
2.5.1.6 Institutional Support
The National Policy and Strategy for SMEs in Zimbabwe establishes institutions and organisations that have a mandate to help develop small businesses in different sectors.
Institutional support is offered at different levels and for different areas pertaining to SMEs.
Some of the institutions to be discussed in the section include the Standards Association of Zimbabwe and the Export Processing Zone Authority. These support structures are developed in recognition of the need for the division of labour in efforts to realise maximum benefits from SMEs.
The creation of an SME agency responsible for SME policy is important in the need to draw maximum benefits from SMEs. The mandate and financing of the established agency will determine its effectiveness (SME Policy Index, 2012:10). The Zimbabwean government reorganised cabinet and established the MinSMECD to take the leading role in SME policy implementation (Policy and Strategy Framework for SME, 2002:1). The Policy and Strategy Framework for SMEs (2002:3) also states SEDCO as one of the institutions established by the government with the mandate to support the SMEs sector. SEDCO (Amendment) Bill (2010:6-7) outlines the agency’s function as providing financial, information, training and infrastructural development support for SMEs. The agency forms one of the pillars of strength for SMEs.
SEDCO and the MinSMECD share the same mandate however the two work in consultation and with the leadership of the minister of the MinSMECD.
63
The Zimbabwean government created the MinSMECD with the mandate of implementing and drafting SME policies (National Policy and Strategy for SMEs, 2002:2). Egypt has five institutions that have a prominent role in shaping SME policy thereby making institutional setting complex (OECD, 2010:4). By establishing the MinSMECDwith the sole responsibility of SME policy implementation the government in Zimbabwe is able to avoid the complexities and confusion that is associated with SME policy implementation in Egypt. The MinSMECD in Zimbabwe is empowered to coordinate and lead efforts in improving the state of SMEs in Zimbabwe. In this light though Egypt has a functional SME policy (OECD, 2010:5), the fact that different ministries also develop their own policies makes it difficult to identify the functional SME policy as well as coordinating efforts in policy implementation. In this case Zimbabwe has an advantage that can be tapped into to improve SME policy formulation as well as implementation.
The government suggests the establishment of several agencies mandated with assisting SMEs in different areas. The Small Business Advisory Council (SBAC) is meant to initiate and manage public-private partnerships and to be the eyes and ears of the SME sector (National Policy and Strategy for SMEs, 2002:14). Such partnerships are crucial to the development of SMEs as the government is incapacitated to take on this task on its own. There are so many expectations for government in relation to SMEs yet it has limited resources. In this light the SBAC would assist government in carrying out its objectives as the government has limited resources.
The Small Business Authority (SBA) was established as the lead agency for small business development. It was designed to coordinate SME support and designated as the entry point into the SME support network (National Policy and Strategy for SMEs, 2002:14). Below is an outline of the services the Small Business Authority is meant to offer:
Information and guidance
Legal advice
Marketing support
Counselling and training
Financing
64
Research and policy formulation
However, it is worth highlighting that the Small Business Authority takes on the same role of SEDCO. The duplication of duties is problematic in that resources are split between organisations that are essentially carrying out a similar mandate. The government was struggling to fund SEDCO as such the establishment of another organisation will increase the burden of funding on already overburdened state machinery.
There is also support in the form of the National Association of Small and Medium Enterprises (NASME) whose existence is aimed at representing the interests of small businesses (National Policy and Strategy for SMEs, 2002:14). The mainstay of this organisation is to ensure that the contributions of small businesses are acknowledged. The acknowledgement of such contributions will reaffirm the importance of small businesses in the economy. NASME’s mandate can work towards securing donors for SMEs since the role of small businesses in economic development would be known. Below is an outline of how SMEs can benefit from the National Association of Small and Medium Enterprises (NASME). Through NASME small businesses can have:
Advocacy strength
Market power
Unified voice to assure an enabling environment for small business is established.
Pool resources together
Small business financing is as equally important as the mandate in ensuring the effectiveness of the created agencies. Maunganidze (2013:4) notes that the MinSMECD is perennially underfunded and SEDCO received a paltry USD 3.7million over a four-year period, USD 200 000 of which was received in 2012. The two institutions, however have a comprehensive mandate that covers most of the needs for small businesses, therefore their underfunding presents a challenge to their effectiveness. Executing their mandate has become a mammoth task due to limited financial resources. In as much as establishing agencies for SME policy implementation
65
is important, the allocation and equipment of resources proportional to the given mandate is imperative in ensuring that this mandate is carried out.
Government has been cited as the main culprit in failing to award supply contracts to SMEs as per the amended State Procurement Act (Musikanzwa, 2014:35; Loader, 2015:103). Having enacted the Procurement Act that favours small businesses government should be taking the initiative to contract small businesses. With the other large business then following government’s lead. There is therefore an urgent need for government to implement legislation and actually provide contracts to small businesses. Nevertheless, small businesses can also be part of the problem as observed by Loader (2015:103) argues that there are challenges of public procurement such as SMEs’ struggle to find the resources to engage with a bureaucratic process and they are disproportionately affected compared to larger suppliers. Therefore, although the government may put in place and implement the legislation, SMEs may have insufficient resources to supply the needed goods. Musikanzwa (2014:40) noted that companies and NGOs are willing to comply with government legislation but most SMEs are unreliable. The lack of initiative by SMEs can be a point of contention that substantiates businesses’ refusal to deal with small business. Even though there is the Procurement Act there is also need for monitoring the quality of goods and services delivered by small businesses.