5.4 D EMOGRAPHIC AND O RGANISATIONAL INFORMATION
5.4.1 Demographic and Organisational Profile for SME operators
5.4.1.5 Year in which the business was established
This section was important in determining whether the policy had made any changes to the circumstances of small businesses. Determining the year in which an SME was established allowed for a comparison between small businesses established before the policy and those established after the policy. An enquiry into the year a business was established also helped in identifying if there are increases in the number of SMEs and determining their survival rate.
Table 5. 3 Distribution of SMEs across the year of establishment
Frequency Percent Valid Percent Cumulative Percent
Valid 1994 - 1999 5 4.5 4.6 4.6
2000 - 2004 18 16.4 16.5 21.1
2005 - 2009 27 24.5 24.8 45.9
2010 - 2014 59 53.6 54.1 100.0
Total 109 99.1 100.0
Missing 0 1 .9
Total 110 100.0
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The table shows that 59 small businesses in this survey were established between 2010 and 2014;
27 businesses in the years 2005-2009; 18 SMEs where established between 2000 and 2004 and 5 businesses were established in the years 1994-1999. Most businesses in this survey therefore were recently established with fewer businesses being operational for at least 15 years. This information is important in determining if there were any changes in the number of SMEs over the years. 1994 to 2004 represent the years before the policy was in place and from 2005 to 2014 the years when the policy was established.
More than half of the businesses represented in this study were established between 2010 and 2014 and only four businesses were established from 1994-1995. This trend can be accounted for by the fact that small businesses have a low survival rate as noted in the preceding chapters (Mudavanhu et al., 2011:82). This disparity in the number of businesses can therefore be explained by the fact that few businesses survive past the five-year mark from establishment (Lobel, 2014). Therefore, the researcher expected to find fewer businesses established in the 90s still operating at the time this study was conducted.
The cumulative increase in the number of businesses established over the years can be accounted for by the shrinkage in the sources of formal employment. As highlighted in the literature review SMEs in Zimbabwe are responsible for the livelihood of 80 percent of Zimbabweans as over 80 percent are unemployment therefore relying on SMEs for substance (Matarirano and Olawale, 2010:1709). Over 53.6 percent of the small businesses in this study were established between 2010 and 2014 and this can also be due to the job losses resulting from companies closing down operations.
Furthermore, the government in the National Policy and Strategy for SMEs (2002:4) points out that the decline in the sources of formal employment necessitates focus on the SME sector as a remedy to the declining employment opportunities. The increasing in the numbers of the small businesses could be an indication of the government’s assistance of the SME sector as a source for employment. Karedza et al. (2014:38) assert that people start businesses because they have failed to secure employment or are looking for the simplest method for the upkeep of their family. The surge in the number of SMEs established over the years can be accounted for by the
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low incomes and sources of employment with people resorting to make ends meet through entrepreneurial ventures.
The reported increase in the number of small businesses operating within the last five years shows that it is critical for government to formally enact into law the Small and Medium Enterprises Act which has been held up since 2011 (Medium Term Plan, 2011:157). Enacting the Act will boost the number of small businesses as well as assist in the development of those that are already established. Since more people are relying on and starting small businesses government assistance is critical.
The National Policy and Strategy for SMEs in Zimbabwe was drafted for implementation in 2002 and since its establishment data shows an increase in the number of SMEs established. The SME policy can also help to explain the increase in the number of small businesses established.
One of the objectives of the policy is creating an environment so as to double the number of small business entities (National Policy and Strategy for SMEs in Zimbabwe, 2002:4). However, without a database for SMEs it is difficult to determine whether or not the growth in the number of SMEs was exponential. Nevertheless, data gathered in this survey shows that since 2002 there has been a growth in the number of SMEs established. In this light one can argue that the SME policy has achieved one of its objective of increasing the number of SMEs. Although such an increase can be the result of different factors, chief among these being the shrinking of formal employment opportunities and retrenchments.
Zimbabwe’s economy is currently dependant on the informal sector as the mainstream economy is struggling to cope with the lack of liquidity. The fact that 53.6 percent of the businesses in this study were established in the last five years supports the observation that Zimbabwe is currently being sustained by small businesses. In this light there is need for a paradigm shift in government’s view and interactions with the informal sector. Instead of stifling the sector’s operations, government should develop strategies to assist in the development of the sector.
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