ZIMBABWEANS believe that the biggest contributors to Zimbabwe's economy are agriculture and mining. However, whilst the magnitude of their economic contribution should not be disregarded, and every endeavour to achieve further development and growth of those economic sectors should be made, the reality is that the greatest single element of the economy is small and medium enterprises (SMEs). In August last year President Robert Mugabe addressed that reality, hailing their significant contribution to the economy and to the generation of livelihood, albeit often insufficient, for millions of the populace. In 2012 the World Bank conducted a comprehensive scientific survey of the SME sector, with the data being validated extensively by Zimstat. The survey had diverse objectives including assessing the size and scope of Zimbabwe's MSME (micro, small and medium enterprises) sector, describing the formal and informal levels of access to finance and to services, identifying the greatest constraints on MSME development (with especial focus upon the barriers to access to financial markets), identifying specific development needs of different market segments necessary to stimulate segment related innovation, and formulating recommendations on attaining financial assistance for MSMEs, with attendant financial policies. The survey was conducted by an initial multi-stage sampling process and comprehensive listing of over 57 000 households in 500 areas, thereby identifying 15 906 business owners. 3 222 face-to-face interviews were conducted. It was concluded that 5,7 million people are working in the MSME sector, with consequential contribution to poverty alleviation, albeit to a modest extent, as 40% of MSME owners were earning less than US$200 per month. In the sector there were 2,8 million owners of enterprises, and 2,9 million employees. The owners represented 46% of the adult population; Mashonaland East had the highest proportion of MSME owners, being 56% of the adult population, whilst Harare had the lowest proportion of MSME owners, approximately 38% of adults. Of great significance was that only 15% of all MSMEs were registered or licensed, with 85% being in regulatory default by failure to be registered. Seventy-one per cent of those registered were so compliant with local authorities, 17% with the Registrar of Companies (although such registration did not obviate the need for other registration), 6% with the Registrar of Co-operatives, and 7% had other registrations. Also of import were the principal operating locations of the surveyed MSMEs. Thirty-nine per cent operated from residential premises, whilst 22% from farms or small holdings, 11% by trading from door to door, 9% from the streets, and only 6% from traditional market facilities. Tragically, a miniscule 14% of MSMEs utilise banking facilities, being 14% of those surveyed, with only 3% of all the MSMEs operating bank accounts in the name of their businesses. Apparently the principal barriers to availing themselves of banking facilities were that total incomes were too limited to justify recourse to such facilities, and for many income flows were very irregular. Nine per cent of those surveyed and not using bank services stated that their failure to do so was their absence of financial knowledge and literacy. In like manner, 85% of those surveyed did not have any insurance, the main barrier thereto being non-affordability, that being the reason of more than half of the uninsured, whilst 23% o f the uninsured stated that they had never considered recourse to insurance. 17% contended a total lack of knowledge as to how insurance works, 13% alleged that they had never heard of insurance, and 6% stated that they were unaware as to how to access insurance. Amongst the key conclusions drawn from the survey were: The MSME sector plays an important role in addressing Zimbabwean unemployment, by virtue of 5 700 000 working in the MSME sector, inclusive of owners, notwithstanding that for many their incomes are very limited, well below the Poverty Datum Line (PDL). Nevertheless, to quote from the survey's conclusions: "Although effects on wealth creation are limited given the low levels of income among the majority of MSME owners, survivalist businesses play a vital role as a buffer against slipping into deeper poverty, reducing individual and household vulnerability." Most of the businesses have been in operation for five or less years, with sustainability and upward mobility being influenced by numerous factors, industry governmental policies and regulations (such as labour legislation), and many individual characteristics, such as motivation to start the enterprises, risk tolerance, education and training, networks, and the like, compounded by low levels of access to, and usage of, formal sector financial products and seminars, operational space constraints, absence of marketing expertise and consequential non-usage of sophisticated marketing strategies, and the extensive usage of informal management of the business's finances and of operations. The survey report concludes by stating that "given the crucial rate of MSMEs, and especially of survivalist businesses, it is imperative to create an enabling environment by putting into place strategies to support upward mobility and growth of those businesses to mature into more sophisticated formalised enterprises". To such end, the report urges various enabling policies and regulations. These include the enablement of credit flow, inclusive of "leverages relationships and links between financial institutions and informal enterprises."
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