SUPPORTING Small to Medium Enterprises (SMEs) is the best way of addressing Zimbabwe’s high unemployment rate, Africa’s youngest billionaire has said.
BY KUDZAI CHIMHANGWA
Speaking at an Alpha Media Holdings (AMH) Conversations in Harare last week, Mara Group founder, Ashish Thakkar said the creation of an enabling business environment for the SME sector was key in addressing the unemployment scourge.
“Unemployment in the country will not be solved by bringing in more investment or the creation of big industrial projects,” said Thakkar. “There is need to nurture SMEs for young entrepreneurs and to create an enabling environment.”
Following just over a decade of economic decimation and de-industrialisation, Zimbabwe’s unemployment rate has continued to spiral upwards.
Independent estimates say unemployment in Zimbabwe tops 80%.
Thakkar, who is Africa’s youngest billionaire, gave the example of South Africa where he said 65% of private sector employment was generated by SMEs.
He said that most investors would rather seek to automate their industries and consequently employ less people as they seek to compete with countries such as China and other big nations on the global scale.
“The key question is how to encourage the informal sector to enter the formal sector by creating tax breaks and related incentives. There is need to take SMEs seriously, this is the answer to unemployment,” said Thakkar.
He pointed out that the competition and good corporate governance would also serve to create a better investment climate for the country.
Thakkar, aged 32, runs a foundation with interests spanning across the African continent from information technology, real estate, financial services and hospitality services among others.
Last year the Zimbabwe National Chamber of Commerce (ZNCC) and the Small and Medium Enterprise Association of Zimbabwe (Smeaz) signed a memorandum of agreement designed to foster greater collaboration between SMEs and large corporations in the country.
The partnership was created in a bid to close the divide that existed between large corporations and their small and medium sized counterparts.
Speaking at the same event, Smeaz executive officer, Farai Mutambanengwe called on the Confederation of Zimbabwe Industries (CZI) and Bankers Association of Zimbabwe to provide as much support for SMEs as possible.
“What we need in Zimbabwe is lots of jobs and that can only happen when we have support for SMEs. Most SMEs are blighted by capital constraints, where banks demand collateral, poorly structured organisations, lack of management information systems and access to markets, but these issues can all be addressed with the relevant support,” he said.
Experts contend that incorporating SMEs in the supply of inputs and into distribution channels for final products is a smart method for large corporations to cut their costs, while ensuring better buy-in for their products.
Consequently, SMEs will have vested interests in the larger corporations’ success, thereby creating a trickle down positive impact across the linkage.
CZI vice-president, Henry Nema-ire lauded Atlas Mara’s injection of US$210 million into ABC Holdings last week to acquire a majority stake in the banking group as a positive move for industry.
“This is a good transaction for industry as many companies hope to access funding. Many companies are using antiquated equipment which is giving us problems with high maintenance costs. We hope that with the availability of cheaper funding, we can then retool,” said Nemaire.