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SMES to grow domestic product

ANALYSIS: MAXWELL PHIRI
THE small and medium-sized enterprises can only contribute to the growth of the national governments if they are availed robust policies to grow their enterprises with. I have noticed that some governments in Africa tax holidays and other imports incentives are more skewed to new foreign investors than the local SMEs.
Research has shown that SMEs are estimated to employ about 70 percent of the world’s workforce and contribute around half of the world’s GDP. African governments should consider developing a tax regime that fosters certainty and predictability of outcome over time and removes prohibitive bracket effects for small businesses that may disincentive growth, minimise the burden of tax compliance for smaller firms and entrepreneurs by seeking to simplify tax systems wherever possible. Governments should also consider offering guidance and support for SMEs as governments increasingly transition to digital compliance systems, consider tax incentives to support SME capital investment and SME credit availability. On the other hand it will be advisable to start initiating the process of formulating policies for SMEs with the view of bringing up reputation on the corporate world in as far as visibility is concerned. This will also assist SMEs to access financial facilities from banks easily. SMEs have been appealing for African governments to support development of effective policies to grow and contribute significantly to Gross Domestic Products (GDPs). They are also looking for support in upskilling of their teams especially in digitalisation. E-commerce and the use of information and communications technologies (ICT) increases the average sales of SMEs, allows them to reach new markets and makes their businesses more competitive globally. The adoption of e-business solutions for business-to-business online transactions and electronic exchanges with government transactions drastically reduce costs and improve market opportunities. Therefore, the African government must consider strengthening the technological competence of SMEs through specialised training and access to advice, public data, and global information, allocate resources for investments in ICT and infrastructure in rural and remote areas and establish and promote standards for data-enabled enterprise – i.e. enterprises able to use open and big data in their business planning and/or operations.The main Government role with respect to SME development should include: • To create an enabling environment in terms of solid policy regulation • To provide necessary infrastructure for SME development; • To set up institutions which support SME activities and to strengthen the existing ones, through the national budget; • To ensure equal access to employment for women, youth, and the disabled. With SMEs constituting 80 percent of Africa’s enterprises, multilateral financing institutions, such as the AfDB, need to support these small businesses to trade. Enhanced Bank support to SMEs is particularly important now that the African Continental Free Trade Area (AfCFTA) is in force and will be creating tremendous economic opportunities. Creating a larger market that goes beyond national borders will increase product demand, ensuring full capacity utilisation of these SMEs, and ultimately result in expanded SME investments in the continent. We applaud the new dawn government in Zambia for the establishment of the Ministry of Small Medium Scale Enterprises and our considered view is that Zambian government should immediately start playing the following role in order to make the Ministry of Small Medium Scale Enterprises relevant to the public: • Policy formulation and planning of SMEs development; • Monitoring and evaluation of policy implementation; • Co-ordination of small scale industry and micro project development in Zambia;
• Liaise with donors and local institutions which are engaged in the SME sector. • Engage the youths at all level as one of the key stakeholder • Consider Agriculture as a potential area to involve the SMEs • Consider Manufacturing as the main drive to economy • Take advantage of arable land which the country has and use it for the benefit of SMEs • Relax the conditionality’s on accessing financial facilities from commercial banks
• The government to diversify into other products other than copper whilst maintaining f SME’s as the main drive We have no option in Zambia but to enhance the participation of the SME’s in the growth of the GDP as this has been attested in other countries where SME’s are the main drive of the economy. The author is fellow-ZIHRM and Human Resources Practitioner and SME Promoter.


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