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Zimbabwean SMEs Face Funding, Digitalization Gaps

A new report recently released by the International Trade Center (ITC) on Small and Medium-sized Enterprises (SMEs) in Zimbabwe has shown that the firms are facing funding and input shortages, as well as environmental risks.

“Small and Medium-sized Enterprises play an outsized role in Zimbabwe’s economy, representing 90 percent of all businesses. These firms face funding and input shortages and high production costs, and more than 70 percent face environmental risks. Informality is pervasive, accounting for 75 percent of employment in 2022,” said the report.

Many companies’ operations were being curtailed due to inadequate infrastructure, poor quality of internet connection and expensive broadband-enabled services, it said.

Nearly half of the surveyed firms consider the quality of the internet to be low, and three of four firms find the cost of internet service to be high, it noted.

While access and infrastructure were a challenge, only one in 10 firms said their employees had the requisite digital skills, it said.

Digital marketing was essential for SMEs as a means to connect with buyers and sellers, bolster efficiency and reach global markets. About 70 percent of SMEs use social media for advertising, poor digital access keeps them from using more sophisticated technologies for business promotion. Logistics in landlocked Zimbabwe affect competitiveness, and only 19 percent of surveyed firms used digital technologies to improve their deliveries, it said.

The report recommended strengthening business support services, access to finance, digitalization and a reliable business environment.

It also suggested focusing on small firms, women and youth-led firms and encouraged financial reforms to facilitate the opening of bank accounts and access to financial institutions, financial literacy training, financial products tailored to SME requirements, and a focus on mobile money expansion in rural areas.

Dorothy Tembo, deputy executive director of ITC, said SMEs that incorporated digital technologies into their business models tended to fare better on the international stage.

“They need a policy environment that enables digitalization and empowers business support services,” Tembo said.

The ITC is a joint agency of the World Trade Organization and the United Nations that helps SMEs become more competitive in global markets.

Source: Xinhua