Will small businesses ever catch a break in Zim?

02 Nov, 2018 - 00:11 0 Views

eBusiness Weekly

You start a small business in Zimbabwe. It is an election year. Sales are thin because people are uncertain of the outcome so they are not spending much “just in case” until they get direction.The election comes and goes and there is finally some kind of direction and demand slightly improves so you invest a bit more and produce more.

Your new brand is making some headway because it is affordable and decent quality, so you hire one more person to ease operations.

A new Cabinet is announced and the sentiment is positive towards the appointees in finance and industry, though the one that encompasses small to medium enterprises is unchanged and that worries you because that signals no difference for you in policy. You suspect you are on your own. A few days later a monetary policy statement is issued supported by a full raft of measures that include separation of RTGS and foreign currency accounts on the Reserve Bank end.

The market goes wild as people speculate that they are about to lose their money.

Foreign products start to disappear from shelves and you jump on this opportunity — add a bit of equipment because now supermarkets and wholesales are glad to take more and more product off you, and traction is super now.

You are looking for bigger workspace and are about to sign a long lease, when Government announces they have lifted SI122 and are now allowing the importation of all basic goods. Do you commit to the lease or wait because competition is coming and will possibly take you completely out of business?

Doing business in Zimbabwe is not for the faint-hearted. The environment is dynamic and the entrepreneur must have dexterity. That entrepreneurship is tough is a world-wide phenomenon — most businesses fail in the first few years.

Yet ours is an extra special situation where any size of business can be decimated and/or disrupted in a very short time on the back of one policy announcement that eats into your already thin margins (think two per cent tax).

Equally so, high level announcements may instantly positively position you, as they would have for those into simple trade who can now easily bring in basic goods that are in high demand.

However, one cannot build solid business if there is not consistency and cohesiveness in policy. As the year draws to a close, small business owners are once again tentative as they await the final major announcement — the coming year’s budget.

Meanwhile, pricing madness and confusion reign. From producers that will no longer accept payment through RTGS or Ecocash transfers nor bond cash — to wondering how to tell your own clients that you will be reviewing prices as you progress because you must also match the market — the work of a small business owner now is undefined and demanding.

Such experiences were probably last lived in 2008 and only those present then may have the fortitude for it. For the business under ten years, these are difficult times.

However, the basics do not remain, that business models must be reviewed on the go. Already some are meeting for business operations reviews as often as twice per week — on Mondays to craft the weekly strategy and again Fridays to review and speculate on the coming week.

Many that had temporarily closed for “stock taking”, “deep cleaning” or taken whatever form of breather are reopening and stepping out again with more blatant multiple pricing — outright United States dollar or South African rand quotations as well as bond pricing reflective of the parallel markets of the day.

Businesses selling goods are obviously the most affected as they have a long value chain they depend on —services fare better and can adjust in pricing.

All of this though is taking its’ toll on turnover and behind every type of business are people — the labour force who are also pressing for salary increases to match the soaring cost of living.

Deciding on a fair increment is very difficult; there is a clear preference for foreign currency — sadly not an option at all where most business generates RTGS funds. Even those that started out hopeful are losing steam — we know of those who opened the requisite new FCA nostro accounts that would ring fence United States dollars deposited therein — and are now stuck with such balances whilst banks plead lack of liquidity and process confusion.

One begins to rethink on whether they should be bothered to participate formally when they cannot make any transfers of the same foreign currency even between local nostro accounts, never mind try and get some cash — a process that requires you to “book cash” first so that your branch can find what you need over some hours or in some cases, days.

Neither is there any reward for those that bothered to register for tax with the Zimbabwe Revenue Authority — their informal peers conduct the exact same business for cash or make peace with the ten per cent slashed off for non-registration — an amount they either had already priced in for or is no great loss in a seemingly inflationary environment. What is to be done then?

Our view is that everything small business owners can do they have already done, and in spite of them, the economy is seemingly dollarising of its’ own accord.

Perhaps it is now government’s turn to “formalise” the “real” economy — the one in which business owners are keeping things afloat by infusing some real currency here and there.

Perhaps we must start talking in earnest about allowing free markets — that will do more good than harm. Small business hopes for a realistic and dedicated domestic business policy position that treats their issues — sufficient capital expenditure and working capital access, business development support services, decent workspace for operations and a foreign currency system that allows earners to reap the rewards of their labour, reinvest, grow organically and share profits with their people.

The present actions are not sustainable because the environment is untenable. As a matter of urgency, government must look into the welfare of small business — this sector has the production potential, working alongside already present big businesses, to deliver the economic recovery we desperately need.

Who else has kept the nation supplied with goods and services that suit all sorts of pockets/levels of income?

Who else is as invested as the local business owner who sees the direct impact of jobs they create and families they sustain on the sales of local product? Who else requires very little capital that goes a long way in stimulating productivity? Now is the time to be inward looking and give small business a chance!

Feedback : Email[email protected], Twitter – @kedukudzi


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