Published: 11 June 2025

There is growing urgency for Zimbabwe to overhaul its legal and policy framework governing small and medium enterprises (SMEs) to protect them from the looming threat of regional competition, particularly under the African Continental Free Trade Area (AfCFTA), a business expert has warned.

Speaking on the sidelines of stakeholder consultations to review the SME Act on Tuesday, business consultant Tangani Tazvishaya highlighted the critical challenges stifling Zimbabwe's SMEs, despite them comprising 90 percent of the country's business ecosystem.

He cited severe financial exclusion, lack of access to advisory services, and costly, unreliable energy sources as the most pressing constraints, calling for urgent legislative reforms to empower SMEs in the face of increased trade liberalisation under AfCFTA.

    "Access to bank loans remains dismal-only 7.5 percent of SMEs received funding in 2024, up from 5 percent in 2022. This is a very small portion when you consider SMEs make up the bulk of the business sector," said Tazvishaya.

He also raised alarm over the lack of awareness among entrepreneurs, noting that 92 percent of SMEs do not know where to access support or advisory services, leaving them ill-prepared to navigate market challenges or regulatory requirements.

Tazvishaya further explained that only about 30 percent of SMEs have access to electricity, and those that do face frequent power outages, forcing them to rely on expensive alternatives. This, he said, inflates production costs and renders local products uncompetitive.

    "The Act we're working with today was passed in 1980. At that time, there was no digital economy, no AfCFTA, and no major climate change impacts. But now, these are everyday realities that local businesses face," he said.

He warned that without decisive policy reforms, Zimbabwean SMEs risk being overwhelmed once regional borders fully open under AfCFTA. South African firms, he noted, could dominate local markets due to economies of scale and stronger capital backing.

    "I fear that if our SMEs are exposed to AfCFTA before they are properly capacitated, the consequences will be dire. This is not prophecy-it's a logical projection," Tazvishaya said.

He cited Zimbabwe's pharmaceutical industry as an example, noting that it is currently cheaper to import medicines from Zambia than to buy from local manufacturers due to high production costs.

Tazvishaya urged the government to modernise the SME Act to reflect current economic realities. Key priorities should include access to digital tools, climate adaptation strategies, skills development, and improved market access, especially for youth, women, and rural entrepreneurs.

    "The government's legal and policy approach must now respond to major global and regional trends. That's the only way SMEs can significantly contribute to GDP and employment," he emphasized.

The government is currently conducting nationwide consultations to gather input for the SME Act review. Meetings have already been held in Harare, Bindura, Marondera, Chinhoyi, and Gweru, with further sessions planned across the country.

The proposed amendments aim to transform the 1983 legislation into a forward-looking, inclusive policy framework capable of supporting SME growth in a digitally driven, climate-vulnerable, and regionally integrated economy.
- New Ziana

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