Unlocking small rural businesses can drive inclusive industrialisation

Tawanda Musarurwa

ZIMBABWE has an extensive micro, small and medium enterprises (MSMEs) sector.

According to the FinScope Micro, Small and Medium Enterprises Survey Zimbabwe (2022), the country had 1 639 807 MSME business owners, employing 1 704 454 people and generating a combined annual turnover of US$14,2 billion.

These MSMEs’ contribution to the country’s Gross Domestic Product (GDP) was calculated at US$8,6 billion.

Perhaps a more striking statistic is that 71 percent of these MSMEs were located in rural areas, and just 29 percent in urban areas.

Capacitation of MSMEs, therefore, has the potential to boost the economic fortunes of rural communities.

MSMEs can also drive the urbanisation of rural communities, thereby boosting industrialisation. The MSME capacitation programme can improve the communities’ access to information and communication technologies (ICTs), as well as electricity, water, transport and financial services, among others.

For example, the “Promoting SMEs Competitiveness in Zimbabwe Report 2023” — which was carried out by the International Trade Centre, in collaboration with the National Competitiveness Commission — highlighted poor infrastructure as one of the biggest challenges faced by small businesses in the country.

“Deteriorating transport infrastructure and the high costs of logistics affect the timeliness of delivery for SMEs (small and medium enterprises), as survey results showed,” reads part of the report.

“Priority should be given to improving the transport sector, thereby addressing logistics bottlenecks and ensuring reliable infrastructure, especially in rural areas. This will also go a long way in developing stronger value chains.”

Boosting critical infrastructure in rural communities is akin to sowing the seed of their urbanisation.

While huge critical infrastructure projects are underway, numerous smaller initiatives are also being implemented countrywide, in line with the devolution programme.

According to the Compendium of Projects implemented by the Government (2018 to 2022), which was presented to Cabinet in March 2023, 6 869 projects had been embarked on across the country.

They varied in scope, ranging from community-based empowerment and strategic projects to provincial and national ones.

Of the total, 4 984 had been completed during the first quarter of last year.

Some of these projects are being funded under the devolution programme to ensure inclusive development, with 5 percent of the National Budget being allocated to local authorities each year.

Both big and small, completed and ongoing infrastructure development projects converge in the wider goal of achieving inclusive development.

According to the 2018 World Urbanisation Prospects, “Overall, high-income countries have a higher share of population living in urban areas, showing a positive relationship between urbanisation and per capita income.

“In high-income countries and upper middle-income countries in 2018, the majority of the population lives in urban areas: 81 percent and 67 percent, respectively.”

Zimbabwe exhibits characteristics of the broader Southern African context.

While cross-country comparisons cannot be easily made because of the absence of a regional standard of what should constitute “urban”, the proportion of the Southern African Development Community (SADC) population that was urban by each nation’s classification was comparably lower than the rural proportion for most of the bloc’s member states in 2019.

According to the SADC Demographics and Social Statistics (2019), of the 14 countries that had available data, 10 had bigger rural populations — 82,2 percent of Malawi’s population was rural, followed by Eswatini (76 percent), Lesotho (71,4 percent), Comoros (70,8 percent), Zimbabwe (67,8 percent), Tanzania (66,4 percent), Mozambique (66,2 percent), Madagascar (62,1 percent), Mauritius (59,5 percent) and Zambia (55,9 percent).

Only four countries had lower rural populations, namely Botswana (27,4 percent), South Africa (33,1 percent), Angola (36,7 percent) and Seychelles (42,9 percent).

These numbers show that industrial growth in the SADC region could actually hinge on an unexpected hero: the rural MSME.

Unlike the centralised, large-scale operations that dominate elsewhere, real momentum can come from small economic players.

Decentralised and community-based, MSMEs carry the very qualities that make them crucial to Zimbabwe and SADC’s economic fabric.

Consider Lingfield Farm, an innovative SME backed by the Best Model Farm Project — a collaborative initiative involving ZimTrade, PUM and the Netherlands Embassy.

Based in Gweru, Midlands province, Lingfield is in the business of exporting high-demand horticultural products like peas and flowers.

The numbers speak volumes.

Of Lingfield Farm’s exports to Europe, 50 percent head to the United Kingdom, 25 percent to the Netherlands, 15 percent to Germany and 10 percent to France.

Expanding its crop range from sugar snap peas to include citrus fruits, the farm also empowers local growers.

Through outgrower schemes, Lingfield now collaborates with Takura Trust, an organisation that supports 200 farmers on its own.

In total, Lingfield employs around 350 people, making it a valuable pillar for job creation in the community.

This shows what MSMEs, with the right support, can achieve.

Zimbabwe’s export numbers echo this trend.

Between January and August this year, exports climbed to US$4,56 billion — a 1,8 percent increase over the same period last year.

Growth in horticulture and value-added exports, up by 5,2 percent and 2,3 percent, respectively, played a key role.

The takeaway is clear: MSMEs can play a big role in the push for regional integration and sustainable economic growth across Southern Africa.

When we consider the dynamics of industrial growth in a region like SADC, SMEs play an essential role in the push for regional integration and sustainable economic growth across the bloc

Why?

Because MSMEs embody the principles of decentralised growth, which “leaves no one and no place behind”.

However, there is need to ensure that MSMEs are properly structured to meet the industrialisation demands of the region.

Addressing delegates during the 7th SADC Industrialisation Week in Harare earlier in August, Dr Mclean Sibanda, the managing director of infrastructure development solutions firm Bigen Group, said, to drive broad growth, there is need for a rethink on the current model of small enterprises.

“If we are going to build high growth start-ups that are going to contribute to industrialisation, they have to be enabled by innovation and technology. SMEs and start-ups are different, for example,” he said.

“The focus here is on industrialisation; we need to focus on start-ups, which are technology-enabled, that are opportunity-driven and that address bigger challenges beyond the local needs.”

Zimbabwe, through its Education 5.0 concept, has adopted a catch-them-young approach to upskill the upcoming generations with innovative and industrial skills. This is being done through innovation hubs that have been established at universities across the country.

Improving livelihoods

Capacitating rural-based MSMEs effectively will also help SADC meet its goal of improving the livelihoods of people in the region, through poverty alleviation and quality of life enhancement.

“For me, the sustainable development goals (SDGs) provide a roadmap of some of these problems,” said Dr Sibanda.

SADC’s Regional Indicative Strategic Development Plan (2020 to 2030) is already guided by the United Nations SDGs, which advocate inclusive development.

Locally, the Government and its development partners are implementing various projects across the country that are accelerating agricultural industrialisation.

A case in point is the climate-proofing of irrigation schemes, which is being implemented by the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development; the Zimbabwe National Water Authority; and the United Nations Development Programme, among others.

One of the programme’s key interventions is the establishment of the 156-hectare Bwanya Irrigation Scheme, located in the drought-prone Chivi district, which will benefit around 300 households.

As MSMEs act as the socio-economic heartbeat of rural communities, they build local supply chains and boost job opportunities that benefit the entire groups.