eBusiness Weekly
Business Writer
About 56 percent of Zimbabwe’s Micro, Small and Medium Enterprises (MSMEs) are financially excluded from the formal financial system largely on issues related to compliance with registration and lack of financial products for the sector, a report has said.
Sivio Institute, in its survey report on the state of financial inclusion for small and medium enterprises in Zimbabwe said many businesses are struggling to register their businesses while the registration process is complicated.
Tendai Murisa, Sivio executive director at the launch said the national average for MSMEs on financial inclusion was at 44 percent.
“However, there are other regions that are lower than the national average such as Midlands, Masvingo and Harare that are close to the average.
“Provinces that are doing well are Matabeleland South and Mashonaland West are above national average. But there is no one in the 70 percent with all hovering around 50 percent,” he said.
He said the MSMEs indicated that the registration process is complicated and there is no decentralisation and the cost of registration is also on the high end.
“Once you register, the compliance cost year on year is high and this pushes many people into informality and once they are like that, the banks cannot deal with them,” said Murisa.
According to the survey report, micro-enterprises are prominently involved in retail, vending and agriculture sectors.
The report said that the average annual turnover of micro-enterprises was US$7,589; the average for small enterprises was US$76,647.00 and the average for medium enterprises was US$803,022.00.
The survey indicated that founders of enterprises use many sources of funding to gain sufficient access to start-up financing.
“Eighty percent of founders used their personal savings to start their businesses. Informal relationships are more significant for enterprise development in Zimbabwe than relationships with financial institutions.”
Only seven percent used banks and six percent used microfinance institutions to secure funding. The government, credit unions and local NGOs have contributed to start-up financing for only one percent of the enterprises.
According to the report, mobile phones and financial technology have improved rates of access to financial products and services.
According to Murisa, the report found out that most prominent services include mobile money services are provided by Econet Wireless through the Ecocash platform and ZIPIT Smart provided
by ZIM Switch.
“We ascertained that up to 97 percent of all MSMEs that use mobile money will use Ecocash at some point, 30 percent will use ZIPIT Smart and up to 19 percent will use One Money.
The survey report said that more than half of enterprises in rural and urban areas have a mobile money account.
