SMALL to medium enterprises (SMEs) serve as the cornerstone of Zimbabwe's economy, pivotal in fostering employment opportunities and driving economic expansion.
Defined as autonomous legal entities with up to 100 permanent employees and annual earnings capped at US$1 million, SMEs substantially contributed to nearly half of the nation's GDP, while employing 43% of the workforce in 2023 (Mabenge, B. K., Ngorora-Madzimure, G. P. K., & Makanyeza, C. 2020; Zimbabwe National Statistics Agency, 2023).
Despite their importance, SMEs in Zimbabwe face significant challenges, including poor performance, unstable macroeconomic conditions, and a high failure rate within the first five years of operation.
To address these challenges, it is imperative for SMEs to leverage networks with universities under the framework of Education 5.0, a model focused on heritage-based innovation and industrialisation.
This article explores how such collaborations can enhance SME innovation and overall performance.
Importance of SMEs to the economy
SMEs play a pivotal role in Zimbabwe's economic landscape, characterised by their nimbleness and adeptness in responding to market dynamics, thereby cultivating an environment conducive to innovation, a cornerstone for continuous economic advancement.
In 2023, SMEs constituted approximately half of the nation's GDP and served as a significant source of employment for a considerable segment of the workforce (Zimbabwe National Statistics Agency, 2023).
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Undoubtedly, the SME sector's significance transcends mere statistics, as it not only encourages entrepreneurial endeavours but also fuels innovation, propelling economic growth and fortifying resilience.
Challenges faced by SMEs in Zim
Despite their contributions, Zimbabwean SMEs encounter several obstacles. Many SMEs struggle to compete due to limited resources and access to markets.
An unstable currency and high inflation rates create a challenging operating environment. Additionally, a significant number of SMEs fail within their first five years, often due to inadequate support and resources.
These challenges necessitate a robust support system, particularly through innovation and collaboration with universities within a framework of SME networks (EC/OECD, 2023 see infographic).
Government policies
The Zimbabwean government has implemented several policies to support SMEs and foster innovation. The 2nd Science, Technology and Innovation Policy focuses on promoting research and development (R&D) and commercialising innovations.
The Zimbabwe National Industrial Development Policy (2024-2030) aims to transition from a primary commodity-based economy to a technologically advanced and diversified industry.
The Ministry of Women Affairs, Community Development, and Small and Medium Enterprises Development actively supports SME innovation through various functions.
These include promoting, coordinating, and monitoring innovative financing schemes for SMEs; providing skills, entrepreneurship, and management training; fostering the formation and development of clusters, business linkages, and associations; supporting technology access and development in the SME sector; conducting research to identify business opportunities; and administering SME development funds to facilitate growth and innovation.
The Education 5.0 Model promotes the production of goods and services based on innovation and industrialisation, aligning with the Zimbabwe National Industrial Development Policy (op. cit.).
These policies provide a framework for enhancing SME innovation through strategic collaborations with universities.
The role of education 5.0
Education 5.0, spearheaded by the Ministry of Higher and Tertiary Education, Innovation, Science, and Technology, emphasises innovation-driven industrialisation.
This model supports the development of innovation hubs and entrepreneurship incubation centres across universities, which are critical for fostering applied research and commercialisation of innovations.
These hubs serve as conduits for industry-relevant research, adding value to natural resources, promoting import substitution, and ultimately driving economic growth.
Benefits of SME-university networks
Developing knowledge/innovation networks between SMEs and universities offers several benefits (Figure 1). Universities provide SMEs with access to cutting-edge research, enhancing their innovation capabilities.
Collaborations with universities can lead to the development of a skilled workforce tailored to the needs of the SME sector. Innovation hubs and incubation centres provide SMEs with access to resources and infrastructure that would otherwise be inaccessible. Furthermore, universities can assist SMEs in bringing their innovations to market, improving their competitiveness and sustainability.
Recommendations
To maximise the benefits of knowledge/innovation SME-university networks, the government should allocate at least 1% of GDP to support research and development (R&D) and innovation initiatives within universities and SMEs.
Implementing tax concessions for companies that invest in R&D and innovation can encourage private sector participation. Establishing an Innovation and Commercialisation Fund dedicated to the commercialisation of research outputs can provide essential financial support for SME innovations. Additionally, ensuring effective implementation of existing policies and creating a conducive environment for SME-university collaborations is crucial.
Conclusion
SMEs are pivotal to Zimbabwe’s economic development, yet they face numerous challenges that hinder their growth and sustainability. By developing robust SME networks with universities under the Education 5.0 model, SMEs can enhance their innovation capabilities, leading to improved performance and competitiveness.
Government support through increased budgetary allocations, tax incentives, and effective policy implementation is crucial to fostering these collaborations and driving Zimbabwe towards its Vision 2030 goal of becoming a technologically advanced and diversified economy.
- Jongwe is an experienced business consultant with extensive expertise across various industries in Southern Africa, including higher education. Connect with him on X and Facebook. These weekly New Perspectives and New Horizon (bottom) articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — [email protected] or +263 772 382 852.
