OVER 50 percent of small to medium enterprises would register their businesses if the formalisation would result in them getting support for their enterprises.
A recent study undertaken by the Ministry of Small and Medium Enterprise Development revealed that most unregistered SMEs would agree to have their operations formalised if such a process would bring some benefit to them.
“Sixty two of the respondents said they would be willing to consider registering. When asked what would encourage them to register their businesses the participants in the workshops indicated that they would register their business if there is hope for support with funding, training, access to markets and workspace.”
The Government is now on a drive to formalise the operations of micro, small and medium enterprises to tap into their income through taxes, at a time the sector now accounts for the majority of economic activities in Zimbabwe.
The most important incentive, cited by 42,4 percent of respondents was simplification of the registration process. This was true for both men (36 percent) and women (33 percent) who noted incentives would be a critical element to consider in registering their SMEs businesses.
The second most cited incentive was access to credit facilities with approximately 20 percent of respondents picking it as a major incentive. This was identified as a significant barrier in the operating environment and would be a strong incentive to register.
“Reforms in the current application of taxes were mentioned as the third most significant incentive to registration by 15 percent of the respondents.
“This included aspects such as tax holidays for recently registered businesses, tax exemptions for imports and other discounts on business related products,” the report noted.
Providing business information and training were also identified as incentives with approximately 10 percent of the respondents selecting each of the factors as incentives.
Training was seen as an incentive as it would help the emerging businesses to understand procedures that one has to undergo when setting up a business, and the associated benefits.
The process would also enable the ministry to correct any misconceptions that the traders have on registration as currently the procedure is not clearly understood.
Eight percent of respondents cited decent workspace as the strongest incentive to register, despite 44 percent of micro, small and medium enterprise surveyed having cited challenges in securing operating space.
Important to note was the strong view by respondents that access to operating space was an incentive to formalise, only in so much as the space allocated was conducive to their business needs.
Respondents mentioned the need for operating space to have proper sanitation facilities, be secure, accessible to the customers and, critically, user friendly to people living with disabilities and with child rearing responsibilities.
Results show that majority of SMEs are willing to register provided that the registration process is simplified, costs are reduced and incentives are made available.
“It is recommended that the authorities formulate a policy that simplifies and spell out the registration process.”