Harare, Zimbabwe -Fear for punitive taxation by ZIMRA and other national regulatory authorities is restricting the formalization of many SME’s in the country according to research done by the Ministry of Small and Medium Enterprises and Cooperative Development.
The findings are also a confirmation of the 2014 Informal Sector Perception Study.
“The two major perceived disadvantages associated with formalization identified were paying tax, 29 percent and 14 percent additional operating costs”.
“Further disadvantages identified with formalization included increasing salaries, bills and overheard costs; and potential inability and willingness to pay fees and taxes”.
“SMEs were also concerned about paying to multiple authorities and continued harassment by the authorities”, it says.
Of the respondents only 5.3 percent were affiliated to a business membership organisation or similar association.
A key finding from the research showed that SMEs have not been benefitting from group lobbying and advocacy on issues affecting their business.
This is despite the rise of multiple politically affiliated organisations purporting to fight for their rights.
One of the main benefit of formalizing raised by the SMEs was freedom from harassment by authorities.
Improved market access through selling to large shops and companies, ease in securing loans and access to business development services were also listed as other benefits.
A 2012 Finscope Zimbabwe Small and Medium Enterprises Survey Report revealed the existance of over US$7 billion circulating in the informal sector, a result that has spurred interest in the sector.
Government has been searching for ways to harness the sector so as to improve its input into the country’s GDP.
The research report, done in March 2016 by Probe Market Research, is supposed to lead to the creation of a formalization strategy to be launched within 90 days.
Comments
About Author
