Home » Business » No Progress On SME Clusters, Says ZEPARU

THERE has been little progress towards establishing cluster initiatives identified in the Industrial Development Policy to drive growth of small to medium enterprises, a report by the Zimbabwe Economic Policy Analysis and Research Unit said.

ZEPARU conducted the study to assess the possibilities of enhancing SMEs growth through the establishment of clusters in three sectors – leather, clothing and steel and iron.

One of the strategies identified in the Industrial Development Policy (2012-2016) to deal with challenges bedevilling the manufacturing sector was the cluster initiative.

“Despite being prioritised, there has not been much movement towards ensuring the implementation of the policy strategies identified by the policy,” said ZEPARU.

The cluster initiative, ZEPARU said, was also useful as part of the implementation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), which identifies enhanced support for the SMEs and co-operatives sector as one of the key drivers towards attainment of the projected growth targets.

The main policy thrust on SMEs and co-operatives, employing the majority of economically active people, under Zim-Asset is creating and growing opportunities for business, skills development and provision of funding for indigenous business ven- tures.

The study by ZEPARU was intended to ascertain the scope for SMEs clusters in Zimbabwe by identifying main constraints that have to be addressed for clusters to be established.

It had four main objectives, namely identifying opportunities for SMEs clusters in Zimbabwe, outline the main requirements for such opportunities to be exploited, identify the main bottlenecks towards cluster development and identify and recommend possible policy interventions for SMEs and co-operative clusters to work.

The study has generally found out that there is scope for the establishment of clusters in the three sectors, although there is still a lot of work to ensure that this happens.

According to the findings of the study on the three sectors, the players are already engaged in viable businesses, which can be leveraged on to ensure that clusters develop.

Limited employment opportunities in the formal sector, due collapse of bid companies, have also created a pool of labour, willing and able to work on a very small scale.

“The availability of semi-skilled but redundant labour force can be leveraged upon to establish the clusters, especially in the steel and leather sectors,” ZEPARU said.

The players are actually able to earn a living from their businesses now without much support.

The players in the sector have been able to establish their own markets, which can be leveraged on to build profitable business and sustainable foundations.

However, the level of co-operation within the businesses is currently not there, calling for Government intervention to create incentives for suppliers to have centres close to the cluster areas once they are established,” ZEPARU said in its report.

Policy could reduce high transaction costs borne by the SMEs in identifying markets and sources of raw materials. It could also encourage the establishment of dialogue among the SMEs to identify economically viable projects for collective action.

“The current operating environment is not conducive for cluster development as the players in all the three sectors are scattered in different parts of the towns,” ZEPARU said.

The study established that the Government efforts towards establishing the clusters needed to be preceded by allocation of land for the purpose of the clusters.

ZEPARU said successful clusters in other countries also received subsidies for joint activities, such as market surveys, feasibility studies or participation in trade missions and fairs.

Source : The Herald