Lessons for Zimbabwean companies from the heart of an Asian success story

When the business boom began in Mumbai India perhaps a decade ago, the transport, water and electricity infrastructure was falling apart. Potholed highways, frequent power cuts, inconsistent water supplies, etc were some of the challenges that businesses had to deal with. Sound familiar? Today, things have changed a great deal- but civil infrastructure is still many years away from being adequate.

However, despite the poor condition of civil amenities, business in Mumbai- and other Indian Cities- has never been better. What is driving this boom? A number of factors, one of which is the availability of high speed Internet and supporting technological facilities driven by the Indian Government’s deliberate policy to push technology ahead.

There are many lessons Zimbabwe can glean from this example of how technology can drive development.

Going back to Mumbai, interesting to note is that while big international corporations such as Microsoft and Infosys dominate the headlines that record the progress of India’s march forward, the availability of Tech infrastructure had made it possible for hundreds of SME’s to start up and flourish.

Whilst the Zimbabwean government has put in place policies to foster the development of ICT within the SME sector, the implementation has been slow considering the supply push for technology realisation.

Analysts and scholars say the policy interventions need to be reviewed to consider how best SMEs can benefit from the wide range of technologies available to facilitate their growth to achieve sustainability and reduce dependence on continued funding.

Zimbabwe is one of the Southern African nations that already have a National ICT Policy and is consulting and learning from the experiences of other countries such as India and Malaysia where ICT models are considered ideal and appropriate for SADC Member States’ stages of development in Internet and wireless communication.

Zimbabwe has been cited as not fully utilizing ICTs due to a ‘resistance to change’ attitude which has led to it lagging behind other countries in the Southern region of Africa.

The adoption of Information technology entailing broadcasting and telecommunications all make up the information and communications network, and the technologies involved are therefore referred to as ICT.

According to Herselman and Jacobs (2006), SMEs are helping to set up a base for the process of economic growth by creating employment opportunities, alleviating poverty and raising standards of living in the Southern African Development Community (SADC).

“However, one of the economic challenges facing the region is the development of entrepreneurial skills supported by modern technologies, which can help the SMEs at collaborative and cooperative levels as they share information, values and experiences in their core-competencies,” he said.

Local SMEs have also cited the lack of funds to acquire the necessary ICT resources required to conduct their businesses.

According to the SADC Policy Implementation, there are several government and non governmental organisations, which are supporting the participation of SMEs in the global knowledge-based economy through e-commerce and e-business developments as well as ICT consulting and training.

The IMF, World Bank, IFC, OECD, UN agencies, and several bi-lateral donors, universities and consulting firms are providing technical assistance to the development of ICT and SME development in the SADC region.

In this country, for instance, mentorship support is given by institutions such as International Labour Organisation (ILO) Start Your Business and Business Extension and Advisory Services. The United Nations Industrial Organisation (UNIDO) has sponsored several technical and industrial training programmes in many developing nations.

Gillwald (2005) strongly supports the need to explore and gain a better understanding of access, usage and patterns of ICT adoption by SMEs  in the SADC countries.

“The government is expected to play a leading role in the ICT policy development and also to increase intervention strategies and programmes that take cognisance of the needs and concerns of SMEs to facilitate ICT adoption in innovative ways,” he says.

According to Rose Mazula, CEO of the Zimbabwe Progress Fund (ZPF), due to the political implications of unemployment and shaken by the 1992 drought, government started focusing on employment creation strategies, mainly tax concessions to large mining investments. Special attention turned to (SMEs), indigenisation and the informal sectors, which had been largely neglected.

“Government’s socialist thrust promoted cooperatives to replace SMEs and the informal sector. Consequently the government and the modern private sector attitude toward SMEs was negative. The financial sector did not take emerging small entrepreneurs seriously. Affirmative action groups and black empowerment groups sprouted. They were in their early days and also not taken seriously. However, some local attention and donors focused on microfinance programs,” she said.

In the mid-1990s to date a lot of banks created windows for small business amid competition from new local banks. The Government has also channelled credit for the sector through banks or other intermediaries. An array of funding facilities has become available, but the cost of their funds is very high. Arrears rates were and are still high on micro loans. Basically, microfinance supported trade, including cross border activities.

Mazula adds basically SMEs did not perform well and entry barriers were very high. Most of these were start-ups by players new to the business environment. The major obstacles are lack of managerial skills particularly in accounting and marketing, and investments were debt driven, with leverage or gearing ratios of 100 percent not uncommon.