Impact of trade and economic liberalisation policy reforms on the operations of selected small to medium enterprises (SMEs) in Zimbabwe : a comparative study with South Africa's experiences

Abstract

The study assesses the impact of trade and economic liberalisation policy reforms on the operations of selected manufacturing small to medium enterprises (SMEs) in Zimbabwe, and then compares the findings with experiences from South Africa’s SMEs. Motivation for the study was premised on two fronts. Zimbabwe and South Africa are currently faced with high unemployment rates (80% for Zimbabwe and 25% for South Africa). It therefore follows that job creation and poverty alleviation are the two pressing challenges facing the governments of Zimbabwe and South Africa. Secondly, the governments of Zimbabwe and South Africa have identified SMEs as the engines of economic growth with a special focus on addressing the twin challenges of unemployment and poverty alleviation. The roles and hopes bestowed on SMEs calls for a thriving and vibrant SME sector. On the other hand the adoption of trade liberalisation policies in the two countries has led some analysts to cast doubts on the ability of SMEs to withstand the fierce competition from established Multi-National Corporations and cheap imports. Employing a combined qualitative-quantitative approach, the study finds that trade and economic liberalisation policy had a negative impact on the operations of manufacturing small to medium enterprises in both Zimbabwe and South Africa. Cash-strapped SMEs have been strangled by resource-rich Multi-National Corporations. So dire is the situation that in the absence of significant government intervention, SMEs face an uncertain future. Compounding the matter is the fact that most SMEs in two countries are not involved in exports due to lack of knowledge and resources. The innovativeness ability of most SMEs remains very low. The study does not find significant differences on the impact of trade liberalisation policy reforms between SMEs in Zimbabwe and those in South Africa. It is recommended that the governments of Zimbabwe and South Africa need to introduce incentives to encourage SMEs to export and thus employ more people. Governments in Zimbabwe and South Africa need to factor in the transfer of technology to SMEs as one of the clauses when they negotiate the entry conditions of MNCs. In addition, the governments in Zimbabwe and South Africa must reintroduce tariffs in certain critical sectors of the economy to curtail cheap imports. It is cautioned that failure to protect SMEs could jeopardise the survival of most SMEs in Zimbabwe and South Africa, translating into increased unemployment, poverty and unequal wealth distribution.