TOPIC
With special reference to entrepreneurship business environment in
Zimbabwe and patriotism, explain 5 types of entrepreneurships and at
least 5 common traits of entrepreneurs.
What are the advantages and disadvantages of entrepreneurship?
Evaluate the role played by small to medium enterprises in the
Zimbabwean economy.
INTRODUCTION
Entrepreneurship accelerates economic growth in places all over the
world. This is done by creation of new products, identifying new, better
and cost-effective approaches to service delivery and it creates
employment opportunities for the people. This is, without a doubt, good
for the economic growth of any country, including Zimbabwe.
Small to medium enterprises (most commonly referred to as SMEs)
make up over 70% of all businesses in Zimbabwe and employ over
60% of the country’s workforce, thus making it crucial that people
understand how they operate and how they can be best improved to
make them more beneficial to the nation.
DEFINITION OF TERMS
▪
Entrepreneurship – This is the creation or extraction of economic value.
It is viewed as change, generally entailing risk beyond what is normally
encountered in starting a business, which may include other values
than simply economic ones (Wikipedia)
▪
Business Environment – This refers to the total of all things external to
firms and industries which affect their organisation and operation
(Bayord O. Wheeler). The external things include the set of conditions,
economic, social, political, or institutional in which business operations
are conducted (Arthur M. Weimer).
▪
Patriotism – It is the feeling of love, devotion, and sense of attachment
to one’s country. This attachment can be a combination of many
different feelings, language relating to one’s own homeland, including
ethnic, cultural, political or historical aspects (Wikipedia).
▪
Small to Medium Enterprises - Small to Medium Enterprises are
commonly referred to as “SMEs”. In Zimbabwe, ZIMRA classifies SMEs
as businesses that employ between 5-40 people with annual turnover
and assets from as low as US$50’000 to US$2 million
(www.financialtribune.com).
▪
Gross Domestic Product – It is commonly abbreviated to GPT. It is the
measure of national income and output for a given country’s economy.
It is equal to the total expenditures for all final goods and services
produced within the country in a stipulated period of time
(www.tradingeconomics.com).
OBJECTIVES
▪
To explain the different types of entrepreneurships found within
Zimbabwe, how they are linked to the business environment within the
country and their possible contributions to patriotism.
▪
To explain common traits of entrepreneurs operating within Zimbabwe.
▪
To List the advantages and disadvantages of entrepreneurship.
▪
Assess how much the Zimbabwean economy is impacted by SMEs
operating within it; both positive and negative effects.
▪
To recommend ways in which SMEs can be made more helpful to the
Zimbabwean economy.
METHODOLOGY
Internet – The researcher used the internet to search for journals and
surveys published by renowned companies and institutions on the
subjects of entrepreneurships, small to medium enterprises and
business environment found within Zimbabwe. These topics were
easily accessible through Google and other websites like
(www.rbz.co.zw) among many other information-rich websites.
Textbooks – The researcher visited local libraries and read about the
history of enterprises and the Zimbabwean economic history by reading
books like “Zimbabwe: Poverty, Poverty and Poverty. African Political,
Economic and Security Issues” from authors such as Vimbai C.
Kwashirai and others.
FINDINGS AND ANALYSIS
Types of Entrepreneurships
1. Small Business Entrepreneurship
This is often when a person runs a small business, typically with the
help of family and friends or hiring local employees. Usually, the aim of
the owner is to make enough profit to support their family and lifestyle.
Such businesses are common in Zimbabwe, with street vending, hair
salons and even restaurants selling affordable low-priced food.
2. Large company entrepreneurship
This type of entrepreneurship involves growing a large company from
an already existing business model. They aim to acquire smaller
businesses and intellectual properties to constantly improve the
products and services in order to grow the customer base and
maximize profits. Econet Wireless Zimbabwe is an example of an
entrepreneurship founded and operating in Zimbabwe that has grown
very large, employing over 2000 employees all over the country.
Starting large scale businesses in Zimbabwe can be difficult,
considering the sanctions that are in place that affect Zimbabwe,
hindering potential investments from foreign investors. Strive Masiyiwa,
the founder of Econet was able to overcome these issues despite the
difficulties he faced.
3. Scalable start-up entrepreneurship
This Entrepreneurship focuses on rapid growth and big profits for the
business. The business often seeks to hire staff that can readily adapt
to the fast-changing size of the business. Venture Capitalists often
favour investing in these companies as they offer quick returns on their
investments. Companies like Facebook and Google are prime
examples of this type of entrepreneurship. In Zimbabwe, a notable
example is the “The Comic Pastor”, who specialises in social media
influencing. The company has grown exponentially to well over 200’000
followers on Instagram thanks to their viral, entertaining content. They
generate most of their profits through advertisement revenue from
companies that want to be featured on their social media platforms
(www.Instagram.com/thecomicpastor).
4. Social entrepreneurship
The objective of social entrepreneurship is to solve social problems.
Entrepreneurs who seek to do this, do so with their products and
services all in an effort to do social good. They may do so through
creating non-profits or perhaps more profitable businesses that also
give back to the community. Tadzipa Madzima is a well-known
entrepreneur in Zimbabwe. He founded the “IGNITE Youth”
organisation, who’s purpose is dedicated to encouraging young people
to emergence and a life of purpose. This is very patriotic and without a
doubt a great cause (www.igniteyouth.co.zw).
5. Imitator Entrepreneurship
This involves using other people’s business ideas and improving them
where possible in order to create a more profitable or sustainable
business model of that original business. This can be seen as form of
innovative entrepreneurship, except it is safer as it follows a business
model that has already been attempted before. Examples of these can
be found all over Zimbabwe mostly in the form of restaurants, where
entrepreneurs create new restaurants offering different meals and
services in order to appeal to a particular niche in the market.
5 Common traits of Entrepreneurs
1. Passionate and self-motivated - They love what they do and are not
easily thrown off-course by demotivation on their way to achieving their
goals. Strive Masiyiwa is a prime example of a passionate entrepreneur
in Zimbabwe. Forbes Magazine named him one of the 10 most
powerful men in Africa. He has invested over US$1.5billion in
Zimbabwe in the last 10 years through multiple businesses,
scholarships, donations and much more and shows no sign of slowing
down in his quest to realise his ambitions.
2. Risk Taking – They often go for more bolder ideas that are not the
norm by taking calculated risks that are likely to yield high rewards if
executed perfectly. A good example is Billy Rautenbach who has been
involved in over 150 ventures that have included companies involved in
transportation, cobalt and platinum mining and biofuel production in
Africa. At some point he was even the richest man in Zimbabwe thanks
to the success of most of his endeavours.
3. Innovative – Without a doubt, Successful entrepreneurs are often
innovators. They often come up with new ideas, ways and/or
approaches to problem solving. A good example is Strive Masiyiwa
introducing Ecocash in the Zimbabwean economy to solve most of the
problems faced by Zimbabweans when it came to money transfers,
banking and storage.
4. Confident – Entrepreneurs have to show confidence when executing
their business plans. This can be said for most successful
entrepreneurs because confidence in yourself inspires people around
you to be confident in you. Successful Zimbabwean Entrepreneurs
such as the most successful female entrepreneur in Zimbabwe, Divine
Ndhlukula, who founded DDNS Security Operations, is a great example
for this trait. The same can be said for others like Shingai Mutasa who
was instrumental in the building of Joina City building in Harare.
5. Opportunity recognition – Successful Entrepreneurs are usually able to
recognise opportunities in the form of untapped markets, methods of
production and ideas. A good example is Billy Rautenbach who took
over his father’s company, Wheels of Africa, and expanded it greatly,
becoming a significant player in southern Africa, controlling around
75% of the Zimbabwean haulage market in 1999. This was a true show
of patriotism as it helped make transportation of goods and other
commodities for companies easier in Zimbabwe.
Advantages of entrepreneurship
•
There are no managers to report to everyday. This allows you to
operate the business according to your own rules and regulations as
you see fit.
•
There are fewer restrictions. Entrepreneurs can have businesses they
operate from anywhere like at home, on trips, cafe shops etc
•
They are free to pursue any ideas, like adding any products or services
to the list of those they already offer. They don't have to get special
permissions from any boss to do whatever they wish to do.
•
Unlimited earning potential.
•
You can have a positive impact on people's lives within the company
and around the community in which the business operates. This is
achieved through the creation of jobs as the business grows to larger
scales and helping customers have access to goods and services
through different and perhaps more convenient ways than before.
Disadvantages of entrepreneurship
•
There is no Fixed income. Money earned by the business owner
depends on the profits made by the business after all the expenses are
deducted. This creates pressure for the owner to make consistently
good decisions in order to generate profit.
•
Stiff competition. They face competition in the form of more established
companies that have more resources and a bigger reach when it
comes to getting resources to customers quickly and more efficiently.
•
High Risk. There are a number of factors beyond the control of the
entrepreneur that can disrupt the favourable conditions of the business,
such as war, an unprofitable market or a sudden loss of operational
funds.
ROLE PLAYED BY SMALL TO MEDIUM ENTERPRISES IN THE
ZIMBABWEAN ECONOMY:
SMEs contribute immensely to a nation’s worth. They represent roughly
90% of all firms and are responsible of roughly 50% of employment on
average worldwide (Worldbank.org). In Zimbabwe, they make up more
than 70% of all businesses and employ more than 60% of the country’s
workforce (newsday.co.zw). According to financial data, they account
for roughly 20% of GDP and employ over 6 million people, which is
over 60% of all workers in Zimbabwe (allafrica.com).
SMEs contribute to Zimbabwe’s GDP in many ways with businesses in
the agriculture sector, service sector and mining sector. According to
research done by the Reserve Bank of Zimbabwe in 2022, 39.2% of
SMEs in Zimbabwe are Agriculture /farming oriented, and have a total
annual turnover of USD$4.6 billion. Considering that Zimbabwe’s main
export product is tobacco, it can be concluded that Zimbabwe’s GDP is
affected positively by agriculture-based SMEs which contribute more
than 50% of the country’s yearly tobacco produce (euronews.com).
The large number of SMEs operating in Zimbabwe contribute greatly to
employment creation. This has helped reduce unemployment and
combat poverty. According to the survey of micro, small and medium
enterprises in Zimbabwe conducted by Finmark Trust Zimbabwe, there
are about 302 thousand full-time employers with 1.3 million full-time
employees, up from 235 thousand employers with 622 thousand fulltime employees in 2012 (rbz.co.zw).
SMEs in the mining sectors and agricultural sectors help to boost the
number of Goods and raw materials exported from Zimbabwe. This
increases the amount of available exportable products, thus
strengthening Zimbabwe’s position on the international market against
other countries that export the same products.
SMEs help to Uplift people’s living standards around the country by
providing a wide range of services and product variety across all areas
around Zimbabwe. Creating a small business enterprise is fairly simple,
and if done in remote rural areas, as is the case in Zimbabwe, it brings
previously unavailable products and services to those places.
It is undeniable that SMEs play a huge role in the economic
diversification of Zimbabwe’s economy. Since there are SMEs
operational across all economic sectors of Zimbabwe, these help to
support quality upgrading and productivity growth in existing sectors
and allow new varieties of products to be developed.
Despite all the positive contributions that have been made by the SMEs
in Zimbabwe, negative effects have also been observed. Large
companies have proven to be quite essential to the economy as
compared to SMEs as they attract more funding from foreign investors,
which has a positive impact on the country’s economy and image.
Quite a number of SMEs tend to go out of business quickly, failing to
cross the five-year threshold, filing for bankruptcy and thus leading to
employment termination for those employed in those companies. As
the number of SMEs grow, so does the number of competitors selling
the same product, leading to less profits and potentially profit loss.
CONCLUSION
No matter how you look at it, SMEs are an essential part in any parts of
the world. It is important for the Zimbabwean government to put policies
in place that will protect and improve social and economic growth by
managing SMEs in a conducive manner. Since the majority of the
country’s workforce operates in the small to medium sized enterprises,
they can have huge impacts on the economy both positively and
negatively.
In this research, clearly the positive effects of SMEs on the
Zimbabwean economy outweigh the negative, therefore SMEs have a
positive impact on it.
RECOMMENDATIONS
The Zimbabwean government should help boost SMEs activities in
remote areas of the country so as to fight the problems of
unemployment which are still plaguing the country. This can help boost
the economic strength of the nation. This can be done by creating a
Credit Guarantee Scheme as advised by the World Bank Group, or
something similar.
Efforts towards further economic diversification through the creation of
a wide range of SMEs across all economic sectors has to be
encouraged. This can help save the economy in case an unforeseen
disaster, such as a mass crop failure like in China, 1959-1961, which
resulted in a famine. Such a disaster could easily affect Tobacco
production and the agricultural sector severely causing hunger, a fall in
GDP, social and economic troubles across the country. By having a
diversified economy, Zimbabweans will have a chance to save itself
through exports in other sectors to support the imports of agricultural
products.