Zimbabwe’s Indigenous SME policy Framework, a tool for black empowerment

Zimbabwe embarked on the policy to empower its local people through enacting into law a policy that targeted the empowerment of its citizens. The ‘Indigenisation and Empowerment Act’ (IEP) of Zimbabwe was made into law when the state President, Robert Mugabe signed the Act on March 7, 2008. It is stated in the (IEP) that the foreign-owned companies should offer at least 51 percent of their shares to indigenous Zimbabweans, and also provide for the creation of an empowerment fund to nance the acquisition of working capital, shares, and other forms of nance for indigenous people. The indigenisation process mainly focus on Small and Medium Enterprises (SMEs) as the key drivers of the new economic dispensation hence their performance is of great signicance to this cause. This development was viewed by the citizens as the best strategy to implement in order to empower the nation to participate in the economic development of the country. Methodologically, the study critically analysed the literature of indigenization policies that were applied by some regions of the world and how they impacted on the disadvantaged groups. The researcher went on to analyse the Zimbabwean indigenous policies and how they impacted the SMEs and drew insights from the ndings of other researchers.


Introduction
Before its independence in 1980, Zimbabwe was ruled by the British Colonial Government. The main features of the colonial system were a clear separation of power, wealth and status between the whites and the blacks. This demarcation was evident in every sphere of life. The colonial government perpetuated the economic status of black people at a level below that of white people in the then Rhodesia. The sharp contrast in entrepreneurship development between white and black people were caused by the colonial policies that were biased towards the whites.
The colonial policies favoured the white minority population and did not consider the development of the black people. Strict laws and regulations such as the Town and Country Planning Act of 1946, the Vagrancy Act of 1960, the Urban and Council Act of 1973 and the Vendors and Hawkers by-laws of 1973 restricted growth of the SMEs before independence (Dhemba, 1999). In all these historical developments the blacks were not considered as equal partners in the development of the economy, infect their participation was restricted to provision of manual labour and this promoted the colonial agenda. It is against this backdrop that the post independent Zimbabwe embarked on black empowerment policies aimed at addressing racial, economic and social imbalances hence the crafting of the Zimbabwe Industrial Development Policy (IDP) (2012 -2016) and the Indigenisation and Empowerment Policy (IEP) (2008) became the benchmarks of black empowerment through SME development.

Literature Review
Government Policies Support SMEs Nurul (2016) advocates that Government policy constitutes the blueprint that emphasizes the government plan and initiative to their course of action and the effective government policy therefore, would facilitates the access towards tangible and intangible economic open innovation. The government therefore has the power to craft policies that support the performance of SMEs. Mac an Bhaird (2010) adds that the realization of the signi cant economic contribution of SMEs has resulted in increased attention to the sector from policy makers, as well as academics. Policy-makers appreciating the bene ts associated with more internationalizing SMEs support initiatives that reduce barriers to SME development (OECD, 1998;Bridge et al., 2003;DTI, 2004). The Asian Development Bank (2016) acknowledges that Government policy and the government itself exert a strong in uence on the innovation capacity of SMEs and the government has a critical role to play in every sphere of innovation including access to nance and technology, capacity building and human resources, market linkages, availability of research facilities, and access to key information, among others, via different policies and schemes.
The government support policies for SMEs vary from country to country and from advanced nations to developing countries due mainly to the level of industrialization, cultural context (Eniola & Entebang, 2015;Quy, 2016). Governments of most countries, especially developing nations have invested so many efforts and resources in establishing policies geared toward improving and SMEs (Oni & Daniya, 2012;Quy, 2016;Shariff et al., 2010). Cases in point are Brazil, China, Malaysia, Nigeria, and Saudi Arabia (World Bank, 2014). Eniola & Entebang (2015) found government support policy as having a signi cant impact on the competitiveness of SMEs. Equally, Hadiyati (2015) suggested government support policy on SMEs for e cient performance, and (Shariff et al, 2010) con rmed government policy as having an important role as a full moderator on SMEs performance.
The creations of Government policies for SMEs vary from advanced economies to developing countries and from country to country attributed to variations in social and custom values, the extent amount industry and business settings (Naudé, Szirmai, & Goedhuys, 2011). Sathe (2006 in particular argues that Government regulations and their bureaucratic procedures can hinder as well as facilitate entrepreneurship activity such as new business origination. The Government can occur up with policies that can boost and support the growth of novel technologies, products, and solutions and on the other hand, Government can likewise seem to hinder SME rm performance when it introduces policy which can restrict the autonomy, as well as the entrepreneurial freedom of some variety (Eniola: 2015). The Zimbabwean government in coming up with an indigenisation policies, had the empowerment of the blacks through promotion of the SME performance as the main agenda hence this study seeks to establish the extent to which this broad objective was achieved.
The Indigenisation Policy -the tool to empower the disadvantaged people The indigenisation policy has been adopted worldwide as a process of correcting the political, economic and social imbalances that have been caused by the colonial settlers. McNeil and Shauneen (2014) state that indigenisation acknowledges that the oppression through colonial domination and subordination prevailed for some time and should be eradicated through positive transformation. Columbia Centre on Sustainable International Investment (2014) states that, motivated by the increase in local content from 49% to 63% between 2009 and 2010, Indonesia modi ed its legislation from an initial target of 35% to higher rates. For example, the offshore oil and gas drilling, local content targets have been raised from 35% to 45% and for land drilling to 70%, to be implemented in 2016. Companies offering shipping services have seen an increase in the sourcing of their components from 35% to 75% (Global Business Guide Indonesia (2014). Esteves et al. (2013) states that in its 2014 Law on Hydrocarbon, Mexico has xed a domestic content target of 25% for 2015, to be gradually increased to 35% by 2025 for shallow water projects. CCSI (2014;2016) con rm that in Bolivia, the National Constitution guarantees preference in acquisition of materials from micro and small enterprises and productive community organisations. In this view the principle of indigenisation has been successfully implemented by the cited nations hence the adoption of the indigenisation and empowerment policy by Zimbabwe was a noble idea to empower its local people. The Black Economic Empowerment (BEE) provides a successful example where the indigenous policies were used to empower the black people. Increasing the rate of black men and women-own businesses and increasing the number of the black population in the management structure of existing and new initiatives as well as increased access to nancial and human resources; Promoting investment programs with the aim of achieving broad-based and impactful participation of the black population in the South African economy the purpose of which is ensuring sustainable development and wealth creation for the populace; Empowering rural and local communities by empowering access to economic activities, land, infrastructure, business ownership and skills development; and Promoting nancial access for the economic empowerment the black population.
This was in an effort to alleviate any imbalances of the poor masses that have been kept from any economic uplifting and engagement (South Africa, 2004). All these B -BBEE aims were established under the umbrella of indigenisation.

Problem Statement
Small and medium-sized entities (SMEs) are the key drivers of the economy and the sustainable development of every nation, (Moore et al., 2008). The development of SMEs is a basic requirement for the sustainable development of developing economies (Mudavanhu et al., 2011). According to Storey and Westhead (1994), SMEs are considered as the seed-bed for the development of large companies and are the life blood of commerce and industry at large. SMEs have been identi ed as sources of innovation and business evolution (Wynarczyk et al., 1993). It is against this backdrop of the signi cance of the SMEs in the economy of the nations that Zimbabwe has placed great emphasis on the SMEs. The policy environment which is set by the government has a great in uence on the performance of the SMEs.
Zimbabwe's policy environment does not support the growth and development of SMEs in order to achieve high performance. The government does not have any programmes in place to support the SMEs. There are no capacity building programmes, monitoring and evaluation programmes, research and development and nancial assistance given to SMEs. These sentiments were echoed by Majoni etl (2016) who state that: Zimbabwe's policies are less supportive resulting in higher failure rate of SMEs. SMEs lack the access to business nance, skills and technology shortage, inadequacy or improper infrastructure, lack of managerial skills and SME failure is high in Zimbabwe because of poor training and monitoring of the sector by Government. The registration process for one to be considered an o cial SME in Zimbabwe is hectic and the requirements are di cult to meet.
In this regard, Zindiye et al (2008) further laments that there is urgent need to address the challenges faced by SMEs and an effective implementation of effective measures will result in an increased performance of SMEs which will lead to the achievement of both economic and social objectives of SMEs. If such a policy environment is not addressed, SMEs will not realise their goals hence the need to come up with a more focused strategy to turn around the economy of Zimbabwe.
Globally, Small to medium enterprises are rated highly for their pivotal role in advancing the economic growth and equal access to the resources within the SMEs (Munyanyiwa, 2009). Researchers have highlighted that in the USA and EU countries it is estimated that SMEs contribute 40-60 percent to Gross Domestic Product and 30 to 60 percent in exports. It is also noted that Asian Tigers such as India, Indonesia, China, Malaysia, Japan and South Korea also have high performing SME sectors contributing between 70 to 90 percent in employment and an estimated of over 40 percent contribution in their respective GDPs (SBC, 2015).
In Africa the economic power houses which includes South Africa, Egypt, Nigeria and Kenya, the SME sector is estimated to contribute over 70 percent in employment, and 30 to 40 percent contribution to GDP (Munyanyiwa, 2009). The statistics indicate that the role of SMEs in the economy of any nation as a key driver of the economy is of great importance. In the Zimbabwean situation the empirical evidence according to Mbendi (2003) indicates that SMEs in Zimbabwe contribute less that 5 percent to GDP. Despite the great contributions of the SMEs to employment creation and GDP in other nations, the situation in Zimbabwe shows that the SMEs are facing huge challenges in terms of performance.
The Zimbabwe Industrial Development Policy (IDP) (2012 -2016) and the Indigenisation and Empowerment Policy (IEP) were enacted in order to improve the economy of the country by supporting the SME sector. This led to an increase of SME population which is non-productive as elaborated by Majoni et al., (2016) that SMEs in Zimbabwe comprise approximately 94% of the business population but contribute only 50% of the country's gross domestic product.
The economy of Zimbabwe has drastically deteriorated and Zimbabwe is a country with a failed environment for the establishment of SMEs. No studies have been recorded to unpack the challenges being faced by SMEs which are the prime target of the government to turn around the economy through the indigenous policies as a tool for the black empowerment. Therefore, this study aims to evaluate the extent to which the Zimbabwean indigenous policies have empowered the local people to improve the economy of the country.

Objectives
The Objectives of this paper are to determine the extent at which the Zimbabwean indigenous policies supported the local people to participate in the growth and development of the economy and how the indigenous policies impacted the performance of SMEs. The primary research question in this study is stated as follows: Have the government policies and resources improved the performance of SMEs in Zimbabwe?
Zimbabwe Indigenous Policies

Evolvement of SMEs in Zimbabwe since 1980
It can be argued that Small and Medium Enterprises (SMEs) in Zimbabwe have evolved through three phases from the time it attained its independence in 1980 to date. The rst period is between 1980 and 1990, during this period the policy environment on which SME sector was operating was highly restrictive.
During this period Majoni et al, (2016) states that the government made some effort to address some of the institutional concerns through the establishment of the Small Enterprise Development Corporation (SEDCO), Venture Capital Company of Zimbabwe (VCCZ) and the Credit Guarantee Company of Zimbabwe (CGCZ). During this era the SMEs were overshadowed by the large scale manufacturing industries that were the backbone of the manufacturing sector. The multinational companies like the Anglo American, Lever Brothers and American Motor Industry were set up by the British colonisers and dominated the industrial sector.
The second phase is characterised by the advent of the Economic Structural Adjustment Programme (ESAP) in 1991 which mainly focused on employment creation. When government launched the Economic Structural Adjustment Programme (ESAP) in 1991 it introduced policies that were meant to attract investment in the country. In this regard the SMEs were an integral part of ESAP and were earmarked to contribute to the creation of employment. The major policy statement of ESAP was to improve the status of SMEs as it clearly mentions that the informal and the small to medium scale formal business sectors of the economy together have the potential to make a major contribution to wealth and to employment creation (GOZ, A Framework for Economic Reform 1991Reform -1995 This drive proposes the positive intention of the government to push forward the agenda of the SMEs but not much was achieved. This was caused by the fact the government focused more on the existing industries which had over a century of existence and had long developed a culture, strategy and vision which could not be easily changed over a short period of time. The third and nal phase of the SMEs which was born out of the Indigenisation policies shifted all the economic focus to the SMEs which were seen as the vehicle of black empowerment. Gukurume (2018) states that these policies were anti-investor economic policies as they led to the closure and downsizing of the manufacturing sector which was followed by a decade-long economic crisis (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008). This view was echoed by Manyati (2015) who state that the indigenisation policies led to unprecedented growth of SMEs. It is important to note that at this point the SMEs were now considered as a major industrial institution that would replace the multi-national companies that had since relocated to the neighboring countries.

Zimbabwe Indigenisation Policies
The The Government will priorities the promotion and support to Small Micro Medium Enterprise (SMEs) which are viewed as an important engine for employment creation and economic growth. Given the sector's high labour to capital ratio there will be need to use the sector as strategy for quick turnaround of the economy at a relatively cheaper cost than that of conventional larger industries.

The Government intends to develop and strengthen existing parastatals like the Small Enterprises
Development Corporation (SEDCO) to be able to offer more support to SMES.
Other strategies to be adopted by Government during this period include Infrastructural support; Technology upgrades; Quality Control and Improvement; Research and development, Market access and Financing facilities.
Cluster development including the provision of capacity building for skills training of employees and setting up of common facilities e.g. testing laboratories, common use machinery e.g. lathes, grinders and industrial saws These policies were deliberately enacted in order to empower the SMEs. The Zimbabwe's new economic era was now targeting the black entrepreneurs to drive the economy. It implies that a lot was expected from the SMEs in terms of job creation, production of goods and services and improving the economy of the country.

The Indigenisation and Empowerment Policy (IEP) of Zimbabwe
The IEP of Zimbabwe was enacted into law in order to empower the Zimbabweans to control the economy of the country. The Indigenisation and Economic Empowerment Act (IEEA) Chapter14:33, Act 14/2007 provides the blueprint of the indigenisation process of the Zimbabwean natives. The aims of the IEP are as follows: At least fty-one per centum of the shares of every public company and any other business shall be owned by indigenous Zimbabweans; promote equitable access to the wealth of the economy by indigenous Zimbabweans through establishment of SMEs; To nurture and develop a skills base for the economic empowerment of indigenous Zimbabweans; Promote the use of local raw materials and value addition in economic activities; To provide nancial assistance to indigenous Zimbabweans for any of the following purposesnance for business start-ups, rehabilitation and expansion The concept of empowerment which was adopted by both Zimbabwe and South Africa is based on the idea that resources and opportunities should be deliberately made available to the local people so that they can participate in the growth and development of the economy. There are a lot of similarities between B-BBEE and IEP which are essential to this study. Both policies focus on economic empowerment of black people, increased access to nancial and human resources, access to economic activities, land, infrastructure, business ownership and skills development of indigenisation people whose past has been disadvantaged by the colonial settlers. The indigenisation policies of the two countries mainly focus on economic empowerment hence Zimbabwe can draw a lot of lessons from the B-BBEE programme.
The same principle that was applied by the policy makers in other African states to come up with the indigenisation policy was adopted by Zimbabwe when the IEP was made into law on March 7, 2008. The policy carries the same mandate and objective as those carried by the indigenisation processes of Columbia Indonesia, Bolivia. Canada, USA, India, South Africa, Russia and China as examples. However, the differences are in the periods of implementation, the timing of the programme and the performance of SMEs hence this research will investigate how such a noble cause of helping the local people who have been disadvantaged to participate in the building of their economy through SMEs can be harnessed into a productive development in Zimbabwe.

Methodology
Methodologically, the study critically analysed the literature of indigenous policies globally and narrowed down the literature to the African context and Zimbabwe in particular. Therefore, the researcher implored a desk research approach. The analysis of literature was done through the extensive reading of the indigenous policies and all the related factors of the implementation of indigenous policies. The researcher drew insights from the Zimbabwe indigenous policies and the ndings of other researchers.

Results And Discussion
The implementation of the Zimbabwe's indigenous policies saw the new era of SMEs being ushered in as the main economic drivers of the new economic dispensation in the absence of the multinational companies. The SMEs took the centre stage and their value was stated by Wang, (2016) who pointed out that in developing countries such as in Zimbabwe, SMEs are important for driving the growth and economic development. This view was shared by Zvarivadza (2016) who states that most SMEs are born out of the people or groups of people with the visions to operate and run prosperous businesses (Zvarivadza, 2018). The implementation of the indigenous policies produced some notable results as reported by the Fin Scope Survey (2012) as sited by Majoni (2016) that in Zimbabwe the SMEs sector contributes over 60% to the country's GDP and employs about 5.8 million people. The positive role of SMEs is an indicator of the success story of the implementation of the indigenous policies, however the success is embedded in the numbers only since the SMEs are still struggling.
The other side of literature has it on record that the SMEs are still struggling despite the great expectation from the government. Chigora & Zvavahera (2015) discussed the challenges bedeviling the SMEs in Harare, Zimbabwe, which include (a) lack of access to affordable nance, (b) cumbersome processes of setting-up the business, (c) poor infrastructure, (d) poor institutional structures, (e) limited formal avenues for pursuing interest-bearing investment options, and (f) shallow stock market. This is a clear indicator that the SMEs in Zimbabwe are struggling in their everyday operations.
The indigenous policies were regarded by the government as a best tool to empower the black people in order for them to participate in the economy of the country and eventually control the economy. As a result, local authorities have taken a rm stance in implementing government policy to stimulate SME growth, which will ultimately result in economic growth (Simbi, 2004). In Zimbabwe, the atmosphere in which SMEs operate is characterized by economic challenges that impact the costs and production of the business (Wadesango, 2015). The rate of SME failure in Zimbabwe is very high. Mudavanhu et al. (2011) states that three fth of SMEs in Zimbabwe fail to function within the rst year of registration, a quarter of SMEs fail to continue operating within three years and only a fth of them have a longer life span. Majoni et al. (2016) further stated that most SMEs operate in the informal sector, and the business environment is not conducive to entrepreneurship. These results concur with the research ndings of ThinkTank (2015) who classi ed Zimbabwe as the worst country in Africa in terms of SME operating environment. The  (2015) The given table illustrates the challenge of establishing and operating SMEs in Zimbabwe, and the statistics show that there are di culties of operating SMEs in Zimbabwe. In the past 12 years, Zimbabwe experienced a 50 percent decline in economic growth, 60 percent closure in factories, an 80 percent formal unemployment rate, and a near 100 percent decline in foreign currency reserves (Zindiye, 2008).
The other route cause of failure in SME performance in Zimbabwe is the lack of government commitment to support its policies. This point of view was shared by Makanyeza & Dzvuke (2015) who state that in Zimbabwe, the approach to SME development and promotion lacks government commitment on funding research and promoting technological innovation efforts. This was echoed by Wadesango (2015) who lament that in Zimbabwe, the small businesses have shown resilience and continued to operate and held on in sustaining livelihoods and the economy when the bigger corporates were in distress and most of them closed down businesses due to economic challenges.
Analysis of SME performance The implementation of the Zimbabwe's indigenous policies saw the new era of SMEs being ushered in as the main economic drivers of the new economic dispensation in the absence of the multinational companies. The SMEs took the centre stage and their value was stated by Wang, (2016) who pointed out that in developing countries such as in Zimbabwe, SMEs are important for driving the growth and economic development. This view was shared by Zvarivadza (2016) who states that most SMEs are born out of the people or groups of people with the visions to operate and run prosperous businesses (Zvarivadza, 2018). The implementation of the indigenous policies produced some notable results as reported by the Fin Scope Survey (2012) as sited by Majoni (2016)  The indigenous policies were regarded by the government as a best tool to empower the black people in order for them to participate in the economy of the country and eventually control the economy but they currently face a host of challenges. The environment under which the SMEs are operating have serious negative effects on their performance. These sentiments were echoed by Wadesango, (2015) who states that in Zimbabwe, the atmosphere in which SMEs operate is characterized by economic challenges that impact the costs and production of the business. The SMEs are facing shortages of resources, power cuts, lack of service roads, research and development, market challenges and the government nancial support which was stated in the Indigenisation and Economic Empowerment Act (IEEA) Chapter14:33, Act 14/2007. Even the government conceded defeat in this aspect.
In its own view, the Government of Zimbabwe acknowledges that it has failed to sustain its economy and a rms that it is facing huge challenges to improve its economy. Government of Zimbabwe (2009) asserts that the economy had been facing severe challenges, with the annual real GDP growth suffering declines averaging -5.9% since 2004, cumulatively output declined by more than 40% during that period. The crisis state of the economy of Zimbabwe was con rmed by the report published by the Zim Asset (2013) which ascertains that Zimbabwe experienced a deteriorating economic and social environment since 2000 and this resulted in a deep economic and social crisis characterised by a hyperin ationary environment and low industrial capacity utilization, leading to the overall decline in Gross Domestic Product (GDP) by 50% in 2008. These sentiments expose the challenges facing the SMEs and the economic environment they are operating in hence the government approach failed to address the economic challenges and the black empowerment route did not yield positive results.

Recommendations
The crafting of the indigenous policies to redress the dominance of the multinational companies was a noble idea. It brought up some positive results which include an increase in the number of SMEs establishment and the involvement of the black people in entrepreneurship programmes. To a greater extent the policy framework failed to establish SMEs as the backbone of the Zimbabwean economy.
SMEs failed to improve the economy of the country as the economic situation of Zimbabwe has drastically deteriorated since the establishment of the indigenous policies. This was alluded by Block (2013) who states that empowerment policy has negatively affected the ability of Zimbabwean economy to attract foreign direct investment. These sentiments show that effects of the indigenous policies on the economy of Zimbabwe which has greatly deteriorated. It is against the backdrop of this policy implementation gap that the ndings recommend that Zimbabwe need to come up with a strategic framework that aims to improve the performance of SMEs. The development of home grown strategic framework that can be used by SMEs in Zimbabwe is therefore one of the key economic drivers being recommended foe the improvement of the performance of SMEs.

Conclusion
From the presented facts it can be concluded that the indigenous policies in Zimbabwe to a lesser extent managed to empower the black people, but to a greater extent failed to achieve their major objective of turning the SMEs into an economic hub of Zimbabwe. There is need for the government to rethink and come up with a practical strategy that is easily accessible to all the existing and potential entrepreneurs. Zimbabwe has great potential to improve the performance of SMEs if a more logical and well planned implementation strategy is implemented. Zimbabwe is rich in natural resources like minerals, wild life, soils and the Savannah Climate which provides excellent farming conditions hence it was once dubbed 'the bread basket of Africa', but this has since vanished from Zimbabwe. It can be revived through a positive development and implementation of the policies. The data that support the ndings of this study are available from Thinktank, Southern Times, 16 March 2016 Windhoek, Namibia