The proliferation of backyard industries in Zimbabwe, which shot up as a result of retrenchments, has reached a stage where recognition by industry may now be inevitable.
BY FIDELITY MHLANGA
Dwindling formal employment saw the emergence of Magaba and Glen View informal industries along with many backyard industries that have mushroomed across the country.
A snap survey done by Standardbusiness revealed that backyard industries are flourishing in several suburbs in Harare which never used to have them. These areas include places like Arcadia, Hillside and Hatfield.
This phenomenon has been mostly prevalent in high-density areas where in most cases they operate informally. Backyard industries in a number of medium density suburbs are formalised.
These are mostly in tile manufacturing, car servicing and panel beating.
Standardbusiness last week visited one of the growing backyard small-scale company owned by a couple, Zabrona and Maglin Chakanaka which specialises in concrete tile manufacturing in Harare’s Hillside suburb.
The couple started Zicha Tiles in 1994 but stopped operations nine years later when they left the country to go to the United Kingdom in search of capital to grow the business.
“When we started it was from zero and we grew gradually. I think that has worked for us. We didn’t rush to the bank for loans,” Chakanaka said.
“In 1994 we were doing 3 000 tiles per week using a small machine. From there we realised that it was a lucrative business and we left our jobs and went abroad for 10 years and worked towards buying a big machine and working capital. We managed to buy a bigger machine and we shipped it here before we came back in 2010. After that, we sold one of our properties as we needed working capital.”
“We now produce 5 000 concrete roof tiles a week and employ seven permanent workers. We may also have temporary workers depending on the workload. So far our market is comprised mainly of individuals, we don’t have big contracts but we yearn to do so,” he said.
The majority of informal businesses do not pay taxes and have no form of relationship with formal establishments, according to the Zimbabwe National Chamber of Commerce informal sector report released last year.
However, Zicha Tiles is Zimbabwe Revenue Authority compliant and is certified by Standard Association of Zimbabwe.
Like any manufacturing organisation, the company is experiencing foreign currency problems critical in importing raw materials for their production.
To capacitate their operations, the company has drilled a borehole and applied for heavy-duty voltage from the power utility to cater for heavy-duty machinery.
“We can supply any project. Our plan is to look for our own industrial place in the next three to four years. We can increase time of production from the current five to six per week. We can increase our moulds from the current 1 000 to 5 000 since our machine has that capacity. We may need $500 000 to expand our operations,” he said.
Chakanaka said since they operated from a residential area, they have discussed and agreed with neighbours on the time they should operate their machinery.
Economist Clemence Machadu said the informalisation of the economy had grown over the years, as company closures, downsizing and salary cuts took place in the formal sector. As a result, many skilled people started backyard businesses to make a living.
“For our economy, these home-based businesses have somehow become the fastest growing form of business start-ups as it gives the budding entrepreneurs the flexibility that may not be realised when renting.
“Government has even called it ‘the new economy’. But attention should be put in ensuring that standards are met and that the goods and services they are offering can be marketed at a wider scale or even be exported,” he said.
Machadu said they should safeguard the rights of consumers by ensuring that they received high quality goods and services.
“Home-based businesses should also contribute to the development of the economy by paying taxes, as most of them play cat and mouse with the taxman. They should also protect labour rights as the country is not only looking at jobs creation but ensuring that we have decent work.”
Economist John Robertson said government should move into supporting budding companies by removing regulations and levies that militated against growth.
“Government should reduce costs of regulations, levies and taxes to allow such businesses to grow. The reason why they are not in industrial premises is that they can’t afford to pay rentals and other levies,” he said.
In his 2018 national budget, Finance and Economic Development minister Patrick Chinamasa said government had approved the Small to Medium Enterprises Infrastructural Development Policy that compelled local authorities to provide adequate infrastructure for SMEs in both urban and rural areas, to enhance their contribution to the economy.
“Such infrastructure includes factory shells, warehouses, trading bays for cross-border traders, as well as the necessary basic services such as water, access roads, parking space, ablutions and electricity. To achieve this, local authorities are expected to ring fence at least 30% of revenue collections from SMEs towards infrastructural development,” Chinamasa said.