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Today’s Small Business Crisis in Zimbabwe Demands Partnership & Accelerated Digitalisation

By Alan Johnson,  President of IFAC

The fate of small businesses in the COVID-19 crisis will make or break the economy of Zimbabwe. The crisis they face deserves the attention of everyone concerned with the lives and livelihoods of the people of Zimbabwe. Progress will depend on how well the public and policymakers understand the stakes—and especially on how well Zimbabwe can use the wave of digitalisation to its advantage. And at nearly every turn, the accountancy profession emerges as an essential partner of the SME community.

About 70 percent of businesses in Zimbabwe are small- and medium-sized enterprises (SMEs). They account for roughly 20 percent of GDP and employ about six million people—three-quarters of all workers in Zimbabwe. But the threat to these businesses is immediate and dire as the pandemic exacerbates an already tough operating environment. SMEs generally operate with relatively low cash reserves. Help is hard to come by: SMEs have limited access to financing. Only about 3.8 percent of Zimbabwe’s bank loans go to SMEs. Most cannot survive a few months of lost income the way some larger businesses can. Many have already disappeared, and an alarming number of jobs have vanished along with them. The longer the pandemic lasts we are likely to see more business closures.

Aside from the direct impact on jobs and livelihoods, the loss of small businesses is felt in other parts of the economy. The world’s largest businesses rely heavily on small businesses across their supply chains. When any piece of these sophisticated globalized supply chains break, the entire system—from the SME, to the multinational company, to the global consumer—is in jeopardy.

Part of the answer to this structural challenge to the SME sector is in the institutions that handle domestic and foreign investment—and the accountancy profession’s role in them. As the UN Deputy Secretary General’s SME Competitiveness Outlook 2019 notes, big investments—especially from abroad—generally flow to many SMEs at once. But large amounts of money can reach SMEs only if the institutions that connect firms to investors work well. The expertise of the accountancy profession in financial reporting and assurance services, among many other offerings, is exactly what these organizations need to scale up their operations, and to work with SMEs to get them investor-ready. The 2020 edition of the report notes that COVID-19 has driven many governments—well aware of the economic importance of small business—to be creative in supporting the SME sector. Some jurisdictions are extending more generous financing terms to SMEs; some are indirectly supporting these businesses with direct cash transfers to their employees. Strong financial management will be necessary to carry out these programmes with transparency, accountability, and efficiency.

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A pivotal enabler of this is digitalisation as COVID-19 has shifted our “business as usual” reality and propelled the use of technology to enable growth.


To illustrate the swift impact of new technology, just 20 years ago internet users in Zimbabwe numbered in the thousands. Now there are millions of them. This information revolution has brought its own considerable changes to daily life: in the ways people communicate, make connections, and manage their basic needs. It has also opened countless ways to do business differently and more efficiently.

For example, fixed lines can be hard to come by. The infrastructure necessary to make these kinds of connections is expensive, and installing it takes time. Digitalisation has offered cost-efficient and practical solutions, such as cloud-based data storage. These services can be a crutch for businesses during social distancing, boost mobility, and give smaller firms access to resources formerly available only to larger competitors, such as big data services.

The possibilities of digitalisation might exceed the capabilities of many SMEs. Using technologies to market, buy, and sell online is not a simple task. This is also a space for SMEs to look to the accountancy profession: with its increasing focus on multidisciplinary approaches to advisory services, the profession is leading the way in tailoring digitalisation to firms of all sizes.

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Some obstacles to digitalisation in Zimbabwe are structural, and beyond the control of SMEs. The extent and reliability of electrical grids and internet connections, for example, is a national concern. The government’s National Information Communication Technology (ICT) programme rightly focuses on the expansion of geographic access to ICT, among other fundamental improvements to the infrastructure and education programmes necessary to support SMEs amid digitalisation. This is important work: it would be unfair to ask SMEs to embrace aspects of digitalisation that they simply cannot reach.

Professional accountancy organizations around the world—including several in sub-Saharan Africa—have been training their members in the technological skills that governments and businesses need to manage their digital transitions. All stakeholders in Zimbabwe’s technological progress would benefit from the accountancy profession as a valuable partner in designing and implementing programmes.

Although many of the trends in the business environment for SMEs are clear and often alarming, the immense uncertainty of this public health crisis makes it difficult to predict the long-term impact on businesses and citizens. SMEs will continue to respond as known problems evolve and new ones arise. The hard work and ingenuity of the people of Zimbabwe will be the most important resource in rising to this occasion. Digital tools will help, and they are the future for many industries. The accountancy profession will be here as a partner along the way. Keeping this in mind will guide a more successful and sustained long-term recovery and could boost Zimbabwe businesses for years to come.

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