Some Zimbabwean SMEs may fall through World Cup cracks

The glamour of the 2010 FIFA World Cup windfall for Zimbabwean SME businesses is likely to fall dramatically short of the expectations. Some SMEs, mostly those who export tourism services, may have borrowed some decent funds to renovate their accommodation, buy taxis and cars for hire, hoping tourists will flock the country and demand such services. From the onset, the Zimbabwean SMEs could have been aware that they would not benefit directly form the FIFA World Cup but hoping to cash in on some spill-over of FIFA world cup benefits. Now these spillovers may be too small for the kind of investments which could have been laid down. The fact is that many small businesses now stand to lose out as money spent on expansions and upgrades of hotels, lodges and restaurants may not be recouped during the month-long tournament Even in the hosting nation, South Africa, the hotel bookings are a little bit less than what was expected perhaps because the World Cup is coming in the wake of a global recession, among other reasons.

When faced with the reality of having sunk borrowed funds in anticipation of cashing in on World Cup spillovers, don’t despair. The first thing you need to do is to engage your Bank or the lender and explain the problem. Do not try to be elusive or difficult; rather engage the Bank management with constructive proposals to reschedule the repayment of the loan in line with what you may afford. The banking relationship has to be managed very well when your company is in financial distress.

Zimbabwean SMEs should not stay local

Exporting of goods and services gives Zimbabwean small businesses better chances to reach new markets and increase sales, as well as opening up to more than 99.9% of the world's consumers! The world's population is currently about 6.8 billion. Zimbabwe population of about 12 million is by far very negligible (approximately 0.18%) compared to the world population. Therefore, when one thinks of where the next significant group of customers is going to come from,  its likely to be coming from outside the territory of Zimbabwe. Inversely, it is more likely that the local customers are also increasingly not going to be loyal to local suppliers.

It may look a daunting and expensive to export goods and services, but it will actually help small businesses in both current and future economic downturns. Dealing with diversified foreign markets would assist the Zimbabwean SMEs to manage the risk associated with concentrating on local sales only. As a crucial stepping stone, Zimbabwean SMEs should perhaps start by serving the neighbouring foreign markets like Zambia, South Africa, Mozambique etc as these may tend to have less barriers in terms customer information availability, short distances involved, language and culture commonalities, as well as familiar regulations, bilateral and multilateral trade agreements.

Are you a Zimbabwean SMEs or micro-institution who has a product which you feel can do well in the foreign market? Feel free to network with trade facilitators (ZIMRA, ZimTrade, Commercial Banks, Ministry of International Trade etc) to find the best way to assess your export capability and initiate export of your product/s or engage a consultant to assist you in preparing to penetrate foreign markets, including getting that very first order you need to move the first shipment and assistance in export documentation. Call Dennis +263 772 948 419 for some support services.