How Entrepreneurship Is Important To The Economy

The management of the economy today is of great concern and on of the world's most discussed issues in business. The concern comes largely from the current economic situation which in most cases has been handled poorly by the country's central government.

There is also a debate around the location and manner in which the economy is run.

The focus has been around the role of the Reserve Bank of Zimbabwe (RBZ) and often referred to as a 'private sector banks', who act as an extension of the central government.

Meanwhile there are those who believe that the government has the same responsibilities as a private sector bank as the RBZ is in fact privately owned.

Unemployment situation in Zimbabwe

woman, cook, boiling pans

The current unemployment situation in Zimbabwe seems to have worsened in recent years and has led to a high number of jobless people seeking employment in very unappealing conditions.

The high joblessness rate is further aggravated by an explosion of service industries. Companies are diversifying from the traditional sectors of construction, manufacturing and mining.

It is generally accepted that technology and manufacturing are the most popular industries in Zimbabwe. While the trend in the most part is to outsource manufacturing and services to other countries, a number of local companies have risen to the challenge and are now doing the jobs that once only foreign companies could.

I believe that Zimbabwe needs to embrace the idea of using innovative ideas to foster economic growth, regardless of the technologies.

The government has opened up the economy for foreign companies to invest, but the approach is often not practical, especially when the market is underdeveloped.

What is more important is that when Zimbabwe embraces innovation, not just thinking outside the box to invest in innovative ideas.

But when Zimbabwean businesses start experimenting and implementing them, the country will not just see economic growth, but in particular economic growth that would make Zimbabwe's citizens realise that their lives can improve.

Entrepreneurship and innovation in Zimbabwe

innovation, business, information

One of the challenges that Zimbabwe faces is that the country has little control over the costs and sources of capital. In the area of investment and technology many times people want to invest without knowing the barriers that are present.

The investment usually comes with few payback periods and hence the high risks involved.

An example of the barriers being an investor coming to Zimbabwe to invest in the technology sector but finding the technology exchange so costly to buy that it ends up not being of any use to them.

While many Zimbabwean companies have tried to solve the problem, many of the solutions on offer were overpriced.

The problem of high costs have been further complicated by the fact that the country is underdeveloped, meaning that when companies want to implement technological solutions they usually end up paying a premium for them.

To remedy the situation the government could try to ensure that technology prices in Zimbabwe are lower than they are in other countries, but this solution has proven to be ineffective in the past.

The government could also increase the number of investment opportunities in the country so that investors could not only get a high return on their investment, but also at a reasonable price.

Another possibility is that investors are not aware of the opportunities available in Zimbabwe.

I believe that the problem of lack of investment is likely to be more serious than most people realise, and many investors are still skeptical about investing in the country.

The probable solution

ipad, tablet, technology

Zimbabwe has great business potential, and entrepreneurs need to be encouraged to explore the opportunities that the country presents and to invest in Zimbabwe.

In order to encourage investment in innovative technology the government could tax technology and ICT companies at a low rate, although the effect of these tax cuts could be negated by the high cost of imports, since the country is so underdeveloped.

Given that technology has a strong global influence, the global market would likely take steps to curb the effects of such high taxes.

A second solution is to make the investments that these companies need much more affordable to Zimbabwean companies.

The government can look into lower cost financing options, but a solution that might be easier to implement is by making sure that technology companies pay their taxes in a timely manner.

Tax reform

The country can also look into increasing taxes on existing industries and technology companies, as well as lowering taxes on the technology companies.

In addition, the government could reduce the investment restriction on the companies that it approves to invest in Zimbabwe, which often prevents entrepreneurs from getting into the country.

For example, technology companies that can be used for cyber-crime can be forced to check in with the state authorities regularly and these checks could lead to the company's technology being restricted.

This would put a stop to the type of projects that the technology companies that I have worked with have been trying to fund.

In Zimbabwe, the cost of technology can pose a problem. In addition to the high prices, technology companies often pay high import duties when buying technology from overseas.

 

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