Business linkages vital for SME success

The small-to-medium (SME) sector is a fast-growing area and now forms a significant part of the economy of Zimbabwe. With this in mind, it is critical for stakeholders to participate in efforts to make the SME sector a more sustainable contributor to job creation and gross domestic product growth. A lot of work is already going into efforts to formalise many informal sector players and develop them into SMEs. Such efforts also require a clear understanding of how formal to informal sector business linkages can facilitate that process.

What are business linkages?

Business linkages are those ongoing, profit-oriented relationships that exist between buyers and suppliers. They provide important opportunities for micro and small and medium enterprises to grow by participating in the dynamic segments of the economy.

Business linkage arrangements are a widespread characteristic of successful market-based economies where there is an extensive array of such relationships among businesses of all types and sizes. Business linkages are win-win situations for the enterprises involved as well as for the economy and society as a whole.

They can help micro and small enterprises thrive and grow in ways that lead to specialisation, diversification, economic efficiency, and widespread dispersion of economic benefits. Because the government is a major buyer of goods and services in Zimbabwe, linkages with government can also play an important developmental role.

Increasingly, most business people in Zimbabwe are finding such linkages to be an efficient way of doing business as the economy moves away from its historic, vertically integrated, dualistic, and inward-looking structure. Business linkages are becoming more prevalent as restrictions and protection are removed and as increasing numbers of SMEs develop the competence to perform as reliable partners in linkage relationships.

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