SMES should seize chance to grow, enter new markets

The importance of small and medium enterprises (SMEs) for development in Africa is acknowledged worldwide.

SMEs have become the cornerstone of most economies in Africa, creating employment and reducing poverty.

They have been able to do that because of their structural make up, that makes it easy for anyone to start a small business.

Since nothing much is required except small capital to venture into business, thousands of people have over the years been setting up small entrepreneurial projects in various sectors.

Manufacturing, mining, agriculture, commodity broking and all forms of vending have become hubs for SMEs, which are creating employment to thousands of people annually.

A cursory walk in any part of the continent from Cape to Cairo, one is confronted by hordes of people, mainly women, selling all sorts of wares ranging from food to toothpicks.

On the other side of town, the majority of women would also be engaged in various entrepreneurial projects.

With an abundance of resources and a youthful population, African leaders have started to invest in entrepreneurial projects to create employment and wealth for their people.

It is estimated that small and growing businesses create around 80 percent of the continent’s employment, thereby establishing a new middle class while fuelling demand for new goods and services.

SMES are fast becoming a more dominant form of business ventures in many African countries, Zimbabwe included, because of the overarching role they have been playing following the collapse of major conglomerates that used to sustain economies in Africa.

Buoyed by their success rate, several governments in Africa have since set up funding models to help SMEs grow.

In July 2017 Ghana launched the National Entrepreneurship and Innovation Plan to provide integrated support for start-ups and small businesses.

Almost a year later, Rwanda took robust steps and secured a US$30 million loan from the African Development Bank to establish the Rwandan Innovation Fund.

Zimbabwe also boasts several funding platforms that include the Empower Bank which fund projects of youths and women.

However, while the money they get is strictly “seed capital” needed to start manufacturing or production, they also need money to pay rent, utilities, insurance premiums and a host of other operating costs.

Too often, the money that SMES receive ends up being used elsewhere instead of being injected directly in the core business

Beyond funding, governments will need to address a lot of challenges facing SMEs so that they can meaningfully contribute to economic growth.

Because of limited resources, most SMES still struggle to find appropriate businesses premises where they can operate from. This has been largely due to central Government’s failure to set aside adequate land for the SMES.

Places set aside by the Government in Harare that include Glen View 8 Complex, Siya So, Coca Cola Market along Seke Road and Mupedzanhamo in Mbare have become too small to accommodate the growing number of informal traders who conduct business from these designated zones.

This has resulted in the majority of entrepreneurs conducting businesses in their backyards or in undesignated places, creating chaos in the process.

Reports that Mupedzanhamo complex will permanently close to pave way for a cultural city will deal a further blow to hundreds of traders who have been conducting business there.

Elsewhere across the country, land initially designated for informal traders who manufacture furniture and other household goods is also being repossessed by local authorities working in cahoots with land barons, throwing thousands of people into the streets.

This is one area that the Government working with local authorities would need to address to ensure that SMES continue to thrive.

There are quite a number of businesses in the informal sector that are manufacturing products of high quality which can compete with big brands on the international markets.

Sadly, the products do not go beyond the producer’s storerooms because the manufacturers face constraints inn the standardisation of their production processes.

Training for such SMES would be crucial to ensure that they keep abreast with international trends and technology innovation.

To keep the vision alive, the African Union (AU) is formulating a guarantee scheme for micro, small and medium-sized enterprises (MSME) to speed up the continent’s economic transformation, an official said on Wednesday.

Amine Idriss Adoume, the director in charge of delivery programme and coordination at the African Union Development Agency (AUDA-NEPAD), told a virtual meeting recently that one of the biggest impediments to the expansion of small businesses in Africa is the lack of affordable finance.

“The scheme will be developed jointly with partners and seeks to unlock access to affordable finance for the continent’s small businesses,” Adoume said during the launch of the Pan-African MSME Academy in Kenya.

The AU is prioritising the development of MSMEs because of their significance in the region, he said.

There are currently between 95 million and 100 million MSMEs in Africa which employ some 300 million people.

De Sousa dos Santos reports in the 2015 World Economic Forum that the strong growth of many economies in Africa can be attributed to the boom in SMEs.

The African Union Development Agency-NEPAD last year launched the “100 000 SMEs for 1 million Jobs by 2021” campaign at the AU Permanent Observer Mission.

The campaign that was launched on the margins of the UN General Assembly on September 26 in New York, aims to leverage strategic partnerships, build ecosystems of efficiencies and test new ideas to move the needle on youth development.

AUDA-NEPAD, the development agency of the African Union coordinating and executing priority regional and continental development projects, aims to contribute towards decent employment for Africa’s youth by supporting sustainable youth-owned SMEs especially for young women.-herald.cl.zw