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30 percent of SMEs shut down in 2020

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James Chiutsi

The National Association of Small and Medium Enterprises (Nasme) has indicted that 30 percent of entrepreneurs could not sustain their businesses in 2020 owing to combined effects of the Covid-19 pandemic and political impasse that characterised the year.

In an interview, Nasme National Chairperson William Mwale gave an example of about 200 female entrepreneurs engaged in mushroom cultivation who shut down operations in Blantyre, Thyolo, Mchinji, Lilongwe and Mzimba due to the same.

He said the situation drove demand so low that they had nowhere to supply their products as hotels, lodges and general food and beverage businesses down-scaled their businesses as well.

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He added that other small and medium-sized businesses in cooking oil production and pigeon peas processing shut down, as witnessed by idle processing plants in Liwonde and Luchenza.

“Many in the cross border trade to China, Zambia, South Africa and Tanzania are struggling or have switched to selling fish and second hand clothes, which also were affected by closure of borders in countries where such goods are sourced.

“Numerous factors that have impinged normal business operations in the country; for example, employees were not paid adequately impinging on their disposable incomes, let alone buying power,” Mwale said.

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He said 2021 promises to be a good year in that many businesses may recover if Covid-19 restrictions and lockdown scares do not characterise the year.

In a separate interview, Executive Director of the SME Chamber James Chiutsi added that 2020 was one of the toughest years in living memory for the SME sector.

“Businesses have been slow because, overall, the economy was on the downside and Malawi, being a country that depends on a lot of direct foreign investment, was affected because we had very little travel happening, not many people coming from outside into the country, vice versa.

“However, moratoriums that were provided on financial services assisted to lessen the burden but the damage had already been done because most businesses were operating at 30 to 40 percent capacity,” Chiutsi said.

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