The Small and Medium Enterprises (SMEs) Chamber has reported that the sector registered stunted growth in the first half of the year due to economic woes.
SMEs Chamber Executive Director James Chiutsi, told Times Business that several factors have contributed to this slowdown, including the 44 percent devaluation of the Kwacha that was effected in November last year.
He said the Kwacha’s loss of value particularly impacted small business operators who import inputs.
Chiutsi believes that if the SME Bill, which awaits discussion in Parliament, becomes law, many small businesses would benefit from the structured guidance it provides.
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“There is no evidence that the SME sector is growing. If it were, we would have stopped importing very small items from neighbouring countries.
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“With the devaluation, the cost of importing inputs has increased, meaning we are now spending more money to buy the same quantity of goods we previously purchased at a lower cost,” Chiutsi said.
Chiutsi is, however, hopeful that the sector will perform better in the second half of the year, as the government has invested funds in the sector through the Financial Inclusion and Entrepreneurship Scaling (FInES) project.
According to the 2019 Malawi MSME survey, SMEs contribute approximately 47 percent to the country’s gross domestic product and account for 24 percent of employment.
In an interview, market and investment analyst Bond Mtembezeka acknowledged the sector’s current challenges but suggested several measures to improve the situation.
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Mtembezeka called on the government to address funding issues by strengthening existing SME-focused funding programmes such as the National Economic Empowerment Fund and by reducing collateral requirements.
“Additionally, there is a need for capacity building to enhance business management, technical skills, and financial literacy among SMEs. Improving market linkages both domestically and internationally will also support sector growth,” Mtembezeka said. Recently, Finance Minister Simplex Chithyola Banda urged stakeholders, including Parliament, to develop laws that support SMEs growth and facilitate easier access to credit.
