Economics Association of Malawi (Ecama) president Henry Kachaje has said financial management literacy among small and medium enterprises (SMEs) is key to a country’s economic growth.
He said there is need to equip SMEs in Malawi with financial management skills.
Speaking at a one-day training for SMEs in the Northern Region in Mzuzu organised by FDH Bank on Thursday, Kachaje said SMEs play an important role in every economy.
However, a number of SMEs are started by people with no financial management skills or knowledge; hence, experience difficulties to deal with other investors.
Kachaje said for an economy to thrive, it needs the private sector but it is not just big investors who drive the economy.
He said SMEs, who form a bigger percentage of the business community, play a great role in transforming the economy despite the challenges they face.
However, a number of SMEs have a problem when it comes to financial management as their literacy levels are low.
Kachaje said due to low literacy levels, it becomes hard for SMEs to deal with banks and other financial institutions.
He said most of them do not keep financial records and it is difficult for them to transact their businesses.
He said there is need to train SMEs so that they are able to deal with financial institutions, which will in turn boost their businesses.
“Banks become reluctant to give them loans but if they are properly trained, it would help.”
FDH Bank head of personal and business banking Kawawa Msapato said the bank is trying to address the financial literacy problem among SMEs to create a conducive environment for the traders.
He said the fact that SMEs customers face various challenges does not mean that the bank should leave them out.
Msapato said the bank will ensure that SMEs are well trained and grow in their respective businesses as well as venturing into other businesses.
“You can give SMEs financial assistance, but if there are low financial literacy levels, the investments will be affected,” he said.
Apart from the training, the SMEs were also given an opportunity to interact with successful businesspersons so that they learn from their success stories.