In a bid to secure affordable financing for small and medium enterprises, the Ministry of Industry is engaging financial institutions on how best to provide affordable capital to the sector.
The move comes as the ministry recognises that the majority of small and medium enterprises (SMEs) are grappling with access to affordable capital because commercial banks lending rates are high and with strict conditions.
Speaking in an interview, Minister of Industry Roy Kachale said government would like to industrialise the country but access to finance for SMEs will be key.
“We would like to see the rapid sprouting of small businesses that will grow into medium to large investments to grow the economy. We have discovered that access to capital is amongst key challenges hampering small businesses.
“Therefore our meetings with financial institutions are aimed to discuss modalities on how we can secure affordable financing for start-ups who are lacking capital,” he said.
Kachale said what is coming out prominently from engagements with banks is the need for SMEs training to understand how to professionally run their businesses, including governance issues, which banks look at before approving loans.
One of the banks that has had discussions with the ministry is Standard Bank plc whose head of business banking Graham Chipande said in an interview that the bank’s objectives are aligned to what the Ministry of Industry is advancing to facilitate economic growth through enterprise development.
He said as a bank, before supporting SMEs with capital, they look at the state of business governance and knowledge on how to run their business including utmost discipline.
Chamber of Small and Medium Enterprises executive secretary James Chiutsi hailed the government for taking up the responsibility to support SMEs, saying access to capital has long been a hinderance to SME business growth in Malawi.
Figures from the Ministry of Industry and Trade show that the country has about 987 000 SMEs. Out of the total number of SMEs, 98 percent are not registered.