Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says governance structures continue to choke small and medium enterprises (SMEs) from becoming the country’s economic powerbase to stimulate growth.
Speaking during the official opening of the MCCCI SME Expo at the Chichiri Trade Fair Grounds in Blantyre on Friday, the chamber’s president Prince Kapondamgaga said this is despite the sector’s potential to promote indigenous entrepreneurship.
He said in an ideal environment, the sector can absorb labour, transfer modern technological skills, foster innovation and enhance international competitiveness.
He said: “Many SMEs are owner-managed and usually lack proper management and governance structures or operating procedures such as internal financial control systems and proper reporting structure.
“They also avoid offering formal employment contracts to their employees. This is the reason most SMEs are prone to fraud and non-compliance risks with the taxation laws, for instance.”
Kapondamgaga said successful SMEs have the potential to uplift women, the youth and marginalised groups from poverty, stressing that the role of small businesses is particularly important for Malawi, with its relatively undiversified, resource-poor economy and the need to promote exports.
“If we want to grow the economy, we must grow small businesses,” he said.
Kapondamgaga, however, said this being the first expo of its kind, they hope patronage will be improving over the years, dispelling fears that the relevance of such fairs is slowly fading as firms fear there could be no impact on their product sales and promotions.
One of the exhibitors, Ella Kacheche, who is also chief executive officer of Legume Delight, said despite low patronage, she hopes her firm would get the much-needed exposure to penetrate the market further amid access to finance challenges.
In his remarks, director of finance and administration in the Ministry of Industry, Trade and Tourism, Joseph Mkandawire, while acknowledging the challenges SMEs are facing, including lack of access to finance, said the ministry is engaging finance institutions for a possibility of SME tailored products.
About 30 firms took part in the three-day SME Expo which ended yesterday, under the theme SME Growth Through Business Linkages.
According to a recent Malawi Micro Small and Medium Enterprises (MSME) Survey, Malawi has over 758 118 small businesses owners in the country, operating approximately one million enterprises with a revenue of about $2 billion (K1.4 trillion) with 41 percent collectively employing a total of over one million people.
Besides that, about 80 percent of those employed in the sector work for micro enterprises, employing a maximum of four people.
The survey also established that 59 percent of SMEs were excluded from financial services, as opposed to 31 percent that are formally served by some form of financial system, with the rest of the sector relying on informal services. n