Small and medium enterprises (SMEs) have the potential to boost the economy if properly supported by banks and other financial institutions, Small and Medium Enterprises Association (Smea) president James Chiutsi has said.
In an interview early this week, Chiutsi said the country’s banks do not fully understand the operations of small and medium enterprises as they have not openly partnered with SME associations.
“Financial wise, SMEs are going through very difficult times. With bank rates rising, the kwacha depreciating and few sources of capital which continuously erode buying power, products and services by SMEs become very expensive,” he said.
He bemoaned the tendency by some banks to be suspicious of SMEs, which he said has made it difficult for SMEs to approach financial institutions for both loans and financial advice.
National Bank of Malawi (NBM) has nevertheless pledged its commitment to working with SMEs which it describes as the engine for economic growth.
NBM business development manager Wezi Mwazani recently said the bank looks at the sector as a source of future corporate customers if properly managed, saying SMEs have various financial needs which can be adequately met by the bank.
She admitted that SMEs continue to face unfavourable macroeconomic environment of the country such as access to viable markets, access to finance for start up and expansion of the business and lack of clear government policies to support SME growth.
Mwazani tipped businesses to develop clear business plans, acquire good business and personal account management skills, seek financial advice from bankers and watch profit margins at all times.
Available records indicate that there are in excess of a million SMEs in Malawi employing more than one million people.
Small and Medium Enterprises Development Institute (Smedi) president Charles Kazembe is on record as saying SMEs are vital in an economy as wealth and job creation is largely dominated by SMEs in the present time, hence must be supported.