Despite Malawi having more than one million small and medium enterprises (SMEs) with a substantial contribution to gross domestic product (GDP), more needs to be done to make SMEs vibrant, an official has said.
Principal Secretary in the Ministry of Industry and Trade, Cliff Chiunda, said in an interview in Lilongwe that SMEs are beset with a myriad of challenges that hinder their growth.
He said this on the sidelines of a Policy Validation Workshop in Lilongwe last week.
Said Chiunda: “Some of the challenges that SMEs face include a weak culture for entrepreneurship among indigenous Malawians.
“There is also lack of access to finance due to the requirement for traditional forms of collateral as well as high cost of capital and weak private sector support institutions.”
He said an outdated policy and inappropriate legal and regulatory framework, unfavourable procurement practice, lack of access to technology and markets, unreliable and costly infrastructure services and low awareness of the policy environment rules and regulations also stifle growth of small businesses.
Chiunda said it is against this background that government with support from UK’s Department for International Development (DfID) has updated the SMEs policy to attain an open, sustainable and supportive policy environment necessary for rapid national economic growth through the development of SMEs in Malawi.
The ministry’s director for private sector development, Esther Mwimba, said there is need for a new SMEs policy because the current one is archaic.
She said: “Specifically, the SMEs policy seeks to address key constraints that inhibit the competitiveness and growth of the sector.
“The policy seeks implementation and integration as a prerequisite for SMEs development, create a conducive legal and institutional framework for SMEs, build sustainable markets in support of SMEs development and growth.”
It is expected that the SMEs policy will guide government and private sector interventions in SMEs development as a springboard for the economic advancement.