Economic experts say government needs to support small and medium enterprises (SMEs) to create jobs and enhance socio-economic development.
In his brief analysis, Charles Nyekanyeka, founder of Planetarium Institute, a local entrepreneurship think-tank, said it is possible to create one million jobs in a year through establishment of more SMEs.
He said studies show that about 11 percent of Malawi population owns SMEs and employ about 1.8 million people.
Out of 1.6 million SMEs, 34 855 are identified as high-impact SMEs for economic growth and employment.
Nyekanyeka said if each of the high-impact SMEs are given a task to employ at least 20 people in a year as one criteria to qualify for the business support, 697 100 jobs can be created in a year.
He said government in partnership with other private organisations such as Planetarium Institute, mHub, Growth Accelerator and Synergy can also facilitate the creation of 302 900 SMEs or more in a year.
Said Nyekanyeka: “This approach, with support from experts, can be perfected to make Malawi SMEs ecosystem a strategic sector which can spur industralisation and economic growth.
“SMEs ecosystem remains the safest place to address unemployment compared to creating more white collar jobs in public sector which can exert more pressure on the total wage bill.”
SMEs face challanges such as lack of access to finance, markets, infrastructure, product development, marketing and inadequate labour skills and legal and compliance.
To counter the challenges, Nyekanyeka said government should consider providing concessionary tax on their profits, providing soft loans at a reduced interest rate, intensifying targeted business development support services, supporting targeted certification of their products and improving general marketing systems.
On his part, National Planning Commission director general Thomas Munthali said in a written response that there is need to create a middle-income class and SMEs sector is an important bedrock for take-off.
“In the inclusive wealth creation and self-reliance vision that is emerging, one of the key enablers is private sector dynamism, meaning we need to provide a conducive environment for the private sector to thrive for us to attain the vision,” he said.
Centre for Research and Consultancy executive director Milward Tobias said SMEs should be supported to form cooperatives so they pool capital and expertise together.
He, however, cautioned that government payment system needs to change, saying it cripples SMEs.
In 2019, SMEs contributed at least 45 percent to the country’s gross domestic product, according to Finscope Malawi 2019 SMEs Survey.