Eugene Nizeyimana - Improving the Competitive Strength of SMEs in Malawi

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Malawi SME Development Conference, 20 April 2013
Eugene Nizeyimana
Chief Operating Officer, SSCG
@2013 SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Improving the
Competitive Strength
of Small Businesses in
Malawi

SSCG Outlook – What we do?
Khartoum
Cairo
Tripoli
Algiers Tunis
Rabat
Nouakchott
Bamako
Dakar
Bissau Niamey
N´Djamena
Freetown
Monrovia
Yamoussoukro
Ouagadougou
Abuja
Accra
Porto–Novo
Malabo
Sáo Tomé
Douala Bangui
Libreville
Brazzaville
Kinshasa
Luanda
Windhoek
Lusaka
Harare
Gaborone
Pretoria
Maseru
Maputo
Maroni
Mogadishu
Nairobi
Addis Abeba
Kampala
Kigali
Bujumbura
Antananarivo
Lilongwe
Djibouti
Asmara
Dodoma
Juba
Mission:
 Facilitate private sector
development, investment and
trade in Africa.
 Promote human capacity
development: skills
empowerment, knowledge
transfer, innovation and
entrepreneurship.
 Strengthen the base for growth:
Improving investment climate,
business infrastructure and
regional integration.
 Foster economic growth: SMEs,
industrial competitiveness, value
chains development and job
creation.
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YOUR LOGO
Inspiring
Entrepreneurship and
Innovation: Fostering
SMEs Development
and economic
growth in Africa.

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 A capacity building initiatives to improve business
performance, efficiency , competitiveness and drive
economic development.
 A platform to act as a catalyst for action and to help
accelerate the achievement of small businesses.
 Increase the scale and pace for implementation of
entrepreneurship and innovation solutions through
dialogue.
 Identify new innovative mechanisms and solutions to
support SMEs growth in Africa
About SSCG Africa SME Growth Forum
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How can We Improve the
Competitive Strength of Small and
Medium sized Enterprises (SMEs) in
Malawi?

 “ The Missing Middle”
 Engines of Sustainable Economic Growth
 Classification: Based on the number of employees or on monetary measure
(capitalisation, investment turnover and sales) or a combination of two or
more
Measure Employees Total Assets
Micro
Enterprises
10 < less $100 K < Less
Small
Enterprises
10 – 50 $100 -3 M
Medium
Enterprise
50 – 300 $3 – 15 M
World Bank 2012
SME Classification
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The Role of SMEs in the Economy
 Account for the bulk of the enterprise population in a country, irrespective
of their levels of economic development.
 Create employment opportunities.
 Contribute to social development and people livelihoods.
 Are prime mover of industrial development in many developed economies.
 SMEs play pivotal role in building a solid industrial base.
 The nursery of entrepreneurs.
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Case Studies: SMEs Contribution in a Global
Perspective
The entire industrial base in many of developing countries is virtually composed of SMEs. They, along with micro enterprises, are
high potential sector for employment generation and provision of livelihood to millions of people in African countries like Swaziland,
Malawi, Kenya , Nigeria and Ethiopia, in South East Asian nations like Bangladesh, India, Sri Lanka and in Latin American countries.
In Japan - 98% of seven million units are SMEs. They account for about 80% of total employment of around 55 million persons.
Around 52% of the Japanese total exports emerge from this sector.
SMEs are a most dominant form of business organisation in the U.S. They constitute around 98% of all businesses, employ over half
of the US workforce and generate 54% of the sales revenues.
Around 94% of total Italian firms are reportedly SMEs and they contribute about 40% of total GDP and 43 per cent of total
employment.
Similarly, they constitute over 95% of the units and more than half of the total employment in economies like Australia, Canada,
Germany, United Kingdom, France, etc.
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SMEs Contribution to Economic and Social
Objectives
Social Economic
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Challenges Before SMEs
Challenges Limitations
Operation,
management and
entrepreneurial
• Lack of new technologies and E-commerce
• Size limitations
• Lack of labour skills - Inability to hire qualified and
talented people
• Raw material constraints
• Infrastructure limitations
• Financial limitation
• Lack of knowledge and inability to acquire new
management skills
Competition and
exposure to global
market
• Little exposure to international market
• Lack of market information and commercial intelligence
• Inability to forge linkages to meet large demands
• Uncompetitive product – price, standards and quality
• Inability to create brand loyalty
• Inadequate institutional support
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Opportunities for SMEs to Exploit
• The foregoing, however, does not mean that SMEs sector has no future.
• The challenges noted above, in fact, are also the opportunities for SMEs to
exploit.
• The new economic order has opened up several opportunities for a
discerning SMEs to expand their businesses beyond the national borders.
• SMEs today have an opportunity to modernise their entire business
operations with easy access to all needed inputs, including modern
technologies.
Exploiting global
export market
Enhanced scope for
partnership and
alliances
Easier
communication with
customers and
suppliers
Scope of becoming
local suppliers to
industrial giants
Develop competitive
management skills
Implement
international
standards
Access market
information
Access to technology
and innovative
manufacturing
systems
Scope to attract
investment (FDIs &
Diaspora) and
capital.
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SMEs
Adaptability in
Challenging
Environment
Swiftly adapt
to changes
Require
relatively less
operation
capital
Innovative
Able to take
quick
decisions
Capable of
developing
niche markets
Most
important are
nursery of
entrepreneurs
SMEs Adaptability in Challenging Environment
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Promoting SMEs Development Consciously
 Looking at challenges faced by Malawi such as: inflation, unemployment and
slowdown in investments: Stakeholders need to re-look at SMEs as answer to
these problems in view of their adaptability.
 Technological developments, resulting in several large corporations vacating
areas of manufacturing and concentrating more on marketing, technology
development and diffusion, have favoured SMEs.
 Recognising the positive contribution that SMEs could make to the overall
economic growth. Need to deliberately promote, nurture and develop the
sector.
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New Dimension of Business Development in
Malawi
 To exploit these opportunities and become an integral part of the fast
emerging global production system, SMEs need to be competitive in a broader
sense, capable of competing with foreign companies both in the domestic and
international markets.
 SME can only be termed as ‘competitive’ if they are able to service the
required demand on time in desired quality, price and place.
 Instituting SME-friendly policies and programme, with a very effective delivery
mechanism can go long way in strengthening SMEs. Since the government is
beset with several other responsibilities, and also have their own limitations,
the private sector and other stakeholders need to be roped in to provide
required support to SMEs.
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Solutions: Developing SMEs Competitive Edge
Some of the new forms of BDS that could help in improving the competitive
strength of SMEs in Malawi are :
Skill
Development
Capacity building in specific areas
Technical skill development in identified industries
Enterprise
Digitization
and
Innovation:
Technical Assistance
Helping introducing cost and energy-effective technologies
Open innovation
Providing common facility centres which will act as knowledge exchange hubs.
Market
Development:
Help forging SME linkages.
Help identifying niche markets.
Help to develop competitive brand / consortium approach.
Hosting conferences or trade-fairs to establish contacts, supply databases and other market insights.
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Solutions: Developing SMEs Competitive Edge –
Cont.
Access to
Information:
Trade barriers, trends, competitors and trading standards.
Government policies and programmes; training opportunities and facilities; trade fairs and exhibitions.
Providing information about new product development or the need for change according to
environmental influences.
Environmental issues and quality management.
Advisory &
Consultancy:
Specialised services to address the specific issues.
Help develop effective strategies for growth
Financial management support.
Access to
finance &
Capital :
Combining many of these non-financial services with provision of finances would be beneficial to both
SMEs and financial institutions.
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Stimulate entrepreneurship and innovation.
Empowerment - Improve SMEs management skills.
Support SMEs access to global market & information.
Increase industrial productivity and competitiveness.
Empower SMEs to create employment opportunities.
Drive value - Promote economic growth.
Enterprise Digitization - Access to technologies and crowdsourcing .
Key Objectives in Malawi: How we can stimulate
SME growth?
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Projects
• Enterprise Training &
Advisory
• Enterprise & Start-up Week
• Lilongwe and Blantyre
Business Hubs
• Malawi Business Award 2013
& Malawi SMEs Forum
• Malawi Enterprise Challenge
Competition
• Enterprise Capital Fund
Growth Targets
• Increase employment by 5%.
• Increase start-ups rate by 10%.
• Increase revenue by 1%.
• Improve productivity by 10%.
• Increased entrepreneurship and
innovation activities by 10%.
• Increased international trade by
10%.
• Increased industry output
diversification
Summary: SSCG Objectives 2015
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These challenges will not be met
overnight. We must all continue
to work together to engage the
economy’s most powerful forces,
entrepreneurs, the private and
public sectors, to build the
foundations of a new era of
economic growth. We hope SSCG
initiatives will help set the stage
for contributions to SMEs and
entrepreneurship development in
Malawi.
Looking Ahead
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Thank You
For further information or to discuss your
organisation tailored needs, contact our
advisory team at:
E: Info@s-scg.com
W: www.s-scg.com
Stay Connected
@SSCGCorporation
@SSCGSMEForum
Facebook/sscg
Linkedin/sscg
Questions & Further Enquiry
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Eugene Nizeyimana - Improving the Competitive Strength of SMEs in Malawi

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