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Sithembiso Nyoni
WITH small to medium enterprises (SMEs) and cooperatives taking centre stage in the country’s economy, concerted efforts are needed to support them for the country to derive value.
A vibrant SMEs base creates a solid foundation for job creation, especially considering the inclusive nature of small businesses.
Sithembiso Nyoni, the Minister of Small to Medium Enterprises and Cooperative Development, recently held an engagement meeting with representatives of the SMEs sector in Bulawayo.
Below are excerpts from her address in which she shares broader insights about SMEs and the essence to innovate as a springboard to industrialisation.
“Innovation creates a perspective and context which the SMEs sector should critically think about and consider as they find their development path in this very dynamic environment.
The strategic positioning of the sector in our economy as the engine for economic growth, generators of employment, and revenue generation base compels for innovativeness, as well as integration with mainstream value chains and become the springboard for industrialisation.
For the MSMEs sector to play these roles in the economy as well as play the game in the context of the theme, a conducive environment is required.
The sector among other challenges is hamstrung by lack of access to finance, coupled with high cost of borrowing. This challenge is compounded by inadequate and restricted lines of credit to our financial markets and the cost of funds.
The high cost of funds of these lines of credit that become available is associated with the wrong risk perception of our country as a destination for capital.
It is against this background that we should be innovative and galvanise our efforts. Let us start to look inward and find our own home grown solutions. The financial institutions should come down and play their intermediation role by banking the so called ‘unbankable’ through offering innovative financial inclusion products and services. There is need also to reduce the level of bank charges.
A saving and banking culture should be promoted especially among MSMEs. The Ministry is driving a saving culture through promoting Savings and Credit Cooperatives (SACCOs). Consultations are being done to put in place a SACCOs Act and this Act will go a long way in promoting and protecting savings of members in these SACCOs. Kenya has excelled in the SACCOs movement and the biggest bank in Kenya is owned by savings and credit cooperatives. Why can’t we do it when other countries are doing it? A savings culture will definitely replenish the financial market with liquidity and enhance their role of intermediation. There is also need to tap financial resources in pensions funds and channel these to fund the productive sectors.
Such strategies increase the supply of the credit to the MSMEs sector for them to finance their innovativeness and that will lead to the industrialisation of the economy. The ministry commends the various efforts being made by some of the financial institutions in financing MSMEs through specialised financing windows as well as promoting financial literacy, especially those at the bottom of the economic pyramid.
For MSMEs to become active players in the mainstream value and supply chains, there is a need for conformity assessment and compliance to technical regulations and relevant standards.
As much as we can promote access to markets for MSMEs, if MSMEs do not comply with quality standards such efforts will be in vain.
The government is working on improving the ease of doing business and quite a number of reforms are being implemented. This agenda goes hand in glove with the MSMEs formalisation agenda which the Ministry is pursuing with technical assistance from Zimbisa.
For such efforts to bear fruit, it certainly needs complement from the MSMEs themselves. MSMEs should register their enterprises, be licensed by their local authorities and pay relevant taxes to the tax authorities. Even in the Bible the Pharisees asked Jesus if it was lawful to give tribute to Caesar, and Jesus replied ‘Give unto Caesar what belongs to Caesar’.
So as MSMEs we should play our part as expected by the laws of the land. I would like to make a special mention of the long time partnership and relationship we have with Old Mutual in our collective endeavour to support MSMEs development.
This relationship and partnership has seen a lot of success in areas such as training, provision of infrastructure and workspace and market access. It is our fervent hope that the relationship will continue for a long time to come.
Online Reporter