SMEs sector a key economic player

development in the country if it is properly supported.

This is because the sector, by virtue of its size, demands lower levels of capitalisation as compared to larger companies and they have a closer link with the communities than large organisations.
The little financial resources available in the country could be of better use if channelled towards the growth of this sector.
With large companies continuing to close down, or scale-down operations because of viability constraints, supporting the SMEs could be the only sure way of kick-starting meaningful economic activity in the country.
While stakeholders have always acknowledged the sector as a key economic player in the country, there has not been much done to galvanise the sector.
Support for the sector has been played out more in conferences and workshops than on the ground.
The SMEs sector today evidently spits and puffs as it tries to recover from the debilitating effects of the economic haemorrhage the country experienced in the last decade.
SMEs naturally are pioneers, and they are known to plough new ground.
While some large companies are closing shop or retrenching because of viability challenges, SMEs have become employer of choice for the retrenched.
They are providing the bulk of the jobs for the retrenchees, thus significantly contributing to the welfare of the communities and reducing stress levels that come with unemployment.
The sector now has on its ranks people with great expertise and experience, and support for the sector needs to be leveraged on this strength.
The sector has the potential to become the engine for economic growth and development if Government comes up with public policies that acknowledge and strengthen this reality.
This will help make loans available for capitalisation, technical training, infrastructure development, and product research and development in the sector.
The sector needs investment in new technologies that will push production levels up thereby ensuring quality goods are produced.
On the culture front, the SMEs sector needs to be freed from the power, patronage and control manipulations by politicians, and be assisted in building in their structures responsible business conduct and ethical workplace practices.
Responsible business conduct can be achieved through the propagation of good corporate governance and business ethics principles and practices in the sector.
Because of poor governance processes, deception and predatory business practices, including client manipulations have tended to describe the business terrain of the SMEs sector.
Tax evasion and non-compliance with a number of laws including municipal by-laws is a common feature.
This has in most cases left the SMEs exposed to marauding law enforcers who take advantage of the situation to pound on them every now and again demanding bribes.
Inculcating good corporate governance and formalised ethical business practices will help SMEs appreciate that complying with enacted laws and local authority by-laws is good business.
The benefits accruing include improving company performance and access to capital, in the process ensuring long-term stability and growth of the business.
While bending the rules may seem lucrative in the short-term, it has serious repercussions in the long-term as it destroys a firm’s credibility in the eyes of its stakeholders such as clients, creditors and suppliers.
Complying with all legal requirements including municipal by-laws enhances business competitiveness and credit worthiness, and those who evade paying tax and violate operating rules should know that they are deprive themselves of a platform upon which they can grow their businesses.
When building into their structures ethics programmes, SMEs don’t necessarily need to put up a highly formalised ethics infrastructure as is the case with large organisations.
Through the use of existing infrastructure, and without having to employ new staff or creating new positions, the SMEs can effectively embed ethical practices in their operations.
The owner or manager of the business can drive the process with a few people down the chain of command in the business being assigned ethics responsibilities on top of those duties they already perform.
Adapting best practices in business processes means SMEs are in a position to grow and become the large organisations of tomorrow. SMEs should know that in business first impressions run deep.
Developing a business ethics programme will help owners to present a core set of beliefs and standards that will demonstrate to creditors, investors and customers that they are committed to good business practices.
SMEs occasionally need to engage their stakeholders in order to make them understand the uniqueness of their challenges, agreeing on how they can best work together.
When all the necessary support is given to the SMEs sector, economic growth and development that is all involving will be achieved.
l Bradwell Mhonderwa is the Managing Consultant of Business Ethics Centre, a Corporate Governance and Business Ethics Management firm. Phone 04-293 2948, 0712 420 090, 0772 913 875, or email [email protected]