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Lack of credit access crippling businesses

SMEs such as these face a number of challenges
SMEs such as these face a number of challenges

Government hopes that the findings of the Micro, Small and Medium Enterprises (MSME) survey will help in addressing challenges small-scale businesses face in the country.

The Finscope MSME Survey 2012 was conducted to understand the environment in which small businesses are operating, assess their competitiveness and identify challenges affecting business growth and profitability. The survey findings cite challenges such as lack of access to credit; hostile business environment; and lack of access to information and markets, among others, as affecting MSME.

Secretary for Industry and Trade Nebert Nyirenda said the findings have come at a time government wants to inspire small businesses to expand and create jobs for the country as well as produce more for the export market. “The study confirms some of the challenges that we already knew, but we wanted it to be quantified so that the quantification helps us to address these challenges, in particular, the business environment. Through the business environment, we have focused on institutional reforms, policy reforms and regulatory reforms,” he said.

On regulatory reforms, Nyirenda said Parliament has already passed the Companies Act to allow ease of starting business as well as ensuring the best practices in corporate governance. He also noted that Parliament has already passed into law the personal properties security bill that allows entrepreneurs to use movable assets as security and collateral.

“This will enhance access to credit which from the report is one of the major challenges that the MSMEs face. So, we hope that this study will help us ensure that we address these challenges more clearly particularly in the four key result areas which include the access to finance; the business environment; ensuring productivity and competitiveness of MSMEs as well as accessing information, markets and business development services,” he said.

The small and medium enterprise sector has potential to change lives of people who have limited access to formal employment opportunities.

The survey found that small businesses, in general, attract the interest of not only policy makers but also researchers as the sector is seen as an important means of enhancing the long-term development and growth of countries.

“Governments are interested in setting up support programmes which enable firms to increase their export sales, given the positive effects that increasing exports has on the economic growth and competitiveness of countries,” reads the report in part.

According to the survey, the barriers stem from limited access to resources and lack of competences necessary to meet the challenges existing within the business environment as well as a complicated and bureaucratic environment posing serious obstacles to the sector.

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