Budding small and medium enterprises (SMEs) are struggling to grow their ventures despite promising potential largely due to various challenges, Business Review has established.
Speaking in interviews on Tuesday, some start-ups currently showcasing their products at the 35th Malawi International Trade Fair in Blantyre,cited lack of capital, markets and supply chain disruptions as some of the major challenges affecting their growth.
Chimbale Business Club chairperson Andrew Chimenya, whose venture produces peanut butter, said almost a year and half into the business, they are yet to secure markets for their products as certification continues to be a challenge.
He said this is happening at a time the business is struggling to find stable markets for its products as rising prices of groundnuts, which is a key raw material, has pushed up the price of their products.
Said Chimenya: “At the start of the business, we could process a 50 kilogramme bag of groundnut bought at K75 000 and it would take us two weeks to sell the peanut butter.
“But now, a bag of groundnuts is selling at around K300 000 and we can only manage to process two bags in two weeks as our customer base has not grown that much.”
Chimenya said the challenges have affected their market expansion drive, as penetrating new markets means having certification from Malawi Bureau of Standards.
“We were told to renovate our production house to suit the standards and that means an extra K10 million, which the club does not have as we are still servicing another loan.
Another start-up, Moringa Acres said lack of foreign exchange to buy packaging materials for its oils and cosmetic products has also impacted their expansion plans.
The firm’s administrative and sales assistant Lorraine Chiomba said in an interview that although moringa seeds are seasonal, production and successful marketing of their products also hinges on the availability of imported packaging materials, which include glass bottles.
Henry Biliyati is one of the honey farmers whose firm HoneyBee Consultants is also struggling to secure markets for its products despite numerous enquiries.
HoneyBee Consultants senior technical lead consultant Kondwani Pherani said quality of honey depends on the equipment used, which is unaffordable to many farmers.
He said the full kit for bee farming costs about K2 million, but its use determines the quality.
“In the end, a lot more farmers are failing to meet market standards, let alone export requirements,” he said.
The FinScope Survey in 2024 found that only 10 percent of medium enterprises, five percent of small enterprises and three percent of microenterprises have access to credit from a commercial bank.
This is despite more than 50 percent of SMEs in Malawi being in agriculture-related micro-enterprises with most farms existing outside of the formal economy and often lack the collateral required to access loans.
Chamber for Small and Medium Enterprises executive secretary James Chiutsi said small businesses continue to struggle to access finance, suggesting that a specialised bank could help to alleviate the challenge.
