The Ministry of Industry and Trade says it has asked other government ministries to allocate about 30 percent of tenders to Small and Medium Enterprises (SMEs) to ensure that they grow and prompt economic growth.
Speaking at Protea Ryalls Hotel in Blantyre on Thursday during the South Africa-Malawi Business Forum, Minister of Industry and Trade Joseph Mwanamvekha said government will engage SMEs in two parts to build their capacity.
“Firstly, we will engage indigenous SMEs and then the rest of the small businesses. Obviously, SMEs growth will contribute towards economic growth and development,” said Mwanamvekha.
Commenting on the development in a telephone interview on Tuesday, Economic Empowerment Action Group (Eeag) pointed out that this is what the group has been fighting for.
“SMEs should be promoted because the sector is quite significant. We have been ignored for some time although we are key to economic growth. I would urge the government to go beyond 30 percent so that it prompts economic growth,” said Chiwalo.
Against a backdrop of poor capacity by SMEs, Chiwalo said they will be able meet the tenders. He, however, called on government to implement deliberate policies to ensure that the SMEs have capacity to achieve even more.
Speaking earlier before the May 2014 elections in which the Democratic Progressive Party (DPP) emerged winner, Indigenous Association of Malawi (Ibam) president Mike Mlombwa encouraged local businesses to scrutinise manifestos of different parties and only vote for those that give preference to Malawians in terms of development and awarding contracts.
He said that it was very unfortunate that there were no deliberate policies that empower indigenous Malawians.
Apart from preferential allocation of tenders by government, SMEs have also been complaining about access to finance due to strict conditions and high interest rates by commercial banks.
Commenting on access to finance for SMEs on the sidelines of the South Africa Malawi business forum, Andrew Mashanda chief executive officer for Standard Bank—the largest bank in Africa by assets and profits—said their bank had last year suffered heavy impairment because they had extended loans to a large number of SMEs which had no securities through their facility, Mpamba.
“We have however not given up on SMEs and would like to encourage these businesses to develop a relationship with the bank. They have to prove to us that they are disciplined by maintaining their account for some time,” said Mashanda.