In an effort to prop up small and medium enterprises (SMEs), Ministry of Industry and Trade has unveiled a K1.8 billion ($3,131,980) business linkages matching fund to help small businesses to acquire equipment to boost their businesses.
The fund has been established with support from African Development Bank (AfDB) through the Malawi Government.
Already, 24 SMEs have started accessing the money, with some getting as much as K5 million ($8,699.93) to purchase milling machines, tractors, cold rooms for storage of poultry products, carbon dioxide metres and mushroom seed among others.
The ministry’s director of public sector development, Esther Mwimba, said in an interview this week the fund is part of entrepreneurship skills development programme since SMEs contribute substantially to the growth of the country’s economy.
She said: “There is a lot that SMEs are doing in helping government to uplift the economy. In this programme, we are not giving them cash but we are contributing half way towards the purchase of equipment.
“We have assisted over 20 small businesses and the criteria used is innovativeness, potential to create jobs, gender sensitivity. We also look at geographical spread.”
Another official in the ministry, director of administration and finance Joseph Mkandawire said government is impressed with the way SMEs are growing and wants them to grow further.
“With proper support, SMEs can transform the economy of the country as more and more people will get employment as the institutions grow.
“Having assisted this first group, we are now in the process of seeing how we can help more SMEs,” he said.
Small and Medium Enterprise Development Institute (Smedi) chief executive officer Charles Kazembe hailed the business linkages matching project, saying it is one of the best innovations for helping SMEs to grow.
“In Malawi, SMEs have problems to access finance and the cost of finance is also a big challenge. If we can have donors and even government scaling up such projects, it can help to make most our products competitive on the regional as well as global market.
“Most of our products cannot compete on the global market because SMEs do not have enough capital,” he said.
He urged banks to look at SMEs as a fertile ground for business because they can be incorporated into the banking system by offering them loans with better conditions.
Highest interest rates, hovering around 38 percent, has been one of obstacle for SMEs to grow and achieve their potential.
Last week, Reserve Bank of Malawi (RBM) raised the benchmark lending rate to 27 percent from 25 percent, a move that has compelled commercial banks to raise their interest rates as well. n