Small but big business
Last Friday, Mangochi played host to the 10th annual conference organised by the Malawi Institute of Procurement and Supply (Mips).
Since the conference’s inception, procurement professionals have been reflecting on how they can contribute to the development agenda and policies by selecting themes which generate debate.
This year’s theme—Unlocking the Growth of Micro, Small and Medium Enterprises (MSME): Legal and Financial Challenges under Microscope—is a perfect fit considering the businesses under discussion form the largest segment of Malawi’s economy.
According to the International Council for Small Businesses, MSMEs constitute over 90 percent of all firms and 70 percent of total employment.
MSMEs are relevant in the attainment of all the 17 Sustainable Development Goals (SGDs). Apart from job creation, MSMEs contribute to utilisation of local resources and technologies as well as increased national savings and investments. They are the main income provider for income distribution.
On utilisation of local resources, MSMEs largely depend on locally available raw materials for their production while large industries usually import to manufacture their products. MSMEs’ use of local resources for production contributes to the value addition and creation of local wealth.
MSMEs are not capital or technology intensive. As such they save most of their earnings for local investments. This makes them great contributors to national savings and investments than larger firms who usually invest in stable economies.
On utilisation of domestic technologies, while larger firms may be technology intensive and tend to import machinery and equipment, MSMEs are labour intensive and usually use local technologies for production. Their utilisation of local technologies enhances local growth of local technologies
They also help balance the wealth distribution because they are widespread. At times, they are the only source of jobs in rural areas.
From this, the role of MSMEs cannot be overemphasised.
The United Nations declared June 27 the MSMEs Day to raise awareness of their contribution to the sustainable development and global economy.
The UN commitment calls for creation of policies by governments and deliberate efforts by all players to ensure participation of MSMEs in economic development.
Section 44 of Malawi’s Public Procurement and Disposal of Public Assets Act, the so-called 60/40 Rule requires that 60 percent of the government contracts to benefit indigenous black Malawians.
Section 36 provides for a margin of preference, waiving of some procurement requirements and restricting bidding to MSMEs.
These provisions aim at enhancing the participation of the MSMEs, but the existence of such laws is not good enough.
The country must go beyond policies and start practising what the paper work says.
All stakeholders at all levels must support MSMEs’ development.
The procurement professionals constitute an important stakeholder in the development of MSMEs. They are a point of entry for the MSMEs to get business opportunities.
Procurement workers influence the development of policies and decisions in their organisations.
As they transact their businesses and develop the terms of references for business opportunities, they should always consider this as an opportunity to help the MSMEs.
While this year’s conference theme examines the legal and financial challenges faced by MSMEs, it also puts direct responsibility on the procurement professionals in unlocking growth of MSMEs.
With the collective effort by government and stakeholders, small as they may be, their potential to contribute to national economic growth is huge.
