Malawi’s Business Revolution: Collaborative Growth for SME Success
Key Business Points
- Establishing a unified union for small and medium enterprises (SMEs) in Malawi will enhance advocacy for policies that promote growth and development.
- The union will facilitate collaboration among SMEs, enabling them to share information, form joint ventures, and address common challenges.
- Improving access to credit for MSMEs is crucial for their success, with development partners urging the government to establish a specialized private bank for financing.
Malawi’s small and medium enterprises (SMEs) sector is set to benefit from a newly formed union, which aims to bring together various business associations, cooperatives, and groups to fuel growth and development. The Malawi Union of Small and Medium Enterprises (Musme) was established to provide a unified voice for SMEs, which have previously been disjointed and hindered by a lack of cooperation among themselves. A unified approach will lead to enhanced efficiency and a more collaborative environment among stakeholders within the SMEs sector, according to Musme’s newly elected president, James Chiutsi.
The formation of the union comes in response to the shortcomings of existing SME business groups, which have been criticized for lacking cooperation, duplication of support services, and failing to provide a single voice to authorities and policymakers. The lack of access to credit is a major challenge facing MSMEs in Malawi, with only 10 percent of medium enterprises, five percent of small enterprises, and three percent of microenterprises having access to credit from commercial banks, according to a FinScope Survey of 2022.
Development partners, including the European Union, have urged the Malawi Government to engage investors to establish a specialized private bank for micro, small, and medium enterprises (MSMEs) financing to ease access to credit. Domestic credit to the private sector as a percentage of gross domestic product (GDP) is less than 10 percent, compared to an average of 34.2 percent for Southern African Development Community countries and 28.4 percent for sub-Saharan Africa.
National Working Group on Trade Policy chairperson Frederick Changaya has highlighted the need for targeted interventions to support MSMEs, including better packaged credit, sensitization, and civic education, as well as sector-specific business opportunities. Countries that have industrialized quickly have grown their MSMEs into corporates through highly targeted interventions, and Malawi can learn from these examples to support the growth of its MSMEs sector. By addressing the challenges facing MSMEs, Malawi can create a more enabling environment for businesses to thrive and drive economic growth.
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