MSME SECTOR PERFOMANCE DECLINES BY 20%

MBABANE - The overall performance of the MSME industry over the year declined.

The Central Bank of Eswatini 2018 Financial Stability Report 2018 disclosed that the poor performance was unearthed through a 20 per cent contraction in Micro, Small and Medium SME profits to E644 million in 2018 (previously E800 million in 2017), profitability in the construction industry - the largest contributor – declined by 63.6 per cent.

The real estate sector also recorded a decline of 45 per cent, while profitability in the manufacturing, mining and quarrying contracted by 36 per cent.
Due to the large proportion of independent entrepreneurs, 67 per cent of the MSME owners earn under E2 500 per month.

Study

The FINSCOPE MSME study undertaken in 2017 reflected that although income and turnover were very subjective and prone to understatement, they provided indicative performance of the business.

“The income of the business owner, assumed to be derived mainly from the business, is a reflection of how fluid the enterprise is,” read the report in part.
When looking at the income spread by size of business, it was mentioned that as a business grows from independent to medium size, the personal income of the business owner grows significantly.

This is evident in that the personal income of those earning E10 000 and above grows from three per cent for independent entrepreneurs to 62 per cent for medium business owners.
“When looking at personal monthly income in relation to mean business turnover one can see the relation between small turn over resulting in low income. As businesses grow and afford to pay an additional employee(s) it implies the turnover is high enough to foot these extra expenses of wages/salaries,” it was pointed out.

Consist

The overall Eswatini MSME sector is estimated to consist of 59 283 business owners (10 per cent of the population own MSMEs) and employs approximately 93 000 people (16 per cent of the total working age population).

MSME business owners in Eswatini are typically local citizens who are 35 years or older. Most are married under customary or traditional law and reside in properties that they fully own. It was found that MSME business owners are the head of the household and 74  per cent are based in rural areas.

There are more female MSME business owners (65  per cent) than male business owners (35  per cent), with most identifying as individual entrepreneurs.
Three quarters (75  per cent) rely on their business as their only source of personal income. The average number of people employed by the sector per business is 0.82, while 17  per cent of MSME businesses have full-time employees (10 109 MSME businesses estimated total number).

It should, however, be mentioned that the incoming government has purposed to place the development of the MSME sector at the centre of the socio-economic development agenda for Eswatini.

Minister of Commerce, Industry and Trade Manqoba Khumalo recently said they sought to ensure establishment of an integrated Micro, Small and Medium Enterprises (MSME) support system for the effective delivery of MSME support programmes.
Aims
He said the Entrepreneur of the Year Awards was one of the ways the ministry aims to contribute to inclusive entrepreneurship development of MSMEs as outlined in my ministry’s Strategy 2015-2019.

“We believe that through such awards the MSME sector contribution to exports, tax revenues and job creation will be increased,” said Khumalo. 
Khumalo said he was happy to learn that the previous winners of the competition had seen remarkable growth in their business ventures.

“I note with great pleasure that some among them have been able to break into mainstream markets. Indeed the number of people employed has increased, and the income of many improved through this initiative,” said Khumalo.

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