SMALL BUSINESS GROWTH

This article is premised on the sad occurrence and losses that we witnessed as a nation a few moons back. This brings to mind the plight of small businesses in Eswatini and the potential for growth if the sector is strategically incentivised to grow.

An SME policy is requisite to ensure a structured response to cultivate SME growth in the country. One of the major factors to consider as one grows a business is to actually ensure that they are able to mitigate risks. Risks will always be part of the business environment and it is incumbent on the businessperson to ensure that the business stays viable.

Risk Management

It is imperative that risks are managed, though this becomes an additional cost to the business. Though a good pricing strategy would be requisite in passing the cost to the consumer. This ensures that one is able to spread the cost within a good customer base. We need to understand that insurance may seem like a frivolous expense, well at least until a catastrophic event occurs.

Catastrophic events may set the entrepreneur back 10 years just over night. Insurance comes into play to ensure that the business is restored to operational feasibility within a few days and ensuring that the business man is indemnified to a position of good configuration. The lack of insurance or risk management seems to be an oversight on the side of the SME.

It is customary to look at government to intervene in the occurrence of a catastrophic event. However, the role of government is to engender a policy environment that enables businesses to grow and thrive. Also, it is expected for government to intervene in the occurrence of national disasters through the National Disaster Management Agency. However, the unfortunate event in Manzini is an incident isolate to Bhunu Mall and the entrepreneurs who execute their trade at mall.

Policy environment

The government is expected to continue to foster a conducive policy environment. This we expect to be engendered through national policy. I do not single an SME policy in this case because I contend that we need to mainstream into all policies in the country. There is need to ensure that we mainstream SMEs into the procurement policies, incubation policies, investor policies etc.

There is need to always interrogate how all strategies that government tables will improve value for the SMEs. Global data shows that SMEs are pivotal to growth and development of any country. If we learn from Taiwan, one of the important lessons we learn from the phenomenal growth story of Taiwan is the fact that their growth strategy has always been premised on SMEs. SMEs are quick and easy adjust, this allows for flexible economic management. It is imperative that we adopt this strategy as a country affording us the agility for effective economic environment.

Tough economic environment

Notwithstanding, my firm belief in the limited role that government can play in assisting the businesses that were affected by the fire. I hold convictions that government can intervene to assist SMEs deal with the difficult economic environment. We are in a high cost environment, supply chains have been disrupted and SMEs particularly will struggle to identify new supply chains and financing problems as evidenced in the rise in none performing loans to banks. The government has to come in to reduce the impacts of a high cost environment on our SMEs. I urge government to open access to the loan guarantee schemes that are already in place, to provide a buffer to businesses ensuring that they stay afloat.

Furthermore, through EIPA and SEDCO, government can offer business advisory services and identify new low cost sources of supplies. Linkages with FDI and big domestic business can be improved to ensure that the SMEs are integrated into the domestic value chain. This would allow for growth of SMEs. Lastly government can expedite the areas clearing programme, releasing much needed liquidity into private sector.

The size of government

The size of government is also another factor which needs to be considered inline with private sector led growth. The known truth about the economy of Eswatini is that the government is too large in business. This casts a shadow on the growth potential of SMEs. Most of the businesses and SMEs in the country rely on supplying government directly or indirectly. Furthermore, the revenue base for private sector in Eswatini is largely influenced by the civil service, government being the biggest employer in the country.

What this culminates to is a situation, where portfolios are not diversified. We have been grappling with the problem of arrears to business and a number of enterprises have succumbed to the accumulating areas. It is imperative that we push private sector led growth, which would encompass a serious SME development agenda. As the private sector grows the scope for portfolio or clientele diversification is also improved in the country.
This allows private businesses including SMEs to grow through diversity. There is an urgent need to grow the size of the private sector and reduce the relative size of government in business.

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