Small and Medium Enterprises Division

The Ministry of Industry and Trade is responsible for creating a conducive and regulatory environment, formulating and implementing policies on trade for industrial development and competitiveness. It is also responsible for ensuring the expansion of Malawian products and services on domestic and international markets.  With the growing importance of small and medium enterprises being widely recognized, another important responsibility of the Ministry is to empower Malawians, including small and medium enterprises (SMEs) and cooperatives, to participate in economic activities. The Ministry of Industry and Trade is committed to the cause and has an established division responsible to enterprise promotion and development.

 

DEFINITION OF MSMEs

 

The 1998 SME Policy gives the definition of MSMEs in Malawi. The definition is based on the number of employees and sales revenue. The table below summarizes the categories.

 

Category

No. of employees

Annual turnover(MK)

Micro

1 - 4

Up to 120,000.00

Small

5 - 20

120,001 to 4 million

Medium

21 - 100

Above 4 million to 10 million

Large

Above 100

Above 10 million

 

 

 

MSME SECTOR IN MALAWI

 

The 2012 FinScope survey revealed that there are almost a million MSMEs in Malawi (987 480) owned by 758 118 people.  This means that some people own more than two businesses. The sector employs over a million people (1 050 320), generating an income of MK 326 billion (2011), and is a significant contributor to Malawi’s economy. However, the majority of MSMEs in Malawi are very small. 59% are individual entrepreneurs who employ no other people, while the remaining 41% of businesses generate employment; however the majority of them are micro businesses.  The survey also found out that the large majority of MSMEs (85%) are located in rural areas and 15% are located in urban areas. Given the fact that the majority of MSMEs are micro businesses, the net profit of many businesses is relatively low with 35% of MSMEs making MK 110 to MK 25 000 a month. Many of those businesses are in the growth phase (3 – 5 years of existence).

 

 

 

MANDATE OF THE SME DIVISION

 

The SME Division has the responsibility of developing the SME sector and empowering the local masses economically. The SME Division therefore has the mandate to carry out and oversee all SME development programmes and initiatives in Malawi.

 

 

 

SMES DIVISION VISION

 

To be the centre for the development of a competitive SME sector.

 

 

 

MISSION

 

To promote and facilitate the development of a highly competitive SME sector by creating and maintaining an enabling environment

 

 

 

 

STRATEGIC AREAS

 

The division undertakes a number of activities. The activities undertaken are aimed at addressing the following strategic areas:

 

·         Creating and strengthening an enabling environment for SMEs including infrastructure development-The Ministry of industry and Trade does this through research and formulating policies, laws and regulations necessary to advance the SME sector.

 

·         Building capacity and capability of SMEs-The SME division facilitates training of SMEs. The division conducts needs assessment of SMEs and recommends the right trainings to bridge the gaps. SMEs are linked to appropriate training providers.

 

·         Enhancing access to finance by SMEs. The division works with financial institutions to address some of the challenges faced by the sector in accessing finances. SMEs are also linked to financial institutions to obtain credit.

 

·         Enhancing access to domestic and international markets. The division facilitates SMEs accessing markets. One way in which this is done is for SMEs through participation in trade shows. SMEs are also linked to the Malawi Investment and Trade Centre to assist in accessing foreign markets.

 

·         Facilitating access to modern and appropriate technology and information-The SME division works with the Malawi Industrial research and Technology Centre, Universities and Colleges and other related institutions to develop and facilitate the development of appropriate technologies for SMEs operations.

 

·     Facilitating the provision of BDS to SMEs. The SME division works with the Small and Medium Enterprise Development Institute (SMEDI) and other business development service providers to provide business support services. It makes sure SMEs access mentoring and coaching services, on the spot business advisory and other business management skills.

 

NOTABLE ACHIEVEMENTS

 

1.      The Ministry of industry and Trade successfully reviewed the 1998 SME Policy in 2012. The revised policy was submitted to cabinet for approval and it is working to finalize its supporting strategy.

 

2.      In 2012, The Ministry with support from World Bank conducted the SME survey whose report is available at the Ministry of Industry and Trade

 

3.      The Ministry of Industry and Trade has adopted the sector wide approach and through this, it has worked and continues to engage all relevant stakeholders like banks and find ways to enhance SMEs access to finances. Access to markets, inputs, information, business development services also feature highly in the approach.

 

4.     The Ministry of Industry and Trade has in the past five years focused on sponsoring SMEs to participate in the trade fairs. This has helped gain exposure to the market and significant revenue has been realized by sponsored SMEs as a result.

 

5.   The Ministry of Industry and Trade with support from the Common Market for Eastern and Southern Africa (COMESA) started the process of developing cassava, textile and leather clusters. Through the support, the Ministry has facilitated the appropriate capacity building to enable SMEs operate the clusters.

 

6.       In 2013, The Ministry of Industry and Trade finalized the merger between Malawi Enterprise Development Institute (MEDI), Small Enterprise Development Organization of Malawi (SEDOM) and Development of Malawian Enterprises Trust (DEMAT) to form what is now known as Small and Medium Enterprise Development Institute (SMEDI). The merger became operational in February 2013.

The Ministry’s SME division does not work alone in ensuring that MSMEs are operating in a conducive environment. The Small and Medium Enterprise Development Institute, Malawi Investment and Trade Centre, Malawi Bureau of Standards and Malawi Industrial and  Research Technology Development Centre are some of the  statutory corporations which play a critical role in the development of SMEs in the country .

 

 

 

NEW HORIZON

 

The Ministry of industry and Trade is aware of the challenges being faced in the SME sector. There are various programmes currently being implemented by various stakeholders to tackle challenges faced. The Ministry has plans to start accrediting Business Development Services providers as one way of ensuring that state players are not pressured with demand and allow the private sector to also carry out the services. The Ministry also notices that SMEs are disorganized and lack a unified voice The Ministry therefore plans to start facilitating the formation of associations that will allow SMEs to work together and effectively lobby with various authorities.

 

 

 

ACCESSING SERVICES PROVIDED BY THE DIVISION

 

The division provides the services to businesses in two ways. Businesses can visit the office premises and meet officials from the division. The division also plans visits to reach out to SMEs across the country.