sme & development supplement

7/27/2019 SME & Development Supplement

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Harnessing

SMEs for

economic

growth

P2

4 steps to becoming entrepreneurs P4

Role of banks in developing SMEs P10


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Special pullout the nation 30 JulY 2013

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Harnessing SMEs foreconomic growth

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Security

SMEDI

Business

Finance

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Steel Touch

Cable

Manufacturers

Kwithu

Kitchen

National Bank

of Malawi

Zuri

Investment

2

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SMEs are a key to economic growth of any country P H O T O G R A P H : N A T i O N

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ext year is importantfor two things. Malawi

will for the firsttime be conductingtripartite elections. 2014 is alsoimportant because the countrywill be celebrating its 50thbirthday.

Despite clocking 50, Malawiseems not to have achievedmuch economically.

The country is still lookingup to donors to finance about40 percent of its nationalbudget.

Donorsmajor ones beingour former colonial mastersare still issuing orders on whatwe should do or not do.

In essence, Malawi ispolitically and not economicallyindependent.

By this time, Malawi oughtto have grown and be runningits own affairs. A man of 50is old enough to provide forhis family and not rely on hisfather or mother to do so.

If that happens, thensomething is terribly wrong

with the man.At 50, Malawi is stillgrappling with widespreadpoverty and failing to generateenough jobs for its people.

What is wrong with Malawi?Malawians need a mindset

overhaul.Most of parents send their

children to school to becomeemployees not employers.

This is where Malawianparents differ with their Asiancounterparts.

Think about this! If allMalawian children go to schoolto become salaried employees,

who will create jobs for others?If we do not createemployment for ourselvesthrough small and mediumenterprises (SMEs), thenforeigners will not only employus, but also control our wealth


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Special pullout the nation 30 JulY 2013 5


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NBM geared to support SMEs growth

all and medium sizedterprises (SMEs) andtrepreneurs are theone of every economying Malawissupportingmic growth, creatingyment opportunities andving peoples livelihood.the dawn of multipartycracy, Malawi has seenal growth of SMEs over the

wever, it is generallynised that Malawianrises face unique

nges which affect their

tial, hence diminish theirto contribute effectivelycountries sustainablepment.

st enterprises andreneurs in Malawi face

nges which includef managerial skills,portive business policiesgulatory environment,t competition, fast

ological advancement,nfrastructure, lack oft information and industry

ikani BoBe

marketing and

ess information

er

standards and inadequate capitaland access to finance.

NBM appreciates that theSME sector is growing fast

and contributing a lot to thecountrys gross domesticproduct (GDP), job creation andcontribution to tax purse. NBMknows what SMEs face to realisetheir full potential.

The banks SME BusinessFinance has been designed tohelp SMEs with a means toaugment working capital, fundcapex requirements and providethem with a platform to accesstrade facilitation instrumentssuch as letters of credit,guarantees and bonds.

Definition of SME

Business Finance

SME Business Finance is definedas the provision financialsupport to small and mediumsize business customers(companies, sole proprietorshipsand partnerships) whose:

AnnualtradingturnoverisK5 million to K100 million,and;

Facilitiesrequirementsdo

not exceed K100 million

They may be soleproprietorships, partnerships,

limited companies and registeredinformal bodies.

SMEs accessing these facilitiescan be those that are runningan existing business or intendto run a business which is wellsupported through a soundbusiness proposal and vettedpotential as long as their sectorof operation does not fall underthe banks negative list andprovided where the businessfalls under red flagged areas, it iswell mitigated.

The following businessesqualify for funding from the

bank: Construction industry,food industry, tourism industry(hotels, lodges, resorts, resthouses, and restaurants),private education sector,agriculture sector, generalvending, fast moving consumergoods (FMCGs) wholesalers,retail shops, perishable goodsprocessing, exporters of productswith long term relationshipsand differentiated products,transportation, medical careproviders and bakery.

Credit facilities under SMEBusiness Finance

Overdraft or cash facilities1. Loan short term, medium

term and long term loans2. Letters of credit3. Guarantees, bonds and

Indemnities by bank4. Assignmentofinvoice

proceeds

Improvements to SME policy

1. Provision of credit facilitiesto new customers of thebank observation periodreduced to six monthsprovided that the customer

has furnished the bank withbank statements from otherbanks and the bank is ableto obtain satisfactory statusreport and the customer hasbeen in same business linefor a period of more thanone year.

2. Clean lending subject toprovision for business trackrecord

3. Facilities available to SMEs expounded to include:

i. Mortgage and propertyimprovement.

ii. Assetbasedfinancing

iii. Leasing facilitiesiv. Project financing of up to

K100 million.v. Supporting banking

Products electronicBanking, current andinvestment accounts andforex.

vi. Provision of pay dayloans to confirmed SMEsemployees

The bank is also offering adiverse range of secure andsafe E- Banking productsto easily facilitate SMEstransactions such as Visa

POS machines which can beplaced in restaurants or FCMGmerchant shops etc, electronicfunds transfers via Mo626Iceor Internet banking platformBanknet to remotely monitoraccount transaction lastlyelectronic salary processing forSMEs employees to mention.NB will continue to bring outnew innovative products tobridge the financial challengesSMEs face hence saving themboth Time and Money.

locking economic potential advertorial


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Entrepreneur finds gold in weldingYuda shows some of his products

Juda gets down to business

PHOTOGRAPHs:CHRIsTOPHERJIMU

alton Yuda is one of youngmen who have succeededagainst all odds.

en he dropped out ofl in Standard Seven dueancial constraints, he lostthat he will amount toing in life.

God had somethingore for him. Yuda, whos from Balaka, was offeredce at Andiamo to learnaying.er completing histion, he realised thatng was more lucrativericklaying.aw a huge opportunitylding than in bricklayingse of the increasing

nd for gates, door andw frames.hen I moved to Lilongwe5, I continued to work asklayer, but my fortunesed when a friend taughtelding, says Yuda.pite having the skill, he

d equipment to effectively

atuReS unlocking economic potential

istopher Jimu Reporter

work as a welder so he trekkedto South Africa to work and raisemoney for welding machines.

Gods granted his prayers.When he came back in 2009,Yuda had a complete weldingmachine and he opened a shop

near Mchesi Primary School inLilongwe.

I bought the weldingmachine at K300 000 andwithin six months, I expandedmy shop because of huge profitsI was making, he says.

Yuda offers employment toseven people and he says he isnow a free man because he ishis own boss.

I make over K90 000 ina month, but the problemis that some customers areuntrustworthy. They come inposh vehicles to collect my doorand window frames, but they

fail to pay you, he says.Yuda says most people likehis goods because they areaffordable.

He advises fellow youngentrepreneurs not to despairas God, at an appointed time,will see them through theirchallenges.


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locking economic potential FeatuReS

Role of banks in developing SMEs

M

alawi has 758 118 micro,small and mediumenterprises (MSME)

rs, owning about onen (987 480) businessesemploying about 1.1n people (excluding thers themselves), accordinge 2012 Malawi MSMEy results.

turnover of the sector,ding to the survey, wasated at K326 billion.

a competitive andative MSME sectorkeys to higher income

h, optimal employmentmestic resources, more

ul integration through

nal trade and investmentreater equity in access,

bution and development.istry of Industry and

spokesperson, Wiskesmbezi, says financialutions have also realisedimportance of SMEshey have become morensive to their needs.me banks have specialtments to serve SMEs.means banks have nowed that SMEs havect needs to those of bigrations.hat is also more exciting

at some banks are nowng collateral-free loans to, says Nkombezi.S Bank, for example, hasy fledged department tofor the needs of SMEs,

ding to the banks SMEwomen banking manager

Nchembe.is department has units in

yre, Lilongwe and Mzuzu.support SMEs throughprovision of suitableaccounts. For instance,Bank has SME Savingsnt, Business Womengs Account, Chiperegano

ment and Loans.these have low minimumce compared to othernts. For businesses thatst starting, NBS Bank has

mpamba account with amum balance of K500,

ys.hembe says the bank also

business managementng and advisory servicesEs.e also help them withng capital and assetment loans to grow theiresses, she says.es Manda, chairperson

e National Small andum Enterprises (Nasme), confirms that someprovide loans to SMEs as

as business managementory services.on William, 38, is onee beneficiaries of NBSrt to SMEs.

NDA TWEA

Reporter

A businessperson withdrawing money from anATM machine

Banks rates measurethe performance of the

economy

PHOTOGRAPHs:NATIONL

IBRARY

William runs Van General

Suppliers, a hardware shopin Blantyre Central BusinessDistrict.

His romance with NBS Bankdates back five years ago whenhe was a vendor at BlantyreFlea Market, selling hardwarematerials.

Five years ago as we wereselling our items at the fleamarket, an official from NBSBank came to my bench andasked challenges I used toencounter.

I told him that access tocapital was a challenge and hetold me that NBS offers loans

aimed at boosting SMEs.We had a fruitful discussionand the bank gave me a loanof K500 000. Later, I got K1million then K2 million,says William who started hisbusiness in 1998 with a capitalof less than K5 000.

He still maintains a shop at

the flea market and admits hisbusiness has really grown withthe support from NBS Bank.

William imports hisitems from Dar es salaam,Johannesburg and China.

He says with more support,he will be able to build his ownshop and grow his businessfurther.

Nasme Central Regionchairperson, William Nkhono,however, bemoans theexorbitant interest rates bankscharge on loans.

These high lending rates arekilling businesses. Apart fromthat, most of the banks takelong to approve loans and they

only do that with collateral. Yetmost of SMEs have no fixedassets such as houses. Thismakes it difficult to accessloans from these financialinstitutions, says Nkhono.

NBS Bank also sponsors SMEto participate in workshops,especially those aimed atenhancing networking and

business knowledge.Umodzi Consultingmanaging consultant, TioneKaonga, emphasised the needfor banks to partner businessdevelopment service providersto promote entrepreneurshipthrough provision of businessadvisory services.

This would allow SMEs toimprove their operations andmanage their risks and in thelong run, earn more profits toenable them to service bankloans, he says.

SMEs are an importantchannel for povertyalleviation through economicempowerment and participation,

especially for women, the youthand the marginalised sectionsof society.

SMEs in most countries havenot received the necessaryattention to enable them tostart, grow and diversifythatis why they continue to facechallenges.


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vertorial unlocking economic potential

Zuri Investments: Your buildingproducts and furniture source

At a time when manyMalawians arequitting businesseso tough economice, Lilongwe-Davie Botie is full

onfidence that hisesses will thrivee extent of openingshops in all the three

ns of the country.30-year-old Botie,

has a Masters degreeUhani University

chnology in China,he ventured into

ess after seeing howprenuership turnedd peoples fortunesna.

der Zuri Investmentsclothing shop, a

ng and constructionany as well as aure.

had a chance ofing further studies inin 2010 and I learnto combine businessrmal employment.rrently, I am working

n administrator atChitedze, and theence that I amg will put me in aposition to conductsinesses with ease,otie.says he brought with

lot of clothes fromand after sellinghe made a huge

which enabled himture into business.2012, when I came

home from China, Iht with me a lot ofs which after sellingme to go back toto order more.

nce then, I havesed the number of

mers and the futurebright, said Botie.a sign that his

ess is on thefooting, Botie has

ged to open a shopongwes Old Town

ite NBS Bank, nextB.the shop, there areed clothes for bothnd women.e stock highy suits, dresses, shoes, weddingories, perfumes and

stopher JimuReporter

jewellery. Our prices arevery competitive and weallow laybye on all items,said Botie.

Apart from the clothes,Botie also sells sofa sets,coffee tables, rags, diningsets, office furniture, TVstands and many moreimported householdequipment.

I knew that if I onlyconcentrate on clothes, itwill be like putting all eggsin one basket, hence mydecision to diversify and

grow my business intosectors such constructionindustry, says Botie.

Under the constructionindustry, Botie sells tiles,ceiling boards, jaccuzi,bath tabs, kitchen units,doors, toilet sets, roofingmaterials, iron sheets andother material requiredwhen building houses.

On how he manageshis time, Botie says heleant the skill when hewas young and is able toharmonise his work and

business life.I am a professional.

When it is time for officework, you will find me atthe office and when it istime for my business, Ialso work hard to completeall my tasks outside thecompany time, saysBotie.

His main challenge isthe stiff competition inthe clothing sector, buthe is hopeful that he willsurmount the challengebecause he only brings

quality stuff.In future, he plans to

open shops in all the threecities of Blantyre, Mzuzuand Zomba.

Botie has just marriedhis love, Yandura, and hehopes this will help him to

have focus in life and makebetter decisions because ofthe advice from his betterhalf.

Zuri offers the bestprices on all materialsand terms of paymentare negotiable and we are

challenging those buildinghouses, those who wantto fit furniture into theirhouses and those looking

for trendy clothes tocontact us at our office inLilongwes Old Town nearMSB Bank, say Botie.

PHOTOGRAPH:COURTSE

Y

OFZURI

Davie and Yandura Botie


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vertorial unlocking economic potential

Steel Touch Furniture puttingsmiles on Malawians faces

Touch managing directorw Chalamanda andcal director Nicodemusulani say they are ready

mpete with any institutionfacturing steel products inuntry because their itemsrable and of high quality.

an interview in Lilongwemanda and Sankhulanihey started Steel Touchture because they saw an steel furniture as mostanies were into woodure manufacturing whilew that were in steel onlybled ready made importedcts from the Far East.e discovered that a numbertomers were complainingthe imported products inof durability and qualitye paying a lot of money.ving done our research,

scovered that we couldit big on the market only

produced high qualitycts, said Chalamanda.lamanda said since theyd the company in 2012,have noted that there is a

potential on the marketse there are times, they

failed to satisfy demand for theirproducts, especially householditems.

The company which startedwith only six employees nowhas 21 on its payroll and whendemand is high, casual labourersare offered short contracts.

Apart from the casuallaborers, the company also offersinternship to students fromtechnical colleges who come inas apprentices to be trained intheir respective fields.

Sankhulani said the companyhas been steadily growing froma small business that was meantto just support them as an IGAinto an established company.

The first operation startedfrom my house in Mchesi andhaving operated for close toa year, we moved to a rentedplace along the famous Mchesifurniture road in City Printers

House.In our quest to grow, we

have relocated to a bigger andspacious place along BlantytreRoad next to St John SecondarySchool, in a building that used tohouse the Evangelical LutheranDevelopment Service, saidSankhulani.

As a sign of excellence, thecompany participated at atrade fair organised by Nasmeat Game Park in Lilongwewhere they were voted the bestmanufacturers.

Some of the challenges the

company faces include pricing,untrustworthy middlemen,tough contract conditions,financing as well as copycats.

On pricing, Chalamanda saysto penetrate the market, theyhave at times tried to reducetheir profit margin to low levelsand it becomes difficult when a

customer takes a long time tosettle a payment as that affectstheir cash flow.

There are times we haveworked with untrustworthymiddle men (agents) assubcontractors and it reallybecomes a challenge as theydont understand the need tofulfill a contract despite themhaving already pocketed moneyfrom the customers, saidChalamanda.

On contract conditions,he says some contracts

by government and otherinstitutions are notflexible which puts smallscale companies at a bigdisadvantage.

For instance, there was acontract whereby governmentwas looking for school desks

and yet there was a need for abid security amounting to K16000 000 and one wonders howcan small companies like ourscan get that money from,chipped in Sankhulani.

The company manufacturesschool furniture, hospitalbeds, hotel furniture and alsohousehold furniture such asbeds, bunk beds, dining setsand garden chairs.

All these are made fromsteel and sometimes combinedwith wood

In future, the company plansto open a proper showroom in

the heart of the city for easyaccessibility by its customers.

Sankhulani was at onetime employed by MapangaFurniture as workshopmanager whereas Chalamandaworked as finance manager atEveryChild Malawi.

stopher JimuReporter


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vertorial/featureS unlocking economic potential

15

ntrepreneurship,hard work andwomen are theof a new business

ted in Mzuzu,awi. Kwithuhen, a wholly

men owned food-essing cooperative,ntly introducedrst product to the

ketgarden freshatoes. And, its

iving rave reviews.e tomatoes arey to use, makingick and easy to

te delicious food.sumers who haveed the productment on howretain the great

our and texture ofh tomatoes andmpressed by theshelf life. They

also naturallyin vitamins and

oxidants and as an

Kwithu Kitchenhining with

resh tomatoesadded benefit, there iszero waste you canuse the entire contentsof each jar.

Jacintha Jere ,chairperson of thecooperative, said:Businesses such asKwithu Kitchen are thefuture local products,made by local people.Im particularly proudthat every sale of our

tomatoes supportsprogrammes forvulnerable children atKWG.

KWG, a localcommunity-basedorganisation wasformed in 2004 tohelp children from thecommunity of Luwinga.

Although the womenstarted smallfeedingonly a handful ofchildren once a weekthey dreamed big.

Today, KWG provideshot meals to over 200children three timesa week, offers earlychildhood education,after-school tutoring,community outreachprogrammes andsecondary schoolscholarships.

Jere says Kwithusjourney towardmanufacturing was

born out of a desire tobe independent.

We were tired ofbegging. So we thoughtof doing somethingdifferent, she said.

Kwithu KitchenGarden Fresh Tomatoesare distributedthroughout Malawiby Mzuzu CoffeeProducers CooperativeUnion and are availablein different shopsincluding Shoprite andChipiku Plus.


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