Investing in SMEs
Malawian entrepreneur Joseph Jaffu (left) learns to make candy from nuts while on a SME training course in China COURTESY PHOTOJoseph Jaffu, Managing Director of Mlimi Enterprise in Malawi’s capital Lilongwe, is one of several small and medium-sized enterprise (SME) businesspersons in the country who is making waves. Mlimi (meaning farmer in Chichewa) Enterprise is an agribusiness that produces food crops and seed for processing and exporting. Some of the crops grown are cassava, oranges and potatoes.Jaffu’s ambition has always been to expand the business. But despite having available finance and a labor force at his disposal, he did not know how to go about it. He said the method he used to attract customers never varied and had become stale. Change was needed.
“In fact, we were predictable because when customers came, they knew how they would be greeted and the type of merchandise they would find,” said Jaffu.
Like Jaffu, Mwiriha Kapondamgaga, an enterprising lady who owns CNS Investments, has been thinking about how to improve her business interests. Some of these include home interior and garden décor products, coffee and tea and events management.
“Honestly, it was irritating because everything I was doing [to improve my businesses] did not come out according to my expectation. I had wanted to acquire some new ideas so that my business takes a different direction, but I did not know how [to go about it],” she said.
Dream come true
As if in answer to their prayers, Jaffu and Kapondamgaga were among 30 Malawian SME owners selected to go to China for business training by the country’s Small and Medium Enterprise Development Institute (SMEDI). According to Tapiwa Nsanja, SMEDI Public Relations Officer, the 30 entrepreneurs, who left on June 9 and returned on July 12, studied at Hunan International Business Vocational College situated in Changsha City in south China’s Hunan Province.
“China has an agreement with the Malawian Government through the Ministry of Industry, Trade and Tourism to send entrepreneurs to China every year for special training. All costs were covered by the Chinese Embassy [in Malawi]. At the end of the training, they received certificates of attendance,” said Nsanja.
Some of the topics covered during the training included SME promotion, competitive strategy, organization structure design, financial management and brand strategy.
In addition, the training gave deeper insight into research on the development strategy of Chinese enterprises, corporate culture and capital market cultivation of SMEs.
“This is the second group of trainees to visit China. The first one was there in 2017,” said Nsanja.
Opening eyes
The SME trainees were skeptical at first as they expected to be introduced to the standard outdated marketing formula for attracting new customers. But they were surprised not only by the quality of the course, but also by the Chinese work ethic.
For Jaffu, what he will continue to cherish is the hardworking spirit of the Chinese, especially the commitment given to a project when they want to achieve something.
“I have witnessed how China has managed to provide food for its citizens,” said Jaffu, adding that whereas agriculture is not always a priority in many countries, in China, it is top of the government’s agenda.
“If a country has enough food, it becomes easy for its economy to grow by producing value added goods,” he said.
Jaffu said as an experienced farmer and entrepreneur, the training has given him an opportunity to increase profits from his agribusiness through value addition in crops such as cassava, which is in high demand in the pharmaceutical industry and for producing adhesives. Jaffu, however, called for his government’s assistance so that SMEs can fulfill their ambitions.
“There is a need for extensive government support and practical policies that need to be implemented in areas of irrigation and mechanization for Malawian farmers, who have used the hoe for a long time.”
“Just like the Chinese farmers, Malawians are hard workers. All they need is help to be innovative and dedicated through technological advancements. This can only happen if they are given opportunities to go and learn what others are doing, as was the case with us,” said Jaffu.
He also said he has become more aware of the need for self-discipline in many areas, including financial which, he now knows, is key to business and economic transformation. For Kapondamgaga, her plan is to implement lessons she learned on operation strategy, tax planning, marketing and financial management.
“Through the training and knowledge obtained [in China], I have also come up with other ideas which will help further the growth of my businesses. Also, some people have already approached me to learn new business skills and I am ready to help them. The training was an eye opener for me and I would like to thank the Malawian Government for according me an opportunity to study and learn new business skills in China,” she said.
On government intervention, Kapondamgaga said it is a necessity as it has worked well in China.
She said, “There are some policies that the Chinese Government is deliberately implementing to support their SMEs and if the government of Malawi can also do the same, small-scale businesses can boom, which [in return] can help grow the economy.”
According to Kapondamgaga, the policies include having good infrastructure, a reasonable tax structure, reliable energy and a receptive market. She cited the example of the Chinese Government establishing a credit guarantee system for SMEs and also providing tax incentives, such as tax reductions to encourage the establishment and growth of SMEs.
“In China, the cost of production is lower compared to many other countries. If we can have a similar situation in our country, SMEs can grow,” she said.
Kapondamgaga said since returning from training in China, she has improved her company’s financial management, saying that in the past, she would sell her goods without a costing configuration.
“I now know what I have spent on the goods and the profit I will get after selling them. I am also expecting to expand my business because things are better now than before,” she said.
Government intervention
The Minister of Industry, Trade and Tourism Henry Mussa said Malawi is on the path to creating business enterprises, especially targeted at the youth, which will result in the growth of the economy.
“One of these paths is the establishment of technical colleges. But bearing in mind that the labor market is limited, we encourage people to open [their own] businesses. So the trip to China was to expose some of the SMEs to what and how advanced countries manage [these businesses],” he said.
Mussa pointed out that government established colleges where the youth and SME owners will be trained in various business and vocational skills, and this will ultimately put money into their pockets and also improve the country’s economy.
“Again, if they need additional money to expand their businesses, government will provide them with soft loans. All in all, we are there for them because they have shown that they are important since most of them employ other people,” said Mussa.
Mussa said the government is aware that there are some people who are willing to engage in business activities, but they lack technical skills and hence its intervention to assist them with basic knowledge.
“You may have the will and capital to start a business, but you also need to understand how it is run, [with knowledge] about financial management and taxation. It is our duty as government to come in [and assist], and that is why we sent some SMEs to China to be trained in these areas,” he said.
**Reporting from Malawi
*** Comments to [email protected]
China has an agreement with the Malawian Government through the Ministry of Industry, Trade and Tourism to send entrepreneurs to China every year for special training.”
Tapiwa Nsanja Public Relations Officer of Small and Medium Enterprise Development Institute of Malawi