SMEs: Key players in regional integration

 

The push towards regional integration in eastern and southern Africa depends on a number of factors. One important factor is ensuring that small and medium enterprises (SMEs) are fully equipped to contribute towards socio-economic development.

This is because SMEs are a vital conduit through which the region can spur development, as the sector provides employment to the majority of the population, particularly youths and women.

SMEs also contribute immensely to poverty eradication and rural development by improving income distribution in the region.

According to a recent study by the Common Market for Eastern and Southern Africa (COMESA), SMEs contribute over 50 percent of employment in the region.

It is estimated that there are about six million SMEs in eastern and southern Africa operating in various sectors ranging from transport, tourism and mining to agriculture, manufacturing and retail.

However, SMEs continue to face various challenges in their operations and are usually not highly regarded in society

Some of the challenges faced by the enterprises include limited access to financial resources, cumbersome documentation required to set up or expand business and inefficient road and rail networks that cause time delays in moving goods from one place to another.

In this regard, the forthcoming COMESA Summit has once again chose SMEs development as the main theme for discussion.

The theme for the summit scheduled for Kinshasa, the Democratic Republic of Congo on February 26-27 is “Consolidating Intra-COMESA Trade through Micro, Small and Medium Enterprises Development”.

This is similar to the previous theme of “Enhancing Intra-COMESA Trade through Micro, Small, and Medium Enterprises Development”.

“The Council of Ministers agreed that micro, small, and medium enterprises are still a vital component to the development of the region’s economy,” COMESA spokesperson Mwangi Gakunga said.

“Thus the ministers felt that there is a need to further focus on them and continue to give them any support they may require to be a force for greater economic growth and regional integration.”

At the last summit held in Kampala, Uganda, in 2012, leaders from eastern and southern Africa proposed a number of measures aimed at capacitating SMEs so that there are fully equipped to compete with other well-established enterprises in an open market.

An open market in eastern and southern African has boosted intra-regional trade, increased investment flows, and enhanced competitiveness, but it has also seen more vibrant multi-national enterprises push and swallow less prepared SMEs.

This has resulted in millions of youths and women involved in SMEs lose their jobs, placing the whole regional integration agenda on the back foot since such a programme should benefit the majority and not hinder their growth.

As such, leaders from eastern and southern Africa are expected to recommit their efforts towards promoting SMEs development since small businesses are the backbones of most economies in the region. The commitment includes increasing access to financial and technical support for SMEs, and availing more land to women and youth, who make up the majority in the SMEs sector.

It is also critical to link SMEs with the big businesses so that the two could complement each other, as they are both key players in socio-economic development and regional integration.

Other interventions are infrastructure developments to improve road and rail network, as well as improving border posts across the region. Improved roads would allow SMEs to move smoothly within the region, while effective border posts are critical in making business easier.

For example, the establishment of a One-Stop-Border Post at Chirundu between Zambia and Zimbabwe has greatly reduced the time traders spend on transit.

Ultimately, the One-Stop-Border Post launched in 2009 has reduced the cost of transporting goods and services. In this regard, the future of intra-regional trade in eastern and southern Africa depends on strengthening SMEs since small businesses are heavily involved in trade.

The annual COMESA Summit set for DRC is being held later than planned. It was originally set for December 2013, but COMESA Secretary-General Sindiso Ngwenya said “unforeseen circumstances” led to the postponement of the summit.

Prior to the 17th COMESA Summit, there will be various ministerial meetings to review the socio-economic situation in the region. COMESA is made up of 19 members ‑ eight of which belong to the Southern African Development Community (SADC).

These are the DRC, Seychelles, Swaziland, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe. As host nation, DRC is expected to assume the COMESA chair from Uganda.

February 2014
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