2014-04-29 SMALL TO MEDIUM SIZED ENTERPRISES FAILING TO MEASURE UP Small to medium-sized enterprises (SMEs) have been the subject of many intellectual debates in Mozambique as their fate remains uncertain, despite the economic boom being registered across the country’s business sector. Concerns are running high that Mozambique’s impressive GDP growth, which is well above the global average, will accrue largely to the business-conscious elite. Developing local content by allowing SMEs to be part of the economic change is paramount to ensuring lasting and sustainable progress. Foreign Direct Investment has flooded in, particularly in the mining sector. However, the development of SMEs has not been sufficient to take full advantage of the economic opportunities available. In many ways SMEs in Mozambique do not have the capacity to meet the high standard and demands made by international mining companies and other multinational corporations. What is more, Mozambican SMEs often lack the knowledge required to connect their business ventures to that of the megaprojects. As a result, they often miss out on direct attempts from multinationals to access the Mozambican market. Often it is part of a multinational company’s social responsibility clause to help develop local content within the host country, particularly in the regions where they are based. However, in a typical example, mining giant Vale launched a public tender for a national catering company to provide its services to their megaproject. After no applications were received, it contracted a French company. Such accounts highlight a gap which needs to be filled. The creation of a platform which would help inform local companies of how they could benefit from opportunities which are out there needs to be implemented as soon as possible. Nonetheless, few companies will have developed to a standard which would enable them to service a multinational company in the first place. Highly skilled and efficient workmanship is vital to winning such tenders and, with a lack of resources, SMEs often do not have the financial backing needed to develop systems adequate of supporting a megaproject. In this case, the increase of credit lines is essential to ensuring SME´s in Mozambique have the means to begin developing towards these global standards. Training and technical support is additionally key to such development. Last week, Mozambican bank BCI announced it would be increasing its credit line to SME´s from 100,000,000mt to 500,000,000mt. In a competition which allows up to 300 micro, small and medium-sized companies to access the credit line, they will not only gain financial support but will have the opportunity to become linked to the multinational companies looking to develop local content. A positive step in the right direction, despite high interest rates of 14-18% continuing to be a dissuading factor for many businesses. Furthermore, whilst initiatives like these, directly guided by the Mozambican Ministry of Industry and Commerce, the Institute for the Promotion of Small to Medium-sized Enterprises (IPEME) and other partners such as the Soico group, attempt to push SMEs development forward, many fundamental tools remain unavailable to local businesses. If SMEs continue to linger behind megaproject development, it is difficult to see how the economic boom will reach the vast majority. Increased jobs for locals will be inextricably linked to the development of local content, and so in many ways this is an area which cannot afford to stay behind, if Mozambique as a whole is to benefit from the current economic boom.
Posted on: Wed, 30 Apr 2014 06:41:20 +0000
Trending Topics
Recently Viewed Topics
© 2015