Swazi SMEs a recipe for big hopes
For a country struggling with a stubborn unemployment rate of more than 40%, the development of small and medium-sized enterprises seems a welcome solution to joblessness.
So, it comes as no surprise that Swaziland’s Minister of Enterprise and Employment, Lutfo Dlamini, is an enthusiastic proponent of these businesses â€’ commonly referred to as SMEs (small and medium enterprises).
“Small and medium enterprises represent a grass-roots solution to the economic downturn.
They are good for poverty alleviation and local empowerment: they create jobs,” he says.
With this in mind, Dlamini recently hosted a large conference for aspiring entrepreneurs. Over 1Â 000 people attended the meeting, while three major banks were on hand to explain the intricacies of applying for business loans.
Many delegates appeared to see parastatals like the Swaziland Posts and Telecommunications Corporation and the country’s water board, also represented at the conference, as potential clients.
“I want to be a supplier to the water board. They need to give business to small local firms like mine, instead of doing business all the time with big firms in (neighbouring) South Africa,” said Mary Simelane, who owns a stationary story and wants to sell office supplies to larger companies.
But, an official from the finance ministry cautions that parastatals simply aren’t in a position to welcome all comers.
“Businesses need customers, and these must come from the private sector,” said the official.
During the conference subsistence farmers, who make up about 80% of Swaziland’s population, were advised to branch out into more exotic forms of agriculture such as cut flower cultivation and bee keeping.
Announcing a new flower export initiative of almost $27-million, Dlamini said of the investors: “They have the technology, and they need local people to grow roses to support them. This is a chance for Swazis, and I would urge you to take it.”
With about two thirds of people in this Southern African country living in chronic poverty, both government and farmers have a pronounced interest in seeing initiatives like this become a success.
Once again, however, a note of caution is heard in some quarters.
“African farmers are conservative people: they prefer crops they can eat,” says Angus Quinn, a farmer who works near the north-eastern South African town of Nelspruit, and who has a long experience of commercial agriculture.
“Weaning them from subsistence farming to cash crops to be sold at markets, or even put on airplanes to Europe—the way the cut flower will go—takes more than saying, ‘Grow flowers and earn money’,” he added. Instead, a more comprehensive effort was needed to help subsistence farmers understand the new markets they were being called to enter.
Supporters of SMEs point to Swaziland’s northern neighbour, Mozambique, as an example of how rapidly the entrepreneurial drive that Quinn speaks of can develop.
“After the long civil war, Mozambique’s economic recovery began not with big reconstruction projects, but in the informal sector,” says a European diplomat stationed in the Mozambican capital, Maputo, who has observed economic development in the region.
“Mozambicans proved to be enthusiastic entrepreneurs individually. They buy and sell anything.”
In fact, these business skills may be in the process of being exported to Swaziland. A stroll through the bustling market of Manzini, Swaziland’s commercial centre, reveals that a number of the fruit vendors, watch repairmen, handicraft makers and used clothing sellers are Mozambican.
“We get these second-hand clothes from shipments that come to Maputo, and bring them here. We are showing the Swazis how it is done,” said Simeo da Silva. Only 19 years-old, he is in the country “informally”, dodging immigration authorities for the chance to make a quick profit.
The popularity of Manzini’s market also serves to bolster confidence in the ability of Swazis to spot business opportunities: it is bursting at the seams, and plans were announced this week to construct a new market twice the size to accommodate vendors.
However, transforming a successful stall into a formal, tax-paying SME presents its own challenges. And, Swazi unionists such as Africa Magongo maintain that the informal sector is no substitute for a healthy formal sector.
“There are no pensions, health schemes or other benefits in the informal sector,” he says.
The organiser of the SME conference, the Manzini-based Kobla Quashie and Associates consultancy firm, hopes the event will prove a critical first step in raising entrepreneurial awareness â€’ and educating people about pitfalls to avoid when setting up new businesses.
If only a few companies spring up as a result, every new firm will still be worth its weight in gold.
At present, profits are down a third for Swaziland’s main agricultural export, sugar, because of a decline in the world sugar price.
And, while the textile sector has grown in recent years, this too sustained a blow with the conclusion of the World Trade Organisation’s Multi-Fibre Agreement on December 31, 2004: an event that has seen Chinese textiles, more competitive in price, flood the world market.
Both the big sugar estates and large clothing manufacturers have laid off thousands of workers this year, creating a ripple effect as local suppliers to those companies have had their orders cut back.—IPS