Invest in SMEs to accelerate regional economic growth

25Dec 2018
Correspondent
Dar es Salaam
The Guardian
Invest in SMEs to accelerate regional economic growth

The rapid economic growth that Sub-Saharan Africa has experienced has been criticised for failing to translate into opportunities for a variety of people across society.

Jane Mwangi is the Managing Director of KCB Foundation.

Across the major economic blocs in this part of the world are many small businesses that provide the bulk of employment opportunities across different industries in both the formal and informal sectors.

However, capital constraints have kept majority of the businesses in a vicious cycle of debt.  These businesses lack capacity to generate jobs needed to provide livelihoods for the growing young population entering the workforce.

The potential to turn the situation around is greatly vested upon the small and medium enterprises (SMEs) due to their growth potential. In order to reap the benefits of the youthful working population, skilled labour needs access to employment. And in order to create jobs, the region is called to invest.

The United Republic of Tanzania is one of the region’s best performers in the last two years, with its economic growth over the last decade averaging 6-7 percent every year. Impressively, the World Bank’s projected growth for the country stood at 7.1 percent Gross Domestic Product (GDP) growth in the 2017/2018 financial year, with SMEs being the largest solo contributor to Tanzania’s GDP by generating up to 35 percent.

Women are at the heart of this pivotal role in facilitating economic development. Notably, most women-owned enterprises are concentrated in informal, micro, low growth and low-profit activities where entry barriers are low but price competition for daily commodities is most intense.

Noting the growing need for external support to catalyse the sector through meaningful channels for economic empowerment, KCB Foundation, KCB Bank Group’s social investment arm, is spearheading transformative platforms and programmes geared to support SME growth and the envisioned regional development.

The Foundation’s youth empowerment flagship programme, 2jiajiri, has taken its initiatives into Tanzania, with a focus on SMEs and the industrious women who run them. The 2jiajiri women empowerment programme is designed to address the challenges faced by women in the course of doing business as well as better their entrepreneurship skills, capacity, and opportunities.

Guided by the immense room for growth in the informal sector, 2jiajiri is focused on training the youth/women in various trades that form the backbone of the informal economy. The programme seeks to leverage on the power of information to catalyse empowerment by addressing perennial hurdles set against women doing business like financial literacy and financial exclusion.

Women doing business in all KCB Bank operating regions go through three dynamic phases; classroom training, mass awareness campaign and practical training. Notably, all three phases will continue to run seamlessly and have now taken root in Dodoma, Dar es Salaam and Arusha.

In early 2019 KCB Foundation will grant the women who have been trained, and who will have viable business proposals, seed capital amounting to TZS 91 million each to bolster their enterprises.

The 2jiajiri programme aims to guide the women youth towards self-employment, a requisite for economic growth.  This then calls for development of a robust SME strategy, which will require efficient inter-ministerial coordination.

There also needs to be an understanding that SME development is a long-term undertaking that needs support from the highest levels of government. 

It will therefore be important that governments address the bigger infrastructural challenges - roads, railways, bridges, water supply and power generation. Efforts should also be redoubled to increase financial literacy and expunging policies that inhibit financial inclusion as well as improving the institutional framework. The time is now.

 

 

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