Partnerships between micro SMEs and multi-national corporations key to unlocking SADC potential from net importer to net exporter
The Southern African Development Community (SADC) region has great potential to become a successful hub for exporters of finished goods if Micro Small and Medium Enterprises (MSME) and Multi-National Corporations (MNC) strongly work together.
This view was expressed by various speakers at the SADC Industrialisation Week 2021 currently underway in Lilongwe, Republic of Malawi. They unanimously agreed during a breakaway session titled “Building linkages between MSMEs and Southern-led MNCs: the case of Southern Africa”, that if large manufacturing firms work together with the small firms in value addition, this can change the story of SADC being the net importer of processed foods to that of an exporter.
An economist at Genesis Consulting, Ms Lauralyn Kaziboni, said for regional growth to be inclusive, local firms together with big firms, need to be able to participate and effectively compete in regional value chains through innovation and effort, investment, quality and prices.
Ms Kaziboni cited poultry farming in the several SADC Member States as an example where multinational corporates have completely dominated the market and in the process pushing away small and medium enterprises to the brink of extinction.
She also said the Region remains a huge net exporter of sugarcane, but a net importer of processed sugar confectioneries and baked goods, adding that if MNCs and MSMEs closely worked together, that would inevitably empower MSMEs to become processors of sugar confectionaries themselves and reverse the current trajectory.
She lamented that the big companies continue to import tones of soya beans, the main component in the feed for poultry, instead of capacitating the small local farmers to produce the same at the Regional level.
Mr Duncan Samikwa, Senior Programmes Officer in the Directorate of Food Agriculture and Natural Resources at SADC Secretariat said that the MNCs need to play an important role to ensure skills transfer and mentorship of MSMEs to improve the quality of their products to make them competitive for export. He said this can be realised if regional governments also capacitate agro-processors to produce improved quality products for exports.
“The move to become net processed food export can work if governments attract and facilitate private sector investments in new agro-processing activities and ensure that investors function optimally,” said Mr Samikwa. He said provision of tax, cost-recovery incentives both in plants and equipment and other investment incentives are capable of changing the status quo for the better.
Mr Samikwa underscored the need to promote product traceability mechanisms for specialised markets and exports and on identified products while also emphasizing the need to improve cross border logistics and trade systems; such as the Tripartite Transport System Project and One-Stop Border Posts.
Ms Bineswaree Bolaky, Economics Officer at Economic Commission for Africa Sub-regional Office for Southern Africa, while agreeing that MSMEs and MNCs can change the food export story for SADC, said local enterprises are the backbone of Southern Africa’s economy but lacked value-addition and that most of them are informal, mostly in the services sector, thereby playing an insignificant role in the value chain dynamics of the Region.
She said for the Region to become a successful exporter of finished goods, there is a need to strengthen the capacities of MSMEs in the private sector to address competitiveness challenges that impede them from participating effectively in inclusive industrialisation processes. Ms Bolaky encouraged MSMEs to learn through business linkages such as skills development, training, access to markets and compliance with standards to help integrate them into global value chains and technology.
She stated that close collaborations and partnerships with MNCs will result in increased profits for MNCs as supplies will be sourced locally, cheaply and faster.
Talks on the need to strengthen working relations between MSMEs and MNCs come when there has been an outcry that the Region is losing out by being a net importer of finished goods or raw materials emanating from the same Region. The sentiments expressed are in line with the message delivered at the official opening of the SADC Industrialisation Week by His Excellency Lazarus McCarthy Chakwera, President of the Republic of Malawi, who said industrialisation is a key priority for SADC economic transformation. He warned that if SADC does not industrialise, it will continue to be a dumping ground for products from other nations.