SMEs in Malawi: ‘access to information and risk sharing can unlock growth in emerging sectors’ – experts weigh in
Small and Medium Enterprises in Malawi face an urgent need to capitalize on emerging sectors such as e-commerce, agritech, and renewable energy to drive growth and ensure sustainability in the face of economic challenges.
As businesses grapple with increasing difficulties, these emerging sectors present fresh opportunities for expansion and innovation.
Bond Mtembezeka, the Country Manager for Business Partners International, an investment firm that supports mid-market enterprises, speaks to MIJ Online, underscoring the importance of information access and business literacy for SMEs to succeed in these new sectors.
“SMEs in Malawi have immense potential, but many are unaware of the opportunities in emerging industries. Sectors like e-commerce, agritech, and renewable energy offer vast possibilities. However, businesses must be well-informed and adequately prepared to seize them,” Mtembezeka states.
Several SMEs in Malawi already venture into e-commerce, recognizing the potential to expand their reach and increase sales. Percy Maleta, the founder of Maleta Gems and Jewels, is a prime example of this. He leverages digital platforms to broaden his business.
Maleta shares with MIJ Online, “I actively use social media platforms such as Facebook and LinkedIn to connect with customers. Additionally, I am developing a website where customers, both in Malawi and abroad, can purchase my jewelry products online. I believe having an online presence will help my business grow. Social media has already helped me attract more customers, and with the website, I hope to expand further”.
While these new opportunities exist, Mtembezeka points out that access to finance remains one of the biggest challenges facing SMEs in Malawi. Traditional financial institutions often overlook small businesses, leading to a significant funding gap.
“We identify this gap and step in to provide tailored funding solutions for SMEs. Since 2014, Business Partners has invested around $15 million (K25 billion) in the sector. Most SMEs don’t just need money; they need skills. Many entrepreneurs start businesses without the necessary knowledge. That’s why we pair financial support with technical assistance,” Mtembezeka explains.
The challenge of rising inflation is another concern for SMEs. Mtembezeka notes that inflation erodes purchasing power and increases operational costs, creating additional pressures on businesses.
“Inflation means people have less money to spend, which reduces sales for SMEs. At the same time, businesses are spending more on goods and services that used to cost less,” he says.
Along with limited access to finance, SMEs also face significant delays in government payments, which often leave businesses struggling with cash flow issues. Daisy Kambalame, Chief Executive Officer of the Malawi Confederation of Chambers of Commerce and Industry, calls on the government to address the issue of delayed payments to SMEs that provide goods and services to government institutions.
“The current delays in payments cripple SMEs financially and force businesses to overcharge for services just to compensate for the long waiting period. If we want SMEs to thrive, we must urgently address this issue,” Kambalame urges.
To help SMEs succeed, Mtembezeka calls for greater support from both the private sector and the government, suggesting innovative funding solutions such as credit guarantees and blended financing instruments to make financing more accessible.
Similarly, Bertha Chikadza, President of the Economics Association of Malawi, emphasizes the critical role of public-private partnerships in supporting SMEs.
“Public-private partnerships provide access to resources and expertise that SMEs often lack. These partnerships enable risk-sharing mechanisms such as subsidies or guarantees, reducing the financial burden on SMEs and making new ventures more attractive,” Chikadza explains.
Chikadza further highlights that these partnerships are essential for helping SMEs navigate new sectors and opportunities. “Private sector partners can share the risks associated with new ventures, encouraging SMEs to explore emerging industries. Furthermore, partnerships facilitate market expansion, as the government can help negotiate trade agreements and reduce regulatory barriers, granting SMEs access to larger, international markets that would otherwise be out of reach,” she adds.
Mtembezeka also stresses the need for policy consistency, arguing that frequent changes in government policies disrupt business operations. “Every time there is a new administration, policies change. We need a stable policy environment so SMEs can plan for the long term,” he says.
Similarly, Chikadza emphasizes that Malawi needs long-term policy frameworks that extend beyond individual administrations. She also notes the importance of transparent communication about policy changes to help businesses prepare for new regulations.
“We need clear and consistent communication about changes so businesses can prepare. Additionally, we should encourage bipartisan agreements on key economic policies to ensure continuity and stability, regardless of which party is in power. There is also a need to establish independent regulatory bodies that can oversee and implement policies consistently, without political interference,” Chikadza says.
According to current government statistics, SMEs contribute up to 40% of Malawi’s GDP, with significant representation in sectors such as agriculture and retail. The sector also accounts for 24% of employment in the country, highlighting the crucial role SMEs play in the national economy.
