SMEs yet to fully benefit from government business

Capacity challenges are hindering small and medium enterprises (SMEs) from conducting business with government, The Nation has established.

This is despite regulations such as the Small and Medium Enterprise (SMEs) Order enabling small businesses to find adequate space to do business with government through procurement.

The order, which was gazetted in December 2020, was in exercise of powers by Section 36 (2) of the Public Procurement and Disposal of Public Assets (PPDA) Act which was passed in 2017.

Chamber for Small and Medium Enterprises executive secretary James Chiutsi said in an interview on Tuesday that their capacity to fully supply government has been small despite registering some minimal growth.

Chiutsi: It favours certain groups

He said: “We have always applauded government for enacting that law, but for several years, the business climate has favoured certain groups of people and not the SMEs.

“When the law was enacted, it was not possible for SMEs to take full advantage because of capacity issues. Our members are capable but it is something that will take 10 to15 years to fully take advantage of the law.”

The objective of the order is to capacitate SMEs to participate and contribute to the growth processes that recognise their contribution to the country’s economic growth.

At the time gazetting the order, Public Procurement and Disposal of Assets Authority (PPDA) appealed to all SMEs to follow the set procedures by first having their businesses registered with the registrar of companies for them to participate in the procurement process.

The SMEs were also required to register with PPDA to have a certificate that would allow them to participate in government procurement and also with Malawi Revenue Authority that they will be paying tax.

PPDA Authority public relations and communications manager Kate Kujaliwa said in view of the 20 percent preference, the progress has been registered but not as expected.

“There are plans to enhance the enforcement,” she said, adding that PPDA is currently reviewing the PPDA Act to strengthen the law and cover some existing gaps including the areas you have raised.

Minister of Trade and Industry Sosten Gwengwe said in an interview that SMEs are facing many challenges when conducting business with government, adding that only a few SMEs, if any, doing business with government.

He attributed this to stiff competition from big players that monopolised almost all sectors of the economy.

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