THE small-scale sector is undoubtedly the main driver and backbone of development in any given economic set-up which can enhance industrial growth and poverty alleviation.
Countries such as China, India and Malaysia, for example, have for a long time relied on the small-scale sector for economic diversification and development.
Due to consistency through the support of their respective governments and the private sector, these countries have rejuvenated their economies that have, in turn, created thousands of employment opportunities for the multitudes of citizens.
This has also helped in increasing the market share for various consumer products on the global export arena, which has also enhanced the strength of these countries’ local currencies.
But this is quite different in the Zambian economic set-up where the local small and medium-scale entrepreneurs (SMEs) have been grappling with the challenge of accessing working capital to develop various business projects.
In addition, the cost of borrowing on the local money market, coupled with high interest rates, is very expensive and differs from institution to institution.
This scenario has definitely knocked down all the prospective SMEs, most of which have the capacity to churn out big business projects that can benefit the economy of this country if given mileage.
Many times these institutions have been reluctant to lend out capital because the local SMEs have been viewed as too risky.
It is for this reason that we give credit to institutions such as Stanbic Bank Zambia for releasing K65 million to more than 10,000 local small-scale entrepreneurs.
This not the first time the bank has done this as between 2012 and 2014, it disbursed K60 million to more than 8,000 SMEs.
The bank also rolled out the Tamanga product which offered the local SMEs quick and easy access to working capital, and this should be commended.
As chief executive officer (CEO) Charles Mudiwa has indicated, Stanbic’s gesture to invest significantly has been driven by the numerous challenges the local SMEs have been facing for a long time.
The private sector, if well harnessed, has immense potential to help diversify the Zambian economy which can be done through the empowerment of SMEs to help them participate in alternative sectors.
The high cost of doing business, inferior quality products and limited access to financing, remain among the major challenges facing the local small-scale industrial sector.
While this is good for the cottage industry, the Government should continue to implement reforms aimed at unlocking the sector’s huge potential.
This should include the review of the manufacturing infrastructure as well as technical regulation framework so that products by SMEs could remain more competitive both on the local and export markets.
On the other hand, the SMEs should endeavour to pay back the loans being extend to the sector in order to maintain confidence from lending institutions.
The turning around of the SMEs sector would bring numerous benefits to the Zambian economy as this would help create jobs as well as strengthening of the local currency through increased exports andmaximised contribution to the Gross Domestic Product (GDP) and general economic growth.