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Zambia: The Small Scale Sector Plays a Pivotal Role in The Growth of The Economy
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The Times of Zambia (Ndola)
EDITORIAL
16 May 2008
Posted to the web 16 May 2008
Ndola
FOR emerging economies like Zambia's, the small scale sector possesses the most realistic potential to play a pivotal role in the growth of the economy.
Examples are numerous of economies, especially in South East Asia that have emerged from small, under performing economies to global giants riding on the backs of the small scale sector.
This is because going by the law of averages, in developing countries, more people fall in the small scale sector category, as opposed to the large corporate entities.
It stands to reason therefore, that both in terms of output and contribution to demand, the small scale sector has the edge.
This fact has long been realised in Zambia and many initiatives have been mooted aimed at harnessing this largely untapped potential. Some of the initiatives have included the creation of distinct separate institutions to nurture growth in the small scale sector.
Despite these efforts, the sector's performance has at best been minimal. One of the major reasons has been the lack of adequate financing to enable small scale entrepreneurs to effectively see through their projects and programmes.
So pervasive has been the dearth of financing for this sector that over the decades, it has become a sing song among the small scale entrepreneurs.
The situation has changed for the good and among the best and concrete solutions for the small scale sector is the arrangement just entered into between the Development Bank of Zambia (DBZ) and the International Finance Corporation (IFC).
The signing of the Memorandum of Understanding between DBZ and the IFC under the Private Enterprise Partnership programme for Africa to support the small scale sector has huge possibilities to unlock the sector's potential.
This is because under the programme small scale entrepreneurs will, apart from the standard access to loan financing, be imparted with the necessary expertise through specifically tailored programmes.
It is a good initiative by DBZ to come up with such a far sighted initiative.
Apart from benefiting the small scale sector, the programme would also help DBZ itself to develop its institutional capacity for promoting the development of the small scale sector in the country.
It is also a chance for the bank to once again reclaim its central role of a vigorous catalyst of development financing on the Zambian market.
Much as all this may be good news to SMEs, it would be prudent for the sector players to exercise utmost prudence and business acumen.
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The programme as envisaged under the memorandum of understanding is tailored for viable small scale players.
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