Lusaka — The Government of the Kingdom of Eswatini, through the Ministry of Commerce, Industry and Trade, requested for technical support from the United Nations Economic Commission for Africa (ECA) in developing an inclusive financing model to cater for the needs of MSMEs. In August 2020, a national stakeholder meeting was convened to review an initial draft through an inclusive platform allowing for open dialogue among key constituencies of the MSME ecosystem in Eswatini.
The objective of the validation meeting was to review the draft report from the August consultative meeting and deliberate on key steps for the implementation of the proposed framework. The meeting participants reviewed the report, verified the accuracy of the information contained therein, identified potential gaps, provided necessary inputs and proposed amendments that should form the basis for finalizing the report and subsequent endorsement and launch by the Government of the Kingdom of Eswatini. The meeting also provided a platform for stakeholders to dialogue, network and foster coordination towards supporting the implementation of the financing model for MSMEs.
In his opening statement, the ECA SRO-SA Acting Director, Sizo Mhlanga acknowledged the collaboration with the Government of Eswatini through the MSME Directorate of the Ministry of Commerce, Industry and Trade (MCIT), in the conduct of this activity which had culminated in the validation meeting. He hoped that the validation meeting would identify and understand the critical impediments to MSMEs' access to finance in the Kingdom and come up with a comprehensive and holistic action plan that would address such constraints and enable sustainable and inclusive enterprise growth.
He noted that, "presenting the report is not the end of the process and developing a model is just the first step in a long process. For frameworks to contribute to the desired outcomes, they must be effectively implemented and this calls for the identification and addressing implementation barriers. Experiences from the region and beyond, show that once policies are adopted, implementation as envisaged becomes a challenge."
The meeting was chaired by Mr Mluleki Sakhile Dlamini, Director, MSME (MCIT) who presented an overview of the MSMEs' environment in Eswatini. He thanked SRO-SA for assisting in the production of a tailor-made solution to the issue of of MSMEs' access to finance. He expressed hope that the implementation of the proposal would help revive the Eswatini economy by promoting a vibrant MSME sector, "which is the back-bone of the country's economy and key to economic growth and job creation," he added.
The draft report was presented by ECA consultant Mr. Vinaye Ancharaz who advised that the commissioned study was meant to undertake a situation analysis of the MSME sector in Eswatini, analyze the opportunities and challenges that MSMEs faced, especially in accessing financing and present comparative models, including experiences, lessons and innovative approaches, from other countries on financing MSMEs and propose a comprehensive and inclusive financing model for MSMEs. He cited a 2017 survey by FinScope that estimated that about 70,000 MSMEs in Eswatini employed over 90,000 people (21percent of the workforce) and contributed 50 percent to GDP.
The report also revealed that 75 percent of MSMEs were owned by independent entrepreneurs, with no jobs created; 74 percent located in rural areas and about the same proportion were female-headed. Mr Ancharaz noted that the survey indicated that while MSMEs had the potential to contribute a lot more to economic development and poverty reduction in Eswatini, currently, this was not the case due to the MSME ecosystem not yielding the desired impacts.
His research indicated that, "the problem facing MSMEs is more of a lack of preparedness to access finance rather than the availability of finance itself." The report confirmed that MSMEs in Eswatini did not as such, face the problem of access to finance but rather, there was a lack of effective demands from MSMEs to the banks as they failed to submit required financial and business information. Further to that, Eswatini operated on a cash system and as a result, most MSMEs did not hold bank accounts, rendering it difficult for banks to offer credit due to the inability to monitor informal clients.
The meeting outcomes included: improved understanding of the nature of reforms and capacity building activities that should anchor the revamping of financing schemes and progammes for MSMEs; increased ownership by stakeholders of the reform process; enhanced communication and cooperation among stakeholders and between public and private sectors in the process of policymaking and implementation of the proposed framework; a validated report on a financing model for MSMEs in the Kingdom of Eswatini; and an adopted framework and implementation plan on easing MSMEs' access to finance in the Kingdom of Eswatini.
The meeting participants drawn from national stakeholders, including government officials, representatives from the private sector (especially MSMEs), the financial and banking sector, academia and research institutes, civil society organisations, United Nations Country Team (UNCT), as well as the media validated the report subject to some amendments. Participants hoped that the validated MSMEs financing model had the potential to considerably contribute to employment, economic growth and poverty reduction. Furthermore, innovation-driven MSMEs could be a catalyst for structural transformation. This role is well recognized by the government, which has mainstreamed MSME development in its Vision 2022 and the National Development Strategy (NDS).
