Malawi gazettes SMEs Order: Minister Gwengwe warns to revoke licences for  foreigners doing ‘petty businesses’

Malawi government has finally gazetted the long-awaited Small and Medium Enterprises (SMEs) Order effectively creating an adequate reserved space for the entrepreneurs to do business with the government and its numerous agencies.

The SMEs have been facing bottlenecks to conduct business with the government, which among other things, included stiff competition from big businesses.

This meant that only a few SMEs were able to do business with the government due to stiff competition from the big players that monopolised almost all sectors of the economy.

The Minister of Trade, Sosten Gwengwe, told Nyasa Times  that he was excited that the SMEs Order has finally been gazzeted.

Gwengwe said the government procurement is one of the best ways of sharing the cake of the national economy that has potential to spur equitable income distribution that could reach all corners of the economy.

“It is for this reason that I am very excited to stand before you and say that the time of creating an enabling environment to encourage Malawian SMEs to participate more actively in the procurement process has arrived,” said the minister.

Gwengwe pointed out that the approved 2019/20 National Budget was approximately K1.731 trillion of which 70 percent of the amount was spent through procurement either of goods or services or construction works.

He said this means that K1.1 trillion was spent on government procurement.

“Yet SMEs share was less than 20 percent, yet you are the majority. From today, starting with this budget, things will change towards inclusive participation in the government procurement to live up to the tonse slogan of ‘Malawi wokomera tonse’,” said Gwengwe.

The SMEs Order lists several sectors covering goods and services that are specifically reserved for SMEs.

Among other things, they span from construction works to cleaning services, goods made in Malawi to services provided by Malawians, general SMEs suppliers have also been considered.

Procurement processes have been softened to make it easier for MSMEs.

However, Gwengwe emphasized that quality compliance will not be compromised, warning that failing to meet requirements of procuring agencies will not be tolerated, including fronting which is now becoming a norm for most business operators.

“What the government has  is to economically empower the MSMEs. The aim is to capacitate this group of people to participate in, contribute to and benefit from growth processes in ways that recognize the value of their contributions, respect their dignity and make it possible for a fairer distribution of the benefits of growth of this country.

“We believe that investing in these MSMes sets a direct path towards poverty eradication and inclusive economic growth. The outcome which we see is that most of these MSMes will now invest in niche ventures that are adjacent or commensurate with the sectors that have been isolated under the Order,” he stressed.

He assured that the process to isolate the products and services under the SME Order was transparent and it was done in consultation with the SMEs themselves throughout the whole country.

Nonetheless, Gwengwe disclosed that the list itself is not conclusive and will from time to time be amended to include other sectors that might have been left out.

To facilitate identification of SMEs especially whether they are micro, small, medium or marginalized, the Ministry of Trade, in consultation with other institutions, will immediately start a screening and registration process for SMEs.

Different coloured certificates will be issued to SMEs depending on your categories, according to Gwengwe.

“The office of the PPDA will go flat out in terms of provision of capacity building programmes that are aimed at addressing existing challenges interms of skills, training and capacity building in public procurement thereafter that’s when they can contact the Ministry of Trade for the license.

“I am aware that some of you might want to know the position of Section 44 (10) of the PPD Act, commonly known as the 60:40 Regulation which states that ‘a procuring entity shall ensure prioritization of all bids submitted to give preference to 60 per cent indigenous black Malawians and 40 per cent others for national competitive bidding’. The Regulations to operationalise this law are finalised and are undergoing legal scrubbing and it is my hope that they will be gazzetted in the near future as well,” he said.

However, Gwengwe acknowledged the concerns and grievances Malawians have been raising about foreigners plying businesses outside their designated areas.

He said the government is aware that even those in the designated areas are doing petty businesses, which must better be left to Malawian SMEs.

“I would like to assure you that soon we will do a clean-up exercise to bring sanity to that situation. Licences for all foreigners doing petty businesses will be revoked and those foreign owned businesses in undesignated areas or districts will be flashed out or closed.

“Any business without any licence whether belonging to a foreigner or Malawian must be also closed. Some Malawians fronting foreigners to do business either with wrong licences or in undesignated areas will be punished heavily. The Ministry of Trade will soon commence to conduct a review of the Business Licensing Act, 2012 to list businesses that will be exclusively for Malawians. No foreigner will be allowed to participate in those sectors,” assured Gwengwe.

PPDA Director General, Ellias Hausi, said the gazetting of the Order is operationalising Section 36(2) of the PPDA Act.

Hausi appealed to all SMEs to follow the set procedures in the Order by first having their businesses registered with the Registrar of Companies in order for them to participate in the procurement process.

“There is also need for them to register with PPDA to have a certificate that would allow them participate in government procurement.

“They also have to register with Malawi Revenue Authority (MRA) that they will be paying tax. These are some of the requirements needed,” Hausi explained.

He emphasised on the need for SMEs to adhere to regulations, saying those who will not follow government procurement rules and regulations will have to pay the penalties.

Such penalties, according to Hausi, include a ban from doing business with government agencies.

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