Malawi included in UN Economic Commission’s implementation of complementary technical assistance for SADC’s SME response to CoVID-19

In cognizance of the impact of CoVID-19 pandemic on micro, small and medium enterprises (MSMEs), the United Nations Economic Commission for Africa (ECA) subregional office is implementing two complementary technical assistance projects that focusses on MSMEs in Southern Africa that include Malawi.

This was said by Eunice Kamwendo, ECA subregional office director for southern Africa during a conference on Tuesday, February 8 held in Dubai that focused on country experiences and a focus on building back better in Mauritius.

Kamwendo, a Malawian national, said in her keynote address that ECA aims to first strengthen the capacities of MSMEs in southern Africa “to effectively respond to CoVID-19 and bounce back stronger”.

Eunice Kamwendo, Malawian national

“The second seeks to strengthen MSME capacities to design and apply innovative approaches to resilience building to future shocks including digitalization.

“Target countries for these projects are Malawi, Mauritius, Mozambique, Namibia, South Africa and Zambia. In addition, the Office is also engaged in financing of MSMEs — recognizing financing as a critical enabler for most businesses, including start-ups.

“We recently supported the Kingdom of ESwatini to develop a financing model for MSMEs which we hope to replicate this success story in other countries in the region.”

The one-day hybrid seminar — attended by high profile experts in industrial development; SMEs and Cooperatives as well as Peter Varndell, Chief Executive Officer of the SADC Business Council —

was co-organized by ECA;  SADC Business Council and the Government of Mauritius as part of the Global MSME Surge Technical Assistance Project which Kamwendo’s office is a key implementing entity.

The seminar collectively banged heads on how MSME development can be strengthened in a post CoVID context and “become an anchor for industrialization, trade and innovation” with a special  focus on Mauritius as a case study country in the context of the African Continental Free Trade Area (AfCFTA).

She said ECA seeks to promote inclusive Industrialization in southern Africa by leveraging, among others, innovation, trade and private sector development, including MSMEs.

“Efforts in this area include support to member states in aligning their national industrialisation strategies with the SADC industrialisation strategy and roadmap and the COMESA industrial policy, as well as technical assistance and capacity building support to further implementation.

“We are invested heavily in providing support to boost productive capacities in the sub-region such industrial parks, special economic zones and MSME development for integration into national and regional value chains.”

Kamwendo said the although the health impacts of the pandemic in Africa have not been as severe as in other regions of the world, “the economic and social consequences have been catastrophic and unprecedented for Africa – with MSMEs bearing the brunt of the pandemic amongst other sectors”.

“To put this in context, the southern African region’s economy contracted by 7% in 2020, making it the hardest hit region in Africa – partly because of the economic structure of the region which makes it vulnerable to economic shocks.

“The region continues to exhibit high levels of commodity dependence, low levels of industrialization, limited value chains, low levels of intra-regional trade, inadequate technological development and a dearth of home-grown enterprises of all sizes to provide the much-needed resilience in the face of shocks.

“We have seen how fluctuations in the global market, lockdowns and restrictions on movements due to the pandemic have had adverse impacts on whole economies including the informal economy which accounts to up to 90% in some countries.

“The full extent of the social impact is yet to be determined. However, gender- based violence has been on the rise, and the World Bank has also estimated an increase in global poverty in 2020 for the first time since 1998, with more than 26 million people thrown into extreme poverty in sub-Saharan Africa alone.”

She singled out that MSMEs are the backbone of the African economy, making up at least 90% and 60% of businesses and jobs, respectively, on the continent.

“As an office we commissioned a survey on MSMEs in Namibia and the results confirmed what we already knew but the numbers exposed the severity of the impact. For example, a combined 82% of business owners believed that their businesses were worse off in June 2021 compared to pre-CoVID times, with low confidence levels for the future – with many businesses folding up due to a host of many reasons.

“These findings reaffirm the need to pursue strategies towards economic diversification in the region that would contribute to the building of resilience in supply chains and reinforced the need for regional value chains across key industries.

“They also point to the need to support member states in developing enabling policy and institutional environments that enhance the capacities of MSMEs to enter into more sophisticated business linkages and improve their access to finance.”

The ECA plans to continue to conduct country studies on the impact of CoVID-19 on MSMES in Southern African member states commencing this year, saying “this is particularly important as it will facilitate a timely assessment of the challenges and required policy responses by member states, private sector and development partners”.

“There are always opportunities in every challenge presented if we look long enough. CoVID-19, with all its challenges, has presented an enormous opportunity for African businesses — big and small to rapidly adapt to digital tools in order to survive.

“This is particularly important, as digital technologies offer a possibility of reaching larger platforms, networks and clients for MSMEs. This is a win for MSMEs.

“There has been a marked increased in the use of digital tools across the sub- region propelled by CoVID-19 — Nambia, Mauritius and South Africa are cases in point where a majority of businesses have increased their digital usage beyond 70% across the board in marketing, communication, payment systems and supply chain management.

“Going forward, we can only hope that the uptake of digital technologies resulting from CoVID-19 mitigation measures is here to stay. The digital sphere is an important enabler of new innovations.

“As an office, we will be exploring ways in which appropriate policies can help MSMEs in Southern Africa roll out innovative solutions and build new value chains.

“We will also look at the role that technology incubators can play in upgrading the region’s performance in this sphere to ensure that the Southern African economy beefs up its resilience against shocks.”

In this regard, Kamwendo assured the delegates that her office will continue to work with partners such as the SADC Business Council to expand online platforms for MSMEs in order to facilitate their networking and access to new business opportunities.

She said the advent of the AfCFTA represents “a significant milestone for Africa and presents ample growth and transformation opportunities”.

“While CoVID-19 has increased the urgency for transformational change, the AfCFTA provides a potential lifeline for MSME development, and promises to be a launchpad for Africa’s industrialization through trade.

“As we embark upon opening up larger regional markets with the AfCFTA, it is critical that we empower MSMEs to seize this opportunity — This is particularly important as we are at an inflection point for MSME development in Africa.”

She added that “it is disheartening to note that a large majority (71%) of businesses are not aware of the African Continental Free Trade Area (AfCFTA) — this according to the Namibian study.

“This is a challenge – but also an opportunity for countries to move the AfCFTA conversation beyond conferences to the engines that will make AfCFTA a reality.

“As ECA, we endeavor to support members states and the private sector move the conversation to where it matters the most by raising awareness and helping to enhance their competitiveness in order to benefit from the AfCFTA.”

She said economic transformation in Africa is possible giving Mauritius as a case in point.

“Economic transformation of the region is vital. While inroads are being made many countries across the region – it is yet to reach the depth and breadth of transformation necessary to realize our development aspirations, including realization of the Sustainable Development Goals, as well as those embodied in the African Union Agenda 2063.

“With that in mind, I would like to acknowledge and applaud the ambition expressed by the Government of Mauritius in its Industrial Policy, for Mauritius to develop ‘a globally competitive and sustainable industrial sector that contributes to higher economic growth for Mauritius through continuous innovation, technology upgrading, productivity gains and high skilled employment’.

“The clear focus of Mauritius on the promotion of innovation, strongly featured in policies across various sectors, provides a strong foundation for innovation- led growth, worthy of emulation.

“Additionally, the country can play a key role as a manufacturing hub in SADC, especially in the context of the AfCFTA. Our role as ECA entails supporting countries in the region in pursuing inclusive industrialization agendas in line with their development aspirations.

“Thus, ECA stands ready to accompany Mauritius and other countries in their respective journeys.”

She concluded by saying “economic recovery of our economies will involve rebuilding our private sector — big and small, which is the heart of our discussion today.

“As ECA, we remain committed to see this happen and part of our response will depend on the learnings, outcomes and recommendations of our deliberations.”

Kamwendo is a macroeconomist and strategic advisor for UNDP Africa, a Bureau that oversees 46 countries in sub-Saharan Africa. With over 20 years of experience, she provides strategic advice to the region on economic development issues, including sustainable development, structural transformation and medium to long term development planning.

She leads and coordinates several knowledge products on Africa including the Africa Sustainable Development Report, LDC Graduation issues in Africa and regional human development reports.

Prior to UNDP, Kamwendo worked as a research analyst on economic governance for the continental African peer review mechanism as well as a senior economist and special advisor to the Secretary to the Treasury on macroeconomic issues and IMF engagement in the Ministries of Finance and Economic Planning in Malawi.

She holds a Master of Science and Bachelor of Social Sciences degrees in Economics from the Universities of Southampton and Malawi, respectively.

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