Micro and Small Enterprise Development Division
Primarily, the direction of Zambia's economic development programmes were geared towards the promotion of medium and large-scale enterprises mainly in the mining and manufacturing sectors with paratatal companies performing a central role. But with change of policy to private sector led-development, there has been facilitation of growth of Micro and Small Enterprises (MSEs). Micro and Small Enterprises cut across all sectors of Zambia’s economy and provide one of the most prolific sources of employment and wealth creation and are a breeding ground for industries.
The development of MSEs is viewed as one of the sustainable ways of reducing the levels of poverty and improving the quality of life of households through wealth and job creation. The contribution of MSEs to economic growth and sustainable development is now widely acknowledged. They are believed to deepen the manufacturing sector, foster competitiveness and help in achieving a more equitable distribution of the benefits of economic growth, thereby help in alleviating some of the problems associated with uneven income distribution. They (MSEs) achieve this by generating more employment for limited capital investment, acting as a ‘seedbed’ for the development of entrepreneurial talent, playing and supplying the lower income groups with inexpensive consumer goods and services. And they act as a buffer in times of economic recession.
In recognising the critical role MSEs Play in the Zambian economy, Zambia Development Agency has set aside a division – MSE Division, which looks at the sector. The MSE Division is mandated to provide services that stimulate the development of MSEs in the country. These services include training, provision of market information and identification of opportunities for joint ventures with local and foreign partners. The MSE division is mandated with such responsibilities in recognition of Zambia’s need to diversify her economy and reduce over-dependency on mining exports. In this vein, the preferred strategy was production of non-traditional export products and creation of Micro, Small and Medium Enterprises. This approach encourages firms to produce for the domestic market, although, the capacity to grow and to export is still very limited.
In addition, the Division is responsible for operationalising government’s policy through various focused programmes on MSE development. It is also mandated to establish strategic partnerships with various MSE Development Organisations and to build the capacity of these organisations to effectively deliver services to MSEs. It further develops, coordinates and monitors and documents all MSE development interventions.
It (MSE Division) is also responsible for regulating the MSE sector and its various implementing organisations and structures and ensuring that all MSE development activities create synergy and are directed at achieving set national goals and objectives. Therefore, the Zambia Development Agency is responsible for liaising with other government programmes and agencies involved programmes and support activities related to MSE Development. The organisation further has the mandate to conduct research and surveys on any aspects related to MSE development and for coordinating and monitoring the quality of MSE interventions by intermediary organisations.
Being committed to the facilitation of the growth of SMEs, government through an Act of Parliament established the Small Industries Development Organisation (SIDO) to promote the Micro, Small and Medium Enterprise sector. SIDO was established to cater for financing needs of small-scale companies as defined in the SID Act. In 1996, SIDO was transformed into Small Enterprises Development Board (SEDB) through the 1996 Small Enterprise Development (SED) Act and, in 2006 it was amalgamated into the Zambia Development Agency (ZDA Act No. 11 of 2006) as an MSE Division.
In order to strengthen the capacity of the MSE Division of the Zambia Development Agency, government established an MSE Policy. The policy is meant to accelerate the development of the sector and facilitate coordination of development interventions for the sector to be viable. In addition, the reinforcement of the MSE sector was through the establishment of an independent National Council for Micro, Small and Medium Enterprise Development and the implementation of the provisions of the MSE Policy.
This Policy provides for the active support and participation of all key stakeholders in MSE development. The hallmark of this Policy is partnership and an enabling environment. Suffice to note that the MSE Development Policy is a Product of extensive research, and consultations with various stakeholders, private sector, government ministries, donors and civil society. The Policy development process is indebted to many organisations and individuals for their valued inputs. Some of these organisations are the European Union (EU) that funded the initial process and finalisation of the policy document and the International Labour Organisation (ILO) for their technical advisory role. Other technical inputs were provided by various institutions, including Zambia Chamber of Small and Medium Business Associations (ZCMBA) and the University of Zambia. Other roles were played by Government Sector Ministries and other stakeholders and many officials from of the Ministry of Commerce, Trade, and Industry who ensured that the policy development process comes to fruition.
Situation Analysis
The MSEs Sector in Zambia is characterised by business activities of enterprises engaged in traditional industrial sectors, primarily in the production of goods and services for domestic consumption. The primary objective of most of the enterprise owners is to generate employment and income for personal requirements. Business activities among most MSEs are further by characterised by the use of low level technology and are oriented towards local and less affluent market segments.
Since the introduction of structural economic reforms and the country’s transition to a liberalised economy in 1991, there has been increased activity in the MSMEs sector. The existence of a large MSEs sector, of which over 90% are informal, has serious implications on the functioning of the economy. There is however limited documented information regarding the business activities of MSE sector and its contribution towards the national development and economic growth. As a result, it is difficult to estimate the total size of the private sector in Zambia as data from the Central Statistics Office (CSO) do not disaggregate national output in relation to enterprise size.
The 1996 baseline survey on MSEs further revealed that the Zambian MSE Sector was dominated by enterprises with a workforce of less than 10 employees and that 52% of all MSE business activities are based in rural areas. Within the MSE sector, manufacturing activities account for 41% while trading account for 49%. Services accounted for only 10%.
MSE business activities are largely in trading, simple manufacturing, and service provision. Manufactured products in the MSE sector include textile products, wood products, light engineering and metal fabrication, food processing, leather products, handicrafts and ceramics to mention a few. The service sector include restaurants, hair salons and barbershops, passenger and goods transport, simple building construction, telecommunication services, business centre services and cleaning services. The trading sector is concentrated in consumable products, industrial products, and agricultural inputs and produce.
The current economic situation presents opportunities which if taken advantage of, can lead to a vibrant MSE sector. These opportunities include implementation of macro-economic reforms by Government which have resulted in substantial reduction in inflation rates, a competitiveness private sector, liberalized trade policies and removal of foreign exchange restrictions. Accordingly, government in 2006 through the ZDA Act dissolved the Small Enterprise Development Board and its activities were incorporated into the Zambia Development Agency (ZDA) under the SME Division. Against this background, a need for a strategic and focused development of the MSE sector in Zambia arose. The MSE Development Policy under ZDA provides much needed guidance and direction on all activities and development efforts related to MSEs.
Vision and Rationale
The MSE Policy outlines the goal, objectives, strategies, and implementation framework for all MSE development efforts in Zambia. The rationale for this Policy is to create a national vision and leadership for deliberate development of the MSE sector and to facilitate creation and implementation of relevant and effective sector legislation and regulatory framework. The Policy further aims to define the sector, its actors, their roles, and responsibilities and to ensure coordination and synergy in the implementation of MSE support activities. Furthermore, the goal of the Micro, Small, and Medium Enterprise Policy is to create a vibrant, dynamic sector that contributes 20% of Gross Domestic Product and 30% annually to creation of decent employment by the year 2015.
The pursuance the goal of the MSE Policy is guided by the principle that the policy will operate within the national socio-economic development agenda and will be aligned to the national development objectives outlined in the Fifth National Development Plan, the Poverty Reduction Strategy Paper and the Vision 2030. In addition, it will be pursued through the provisions of the policy that will be supported by appropriate legal, financial institutional and national development frameworks. And the implementation of the policy will take into account regional and global best practices in MSES development in order to ensure that the sector is current with global development trends. This brings about government collaboration with the private sector, cooperating partners, non governmental organisations, and other stakeholders to implement the MSE Policy. The Policy promotes equality in opportunities and gender participation in its pursuit of outcomes and will give emphasis on the role of women as economic actors in MSE development. Vulnerable and disadvantaged persons receive special attention under the provision of the Pol
icy. It will uphold workers rights including promotion of safe working conditions and prevention/mitigation of HIV/AIDS.
The MSE Policy aims at achieving some key development objectives such as facilitating the creation and development of viable Micro Small and Enterprises that contributes 30% towards annual employment creation and 20% towards Gross Domestic Product by the year 2018. It also aims to facilitate an increase of 10% towards utilisation and value addition of local raw materials in identified regional areas by the year 2018. Furthermore, the policy aims at strengthening forward linkages between MSEs and large scale companies by facilitating an annual increase of 10% in subcontracting of MSE by large scale companies. This entails facilitating improvements in productivity in the MSE sector by 10% by the year 2018. It also aims to enhance Local Economic Development thereby stimulating broad based economic growth by establishing five (5) Business Incubators and five (5) Industrial Parks in identified locations by the year 2018.
Primarily, the direction of Zambia's economic development programmes were geared towards the promotion of medium and large-scale enterprises mainly in the mining and manufacturing sectors with paratatal companies performing a central role. But with change of policy to private sector led-development, there has been facilitation of growth of Micro and Small Enterprises (MSEs). Micro and Small Enterprises cut across all sectors of Zambia’s economy and provide one of the most prolific sources of employment and wealth creation and are a breeding ground for industries.
The development of MSEs is viewed as one of the sustainable ways of reducing the levels of poverty and improving the quality of life of households through wealth and job creation. The contribution of MSEs to economic growth and sustainable development is now widely acknowledged. They are believed to deepen the manufacturing sector, foster competitiveness and help in achieving a more equitable distribution of the benefits of economic growth, thereby help in alleviating some of the problems associated with uneven income distribution. They (MSEs) achieve this by generating more employment for limited capital investment, acting as a ‘seedbed’ for the development of entrepreneurial talent, playing and supplying the lower income groups with inexpensive consumer goods and services. And they act as a buffer in times of economic recession.
In recognising the critical role MSEs Play in the Zambian economy, Zambia Development Agency has set aside a division – MSE Division, which looks at the sector. The MSE Division is mandated to provide services that stimulate the development of MSEs in the country. These services include training, provision of market information and identification of opportunities for joint ventures with local and foreign partners. The MSE division is mandated with such responsibilities in recognition of Zambia’s need to diversify her economy and reduce over-dependency on mining exports. In this vein, the preferred strategy was production of non-traditional export products and creation of Micro, Small and Medium Enterprises. This approach encourages firms to produce for the domestic market, although, the capacity to grow and to export is still very limited.
In addition, the Division is responsible for operationalising government’s policy through various focused programmes on MSE development. It is also mandated to establish strategic partnerships with various MSE Development Organisations and to build the capacity of these organisations to effectively deliver services to MSEs. It further develops, coordinates and monitors and documents all MSE development interventions.
It (MSE Division) is also responsible for regulating the MSE sector and its various implementing organisations and structures and ensuring that all MSE development activities create synergy and are directed at achieving set national goals and objectives. Therefore, the Zambia Development Agency is responsible for liaising with other government programmes and agencies involved programmes and support activities related to MSE Development. The organisation further has the mandate to conduct research and surveys on any aspects related to MSE development and for coordinating and monitoring the quality of MSE interventions by intermediary organisations.
Being committed to the facilitation of the growth of SMEs, government through an Act of Parliament established the Small Industries Development Organisation (SIDO) to promote the Micro, Small and Medium Enterprise sector. SIDO was established to cater for financing needs of small-scale companies as defined in the SID Act. In 1996, SIDO was transformed into Small Enterprises Development Board (SEDB) through the 1996 Small Enterprise Development (SED) Act and, in 2006 it was amalgamated into the Zambia Development Agency (ZDA Act No. 11 of 2006) as an MSE Division.
In order to strengthen the capacity of the MSE Division of the Zambia Development Agency, government established an MSE Policy. The policy is meant to accelerate the development of the sector and facilitate coordination of development interventions for the sector to be viable. In addition, the reinforcement of the MSE sector was through the establishment of an independent National Council for Micro, Small and Medium Enterprise Development and the implementation of the provisions of the MSE Policy.
This Policy provides for the active support and participation of all key stakeholders in MSE development. The hallmark of this Policy is partnership and an enabling environment. Suffice to note that the MSE Development Policy is a Product of extensive research, and consultations with various stakeholders, private sector, government ministries, donors and civil society. The Policy development process is indebted to many organisations and individuals for their valued inputs. Some of these organisations are the European Union (EU) that funded the initial process and finalisation of the policy document and the International Labour Organisation (ILO) for their technical advisory role. Other technical inputs were provided by various institutions, including Zambia Chamber of Small and Medium Business Associations (ZCMBA) and the University of Zambia. Other roles were played by Government Sector Ministries and other stakeholders and many officials from of the Ministry of Commerce, Trade, and Industry who ensured that the policy development process comes to fruition.
Situation Analysis
The MSEs Sector in Zambia is characterised by business activities of enterprises engaged in traditional industrial sectors, primarily in the production of goods and services for domestic consumption. The primary objective of most of the enterprise owners is to generate employment and income for personal requirements. Business activities among most MSEs are further by characterised by the use of low level technology and are oriented towards local and less affluent market segments.
Since the introduction of structural economic reforms and the country’s transition to a liberalised economy in 1991, there has been increased activity in the MSMEs sector. The existence of a large MSEs sector, of which over 90% are informal, has serious implications on the functioning of the economy. There is however limited documented information regarding the business activities of MSE sector and its contribution towards the national development and economic growth. As a result, it is difficult to estimate the total size of the private sector in Zambia as data from the Central Statistics Office (CSO) do not disaggregate national output in relation to enterprise size.
The 1996 baseline survey on MSEs further revealed that the Zambian MSE Sector was dominated by enterprises with a workforce of less than 10 employees and that 52% of all MSE business activities are based in rural areas. Within the MSE sector, manufacturing activities account for 41% while trading account for 49%. Services accounted for only 10%.
MSE business activities are largely in trading, simple manufacturing, and service provision. Manufactured products in the MSE sector include textile products, wood products, light engineering and metal fabrication, food processing, leather products, handicrafts and ceramics to mention a few. The service sector include restaurants, hair salons and barbershops, passenger and goods transport, simple building construction, telecommunication services, business centre services and cleaning services. The trading sector is concentrated in consumable products, industrial products, and agricultural inputs and produce.
The current economic situation presents opportunities which if taken advantage of, can lead to a vibrant MSE sector. These opportunities include implementation of macro-economic reforms by Government which have resulted in substantial reduction in inflation rates, a competitiveness private sector, liberalized trade policies and removal of foreign exchange restrictions. Accordingly, government in 2006 through the ZDA Act dissolved the Small Enterprise Development Board and its activities were incorporated into the Zambia Development Agency (ZDA) under the SME Division. Against this background, a need for a strategic and focused development of the MSE sector in Zambia arose. The MSE Development Policy under ZDA provides much needed guidance and direction on all activities and development efforts related to MSEs.
Vision and Rationale
The MSE Policy outlines the goal, objectives, strategies, and implementation framework for all MSE development efforts in Zambia. The rationale for this Policy is to create a national vision and leadership for deliberate development of the MSE sector and to facilitate creation and implementation of relevant and effective sector legislation and regulatory framework. The Policy further aims to define the sector, its actors, their roles, and responsibilities and to ensure coordination and synergy in the implementation of MSE support activities. Furthermore, the goal of the Micro, Small, and Medium Enterprise Policy is to create a vibrant, dynamic sector that contributes 20% of Gross Domestic Product and 30% annually to creation of decent employment by the year 2015.
The pursuance the goal of the MSE Policy is guided by the principle that the policy will operate within the national socio-economic development agenda and will be aligned to the national development objectives outlined in the Fifth National Development Plan, the Poverty Reduction Strategy Paper and the Vision 2030. In addition, it will be pursued through the provisions of the policy that will be supported by appropriate legal, financial institutional and national development frameworks. And the implementation of the policy will take into account regional and global best practices in MSES development in order to ensure that the sector is current with global development trends. This brings about government collaboration with the private sector, cooperating partners, non governmental organisations, and other stakeholders to implement the MSE Policy. The Policy promotes equality in opportunities and gender participation in its pursuit of outcomes and will give emphasis on the role of women as economic actors in MSE development. Vulnerable and disadvantaged persons receive special attention under the provision of the Pol
icy. It will uphold workers rights including promotion of safe working conditions and prevention/mitigation of HIV/AIDS.The MSE Policy aims at achieving some key development objectives such as facilitating the creation and development of viable Micro Small and Enterprises that contributes 30% towards annual employment creation and 20% towards Gross Domestic Product by the year 2018. It also aims to facilitate an increase of 10% towards utilisation and value addition of local raw materials in identified regional areas by the year 2018. Furthermore, the policy aims at strengthening forward linkages between MSEs and large scale companies by facilitating an annual increase of 10% in subcontracting of MSE by large scale companies. This entails facilitating improvements in productivity in the MSE sector by 10% by the year 2018. It also aims to enhance Local Economic Development thereby stimulating broad based economic growth by establishing five (5) Business Incubators and five (5) Industrial Parks in identified locations by the year 2018.
No comments:
Post a Comment