SMEs: India's Economic Heroes, Lessons for Zambia Businesses

By Clive Mutame Siachiyako

For all its current economic strength, India remains a beacon of small and medium entrepreneurialism. Indian entrepreneurs are making waves across the world. Its micro, small and medium business firms are making acquisitions abroad and spreading their tentacles in various corners of the globe. They have flourished under globalisation and have proved all doomsday prophecies wrong.

Thus, India’s economy has been one of the stars of global economics in recent years mainly due to its robust SME sector. With its growth being supported by market reforms, rising foreign exchange reserves, both an information telecommunications (IT) and real estate boom, and a flourishing domestic direct investment (DDI) and capital market, India offers rewarding economic lessons to Zambia’s micro, small and medium enterprises (MSMEs) sector.

According to the 2009 Economist Report on entrepreneurship, India is the ninth in the Global Entrepreneurship Monitor survey of entrepreneurial countries. It is the highest among 28 countries in Necessity Based Entrepreneurship, while second among all nations in Total Entrepreneurship Activity. The country has been registering about US$3.6 billion annually from the ICT sector alone from SMEs prior to the economic crisis. The mobbed SME heroes of India were transforming small start-ups into global giants every year. They created business minded societies in several Indian cities by engaging in a frenzy of networking through partnerships and joint ventures.

India improved the growth of the SME sector after liberalising the economy in the 1990s by linking education and the industry. The country’s universities/colleges became its economic engines with proliferating science parks, technology offices, business incubators and venture funds. This helped to create a business minded class of graduates. The tradition entrepreneurship dates-back to basic and high schools in India. The trend has significantly boosted India’s DDI profile.

The country’s higher education system has also been designed to discover and develop first-class entrepreneurial skills. The system does not only inspire graduates to strike it rich, but to play their part in forging a new India with a double-digit economic and GDP growth and low levels of poverty. And through linking the education system to the industry, India began to reverse the brain drain. The country’s prodigal children were summoned home by economic offers of the native soil.  For instance, from 2003-2005, some 5,000 industrious Indians returned home from America. They trekked home to kick-start the country’s entrepreneurial economy and increase the DDI flow.

These Indian transplants from the Diaspora promoted SME growth through mentoring, networking and education. Today their network has 12, 000 members and operates in 53 cities in 12 countries. The transplants helped to fill some of the skills gaps created by India’s recent boom. They also reinforced the country’s existing links with high-tech countries in the West like America and in Europe. 

The Indian SME sector growth model offers various fundamental lessons for Zambia’s MSME sector. The linking of the education system to the industry is essential to the Zambia Development Agent (ZDA), Technical Education, Vocational and Entrepreneurship Training Authority (TEVETA) and ministry of education strategies meant to strengthen entrepreneurship levels in the country. By collaborating with human resource training institutions, citizens will obtain an entrepreneurship spirit and learn the art of sustaining business at the appropriate age. They will thus grow up with an entrepreneurial mindset. Such a phenomenon can result into a knowledge-based economy, where the use of knowledge is the main driver of growth, wealth creation and employment across all sectors without much dependency on foreign investors.

Picking it from the Indian model, several technical and vocational training institutions, colleges and universities can be a haven of entrepreneurial savvy and breeding grounds for businesses. The public-private partnership initiative can be a hallmark of linking the education system to the industry beyond public educational institutions. Business incubator programmes can be rooted into these institutions to blend business mindsets in students at the right time. The trend can descend further to basic schools and high schools in order to overhaul the Zambian mindset towards business. The strategy is paramount in enhancing government’s numerous programmes meant to meet long term developmental goals of attaining middle income status by 2030 among others.

Information telecommunications (ICT) is another significant parametre Zambia can tap from the India SME growth model to improve MSMEs’ business prowess. India’s enterprising heroes like Azim Premji transformed Wipro from a vegetable-oil company into a software giant. After liberalising the ICT sector, many Indian SMEs ventured into the sector. The cost of doing business equally reduced drastically. Internet use, calling rates and other related expenses fall. The sector became a lucrative business web.

With the ICT policy in place and other initiatives aimed at improving infrastructure, MSMEs can achieve and contribute greatly to the economy. Strategies such as multi-facility economic zones (MFEZ) meant to have necessary infrastructure in place for improved productivity can help transform dormant small enterprises into economic giants. Grounding MSMEs with competencies on how to utilise ICT to improve business efficiency is key in developing and discovering first-class MSMEs that can creating a strong buffer zone for the local economy. The current business reforms government is implementing fits well in promoting the MSME sector and the local economy as a whole.

The MFEZ initiative can help create a pool of MSMEs in various businesses. Various networks can sprout from these zones and help to uproot start-ups by providing them with key information on market offers and other business etiquettes. The start-ups can be both supplies and part of the global supply chains. With business linkage and joint venture initiatives already in place under the ZDA, Zambia can easily propel its DDI flow to supplement FDI. The net effect of such a combination will be increased economic growth, job and wealth creation as well as poverty reduction.

With well watched pace and coordinated policy strategies, Zambia can realise many new entrepreneurs onto the business sphere. The entrepreneurial spirit will begin to breathe new life into Zambia’s public and private sector and greatly revolve the economy. Zambians in the Diaspora will see the need to invest back home and translate Western ideas into local ideologies, combining them with acquired technological advances to drive economic growth. With such an economic atmosphere, Zambia, like India will be hopeful of having a brighter economic future.