By Ncaba Ntshakala
Micro, Small and Medium-sized enterprises (MSMEs) play a crucial role in contributing to the economy of Eswatini. These businesses form the backbone of the country’s economy, driving sustainable growth, fostering innovation, and creating employment opportunities. One of the key contributions of SMEs to the economy of Eswatini is their ability to stimulate economic development.
MSMEs are businesses that maintain revenues, assets, or several employees below a certain threshold. Each country has its definition of what constitutes a small and midsize enterprise. Certain size criteria must be met, and occasionally, the industry in which the company operates is considered as well.
The Kingdom of Eswatini has a population of 1.2 million, and in 2017, it had approximately 59,283 MSMEs which represented 10 per cent of the population according to the FinMark Trust Survey.
The MSME sector employs over 16 per cent of the total working-age population according to the survey and plays a strategic role in addressing the country’s triple challenges of youth unemployment, poverty rates and income inequality. The Kingdom of Eswatini has implemented a range of programs to support the development of a sustainable and profitable MSME sector. These include capacity building, institutional development, business support services and the institutionalization of an MSME financial inclusion policy framework in 2004, revised in 2009 to foster the growth of the MSME sector.
Micro, small and medium-sized enterprises (MSMEs) are the backbone of economic development for every economy. They contribute to local economic development through household wealth creation, employment generation and poverty reduction in Eswatini. Despite this pivotal role, sometimes MSMEs lack access to finance, and scholarship on the enabling role of financial inclusion on micro, small and medium-sized enterprises’ performance is scant. The government of Eswatini has strived to bridge the financial gap between big corporate companies and MSME’s.
Though small, MSMEs play an important role in the economy. They outnumber large firms, employ vast numbers of people, and are generally entrepreneurial, helping to shape innovation. Micro, Small and medium–sized enterprises can exist in almost any industry but are more likely to reside within industries requiring fewer employees and smaller up-front capital investments. Common types of SMEs include legal firms, dental offices, restaurants, and bars.
MSMEs are often the driving force behind job creation, particularly in rural areas where larger corporations may be less present in Eswatini.
By generating employment opportunities, MSMEs enhance workers’ income levels, reduce poverty, and contribute to a more inclusive society. MSMEs in Eswatini foster innovation and entrepreneurship. These businesses are often driven by individuals with creative ideas and a passion for innovation. They bring fresh ideas and products to the market, spurring competition and driving overall economic growth. This innovation not only benefits the MSMEs themselves but also has ripple effects throughout the economy, attracting investment and promoting technological advancements.
MSMEs in Eswatini also contribute to the diversification of the economy. They are engaged in various sectors, including agriculture, manufacturing, retail, and services. This diversification helps to reduce the country’s reliance on a single sector, making the economy more resilient to external shocks and fluctuations.
MSMEs contribute to the overall development of supply chains, as they often rely on local suppliers and services, supporting other businesses in the process. Furthermore, SMEs have the potential to enhance regional development in Eswatini.
They are often geographically dispersed, operating in different parts of the country. This decentralization of economic activity helps to distribute wealth, resources, and opportunities more evenly across regions, reducing regional disparities and promoting balanced development. The government and other stakeholders need to recognize the significance of SMEs and provide them with adequate support and resources. This includes promoting policies that foster a conducive business environment, offering financial assistance, providing training and capacity-building programs, and facilitating access to markets. By nurturing and empowering SMEs, Eswatini can unlock their full potential and harness the positive impact they can have on its economy.
MSMEs are segregated from large, multinational companies because they fundamentally operate differently. Large, complex firms may require advanced enterprise resource planning (ERP) systems—for accounting, supply chain management and financial reporting, and interconnectivity across offices around the world—or deeper organizational processes. SMEs, on the other hand, may require fewer systems given their narrower scope of operations.