SMEs Challenged to Shift from Trading to Value Addition
By Alain kabinda
Small and Medium Enterprises (SMEs) have been urged to take advantage of opportunities emerging from Zambia’s economic growth agenda, particularly in mining, agriculture, manufacturing, digital commerce and export markets.
Speaking in an interview to Daily News in Lusaka Business Development and Marketing Expert and Co-Founder of CNC360 Consulting Mr. James Chiwala says SMEs are strategically positioned to contribute to economic growth through value addition, job creation and increased private sector participation, in line with the Eighth National Development Plan.
Mr. Chiwala said SMEs account for about 97 percent of businesses operating in Zambia and make a significant contribution to the national economy and employment.
He said the Government’s emphasis on value addition and local participation presents an opportunity for SMEs to move beyond traditional trading and become producers of goods and services.
One of the major opportunities, he said, is the mining sector, where the implementation of the Local Content framework is creating increased opportunities for Zambian-owned businesses to participate in mining supply chains.
According to Mr. Chiwala, local SMEs can supply a wide range of non-core goods and services, including catering, personal protective equipment, transport, maintenance services and safety gear.
He urged SMEs seeking to benefit from mining opportunities to formalise their businesses by obtaining the necessary registrations, including business registration with the Patents and Companies Registration Agency (PACRA) and Zambia Revenue Authority (ZRA) registration.
Mr. Chiwala also highlighted invoice financing as an important financing mechanism that can help SMEs overcome working-capital constraints when supplying large mining companies.
He said the availability of such financing from commercial banks could enable smaller businesses to fulfil contracts while waiting for their invoices to be paid.
However,Mr. Chiwala challenged SMEs to move away from simply buying and reselling products and instead invest in value addition and manufacturing.
He encouraged farmers and agribusinesses to process agricultural commodities such as maize, soybeans, groundnuts and tomatoes into finished and packaged products.
“Don't just sell maize grain. Don't just sell soybeans. Don't just sell groundnuts. Process it, mill it, package it, brand it,” he said.
Mr. Chiwala said opportunities also existed in furniture manufacturing, building materials, agro-processing and the production of products such as tomato paste, sauces and packaged honey.
He said the Made in Zambia and Proudly Zambian initiatives could provide a market for locally manufactured products, particularly as SMEs improve the quality, packaging and branding of their goods.
Mr. Chiwala further urged SMEs to explore government and donor-supported financing programmes, including initiatives providing credit to citizen-owned businesses and enterprises operating within agricultural value chains.
He, however, warned that access to financing would remain difficult for businesses that lack proper management and financial records.
“Most of our SMEs are failing to secure funding because of poor business skills. We lack skills to run our businesses profitably and sustainably,” Mr. Chiwala said.
He urged entrepreneurs to develop business plans, maintain proper financial records and undergo capacity-building programmes to improve their chances of accessing loans and grants.
Mr. Chiwala also stressed the importance of embracing digital platforms as a way of expanding markets.
He said SMEs could use platforms such as social media, WhatsApp Business, TikTok and e-commerce to market their products beyond their immediate geographical areas.
He said a farmer in Kitwe, for example, could sell products to customers in Lusaka or Livingstone without having a physical shop in those markets.
“The world has now evolved. The world has moved on. We cannot do business as usual,” he said.
Mr. Chiwala further encouraged SMEs to form partnerships, cooperatives and business clusters to increase their capacity and take advantage of economies of scale.
He said individual SMEs often lacked the production capacity to meet large orders, but collaboration could enable groups of businesses to pool resources, purchase inputs in bulk, share equipment and compete for larger contracts.
He cited rural cooperatives as an example, saying members could collectively invest in shared infrastructure such as hammer mills, warehouses and cooking-oil processing equipment.
“Let's consider seriously working in partnerships and exploit what you call the economies of scale and synergies,” said Mr. Chiwala.
Mr. Chiwala also urged SMEs to look beyond the domestic market and explore export opportunities under the Southern African Development Community (SADC) and the African Continental Free Trade Area (AfCFTA).
He said access to the wider African market provides significant opportunities for Zambian businesses that are able to produce competitive, quality and properly packaged goods.
He said the responsibility now rests with SMEs to prepare themselves to exploit the opportunities emerging from Zambia’s economic growth agenda.
Mr. Chiwala said businesses that formalise their operations, strengthen management skills, embrace technology, add value to local raw materials and collaborate with other enterprises would be better positioned to contribute to Zambia’s economic expansion and job creation.
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