LUSAKA – The government of the Kingdom of Eswatini has requested technical assistance from the United Nations Economic Commission for Africa (ECA) through the Ministry of Trade, Industry and Trade to develop an inclusive funding model to meet the needs of MSMEs. In August 2020, a national stakeholder meeting was convened to review an initial draft through an inclusive platform that enables open discussion between key constituencies of the MSME ecosystem in Eswatini.
The purpose of the validation meeting was to review the draft report of the advisory meeting in August and to consider important steps for the implementation of the proposed framework. The participants in the meeting reviewed the report, verified the accuracy of the information in it, identified potential gaps, provided the necessary input and proposed amendments that should form the basis for the completion of the report and the subsequent endorsement and launch by the Government of the kingdom of Eswatini. The meeting also provides a stakeholder platform to promote dialogue, networking and coordination in support of the implementation of the MSME funding model.
In his opening statement, the Acting Director of the ECA SRO-SA, Sizo Mhlanga, acknowledges the co-operation with the Government of Eswatini by the MSME Directorate of the Ministry of Trade, Industry and Trade (MCIT) in carrying out this activity which has resulted in at the confirmation meeting. He hoped that the validity meeting would identify and understand the critical barriers to MSMEs’ access to finance in the Kingdom, and come up with a comprehensive and holistic action plan that would address such constraints and enable sustainable and inclusive growth in the business. .
He noted that ‘presenting the report is not the end of the process and that developing a model is only the first step in a long process. In order for frameworks to contribute to the desired results, they need to be implemented effectively and call for identifying and addressing implementation barriers. Experiences from the region and beyond show that implementation as envisaged becomes a challenge once policies are adopted. ‘
The meeting was chaired by Mr Mluleki Sakhile Dlamini, Director of MSME (MCIT), who presented an overview of the MSMEs in Eswatini. He thanked SRO-SA for its help in producing a tailor-made solution to the issue of MSMEs’ access to finance. He expressed the hope that the implementation of the proposal would help revitalize the Eswatini economy by promoting a vibrant MSME sector, ‘which is at the heart of the country’s economy and the key to economic growth and job creation’ , he added.
The draft report was presented by the ECA consultant, mr. Vinaye Ancharaz, who advised that the commissioned study was intended to undertake a situation analysis of the MSME sector in Eswatini, to analyze the opportunities and challenges facing MSMEs, in particular in accessing finance and current comparative models, experiences, lessons and innovative approaches from other countries on the financing of MSMEs, and proposes a comprehensive and inclusive financing model for MSMEs. He cited a 2017 survey by FinScope which estimated that around 70,000 MSMEs in Eswatini employed more than 90,000 people (21 per cent of the workforce) and contributed 50 per cent to GDP.
The report also revealed that 75 percent of MSMEs were owned by independent entrepreneurs, without job creation; 74 percent in rural areas and about the same percentage were female. Mr. Ancharaz noted that the survey indicated that although MSMEs have the potential to contribute much more to economic development and poverty reduction in Eswatini, this was not currently the case because the MSME ecosystem did not have the desired effects.
His research indicated that “the problem facing MSMEs is a lack of readiness to access finance, rather than access to funding itself.” The report confirmed that MSMEs in Eswatini do not as such have the problem of access to finance, but that there was a lack of effective claims from MSMEs to the banks because they did not submit the necessary financial and business information. Furthermore, Eswatini operated a cash system and consequently most MSMEs did not have bank accounts, making it difficult for banks to offer credit due to the inability to monitor informal customers.
The outcomes of the meeting included: improved understanding of the nature of reforms and capacity building activities that needed to anchor the refurbishment of MSMEs funding schemes and programs; increased stakeholder ownership of the reform process; improved communication and cooperation between stakeholders and between the public and private sectors in the process of policy-making and implementation of the proposed framework; a validated report on a funding model for MSMEs in the Kingdom of Eswatini; and an adopted framework and implementation plan to facilitate MSMEs’ access to finance in the Kingdom of Eswatini.
Participants in the meeting came from national stakeholders, including government officials, representatives of the private sector (especially MSMEs), the financial and banking sector, academia and research institutes, civil society organizations, the United Nations National Team (UNCT), as well as the media. ratified the report, subject to some modifications. Participants hoped that the validated MSME funding model would have the potential to contribute significantly to employment, economic growth and poverty reduction. Furthermore, innovation-driven MSMEs can be a catalyst for structural transformation. This government is well recognized by the government, which has integrated MSME development into its Vision 2022 and the National Development Strategy (NDS).