SME’s overlooked in favour of more populist policies – HH

Lusaka, 9 November 2015, In reaction to the interest rate rise last week the

Hakainde Hichlema poses for a picture with a baby and its mother at a function

UPND called for more support of Zambian SMEs, including by cutting red tap and relieving some of the bureaucratic burden.

This is a subject that deserves a lot more attention but is unfortunately often overlooked in favour of more populist policies.

Regulatory changes that streamline business processes can significantly reduce the time and therefore the costs incurred by companies at various points in their creation and operation. Improving their competitiveness will increase their appetite for growth and expansion within Zambia, as well as internationally, and help them to survive challenging periods, such as the current heavy load shedding and high interest rates.

There are some fundamental changes that can be made that are low cost interventions. We do not need to spend great time and energy inventing new solutions but we can learn from what countries have done elsewhere.

For example, we can look at Rwanda, which is recognised as having one of the best business environments in Africa, and compare our performance to theirs in order to show the room for improvement. According to the World Bank Ease of Doing Business index it takes 7.5 days to start a business in Zambia, but just 5.5 days in Rwanda. In Zambia border compliance procedures takes 136 hours, whereas in Rwanda it takes 97 hours. These are just two areas in which it is clear that we are not doing things efficiently as it stands with only ourselves to blame.

If Government can commit to bringing these times down then more and more businesses will become viable, grow and create jobs. We can also target these interventions to stimulate activity in certain sectors, helping to diversify our economy, and grow our export industries, helping us to generate more foreign exchange reserves. It is clear to see that the impact of such interventions can go beyond job and income creation in the short term towards helping us create a bigger and stable economy that will be less vulnerable to external shocks.

Unfortunately to date Government has missed much of the opportunity to create a better environment for our SMEs. They have opted for piling on more and more regulations over time, which only creates confusion, drives up costs and can lead to non-compliance for one reason or another. As Government addresses the electricity crisis and attempts to reign in inflation they would also do well to revisit these fundamentals in order to relieve some pressure and help set up our SMEs for success.

Hakainde Hichilema

UPND President