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By Richard Chirombo
Challenges that beset
Malawi’s economy during the past two years were not pulley enough
to bring informal sector enterprises down, as entrepreneurs shifted
from capital intensive ventures to small business ventures with high
returns, says the Malawi Union for the Informal Sector (Mufis).
Mufis general secretary,
Mwanda Chiwambala, said in an exclusive interview that the organisation
has no reports of small business enterprises closing shop. If anything,
he said, the 3.5 million people Mufis counts among its membership national
wide simply moved from one type of business to another in a bid to reduce
on operational costs and maximize profits.
This is in sharp contrast to the knee-jerk reaction adopted
by medium and large-scale enterprises at the height of the crisis, resulting
into staff down-sizing exercises and reduced operational capacity as
the country grappled under an unprecedented fuel and forex shortage
squeeze.
At a time European investors
were eyeing Africa as a viable investment alternative owing to the establishment
of pro-business policies and inherent regional advantages in low labor
costs and abundant resources, Malawi’s policies under the Bingu wa
Mutharika’s administration stifled the operations of local investors
while scaring away potential Foreign Direct Investors.
“We did not register
any cases of business enterprises closing down due to the economic situation
of the past two years. When things get tough in the economy, the tendency
by informal sector traders is to shift from one business venture to
another, rather than closing down on operations. This is because, in
most cases, the business ventures act as their only viable means of
survival,” Chiwambala said.
“If a small-scale business
enterprise was affected by fuel, forex, price adjustment shocks, punitive
taxes, and declining consumer demand, operators were simply refocusing
on ventures that could yield immediate financial results without exposing
them to business losses, “Chiwambala said.
Chiwambala said, however,
that even without any economic challenges, informal sector players face
a number of challenges, including failure to access soft loans through
Authorised Dealer Banks (ADBs), unsanitary business premises, and lack
of consultation on policy issues.
“For example, when City,
town and district councils are adjusting market rates, vendors are not
consulted, which creates animosity between them and the responsible
officials,” Chiwambala said.
He proposed that policy
makers should establish an ADB to cater for the specific needs of informal
sector players, consult informal sector players on policy issues, and
introduce insurance cover to shield vendors from market fires.
This is in reference to
market fires that often plague local markets. Some of the gutted places
razed down by infernos include Blantyre Flea Market, Ndirande in Blantyre,
Balaka market, and Mtandire in Lilongwe.
A snap survey conducted
among small-scale traders in Blantyre and Zomba also revealed that most
traders survived the economic storm by investing in quick-returns’
ventures.
A good case in point is
that of Merina White, a maize trader at Manase market in Blantyre.
“Of course, we had the
issue of shortage of disposable income among our clients but I did not
stop selling food commodities. At one time, I took a break from selling
maize and opted for ground nuts, before reverting to maize again.
“This business keeps
me going, and I could not abandon it due to the economic problems. I
depend on this business to meet family needs,” White said.
White said the secret
to surviving market uncertainties lies in the ability to alternate between
one food commodity and another.
“We are fortunate in
that we have so many seasonal crops that bring us cash in Malawi. People
like me do not depend on economic indicators but (we) depend on the
season of the year. When it is the season for mangoes, we sell mangoes.
When tangerines are in season, we sell for tangerines. That way, we
survive,” White said.
White said informal traders
could have survived the economic crisis because it was just one of the
many challenges facing them, the other challenge being that of neglect.
“Most of the times,
we depend on ourselves. For your own information, Blantyre City Assembly
workers do not visit Manase (market) to collect garbage and market fees-
which shows that every day is survival day for us,” she said.
Ronnie Kazembe, a small-scale
business woman from Domasi in Zomba, said she continued selling farm
produce and baking flitters because it is her only source of income.
“During the tough economic
years, I have been shifting the focus from selling flitters, Zigumu (home-made cakes), sweet beer, cassava tubers, sweet
potatoes, tomatoes. The determining factors are the season of the year,
and commodities available. I take care of my children and orphaned children,
who all count on me to provide clothes, school uniforms, shoes, food,
and shelter.
“So, despite the shortage
of money in our pockets and escalating cost of commodities, I did not
opt out. My business ventures do not depend much on fuel except, perhaps,
when transporting maize from Mulanje, Chikhwawa, Zomba to my business-place,”
Kazembe said.
Kazembe said the main
challenge facing local businesspeople has nothing to do with surviving
the economic meltdown, saying the challenge is on “growing our businesses,
and graduating from small-scale business enterprises to large-scale
enterprises”.
“We need business loans
but (commercial) banks remain hostile and demand a lot of paperwork,”
Kazembe said.
