Support for SMEs

Financial Products for DFIs

Through this programme the DFRC provides support to DFIs to develop appropriate financial instruments for SME financing and the mobilizing of requisite resources.

While access to short term or trade credit may not be a serious constraint access to medium and long term credit are major constraints for start ups and those SMEs that wish to expand their operations. SMEs represent a high risk to the traditional lender because of ;

  • Insufficient assets;
  • Low capitalization;
  • Poor accounting practices;
  • Lack of financial records; and
  • High transaction costs
  • Policy Environment

In conjunction with Policy Research the programme undertakes activities to review and advise DFIs and SADC member states on policies that encourage resource allocation to SME funding and other related support services. Legal and regulatory systems controlling SMEs require complex registration and licensing which imposes tedious reporting systems and costs on SMEs.

Empirical evidence has shown that as firms grow and become more visible their options for regulatory avoidance decrease, suggesting that there exists a breaking point in the cost of regulatory compliance. SADC governments have often overlooked such seemingly simple aspects of doing business, adopting actions which in the majority of cases penalize SMEs in favour of large businesses.

Technical Assistance

The programme focuses on the institutional capacity of DFIs, assesses adequacy of their delivery, systems and procedures and staff competencies with a view to facilitate accessing of appropriate external expertise where necessary for effective SME support. The programme uses a broad based approach which focuses on business and strategic issues to operational issues. Depending on identified weaknesses and agreed plan of action with the management of the DFI, turnaround programmes involving regional and international experts will be key to any TA provided.

Business Support for SMEs

There is general agreement that SMEs are effective creators of employment, innovation, income and economic growth. Many of the SMEs fail to realize their full potential due to lack of access to markets, finance, technology and business skills. On the international scene globalization and liberalization have compounded the problems of SMEs as production has become heavily knowledge-based and competition occurs on the basis of continuous innovation.

As a result SMEs need to master extensive knowledge of markets and technology which on their own they cannot do due to a host of reasons, chief among them is resource constraint. The DFRC in collaboration with other development partners has designed programmes that will be implemented to assist SMEs at enterprise level to raise their level of competitiveness both at the domestic market level and international.

Linkages to Big Business/PPI

The DFRC, through its research activities and in collaboration with other SME development agencies/partners, designs and develops projects to support DFIs generate business through business linkages between SMEs and big businesses. Such business opportunities can only be realized by the DFIs if there is deliberate and conscious effort in the region to promote business linkages between large businesses, both domestic and foreign-owned (multinationals) and SMEs. Fostering linkages between large businesses and small and medium businesses is key to developing a more vibrant and competitive SME sector, particularly for better export competitiveness.

Environmental Management Systems

This programme aims at raising SMEs awareness and adoption of best practice in EMS to improve SME competitiveness and profitability.

Business Support Services Providers

The DFRC through this programme develops projects that give support to DFIs in their development and delivery of appropriate extension services to SMEs.

While SME support agencies exist in the region their impact has been limited. The service providers have been criticized for;

  • Their bureaucratic