According to Richard Chirwa who is the Managing Director of Fadeth Furniture Company Limited, the unavailability of money on the market has accorded local manufacturers a window for bargaining with suppliers in terms of flexible payment terms.
“We have been able to survive the period due to the fact that our suppliers have been more understanding. We have struck agreements with the suppliers to pay for materials in bits.”
Chirwa added that the arrangement is an added to customers because they were able to pay for products in segments as well.
He nonetheless advises blossoming entrepreneurs to tread very carefully when they want to get monetary assistance from local financial institutions.
“Money lending institutions are very vital in the development of businesses in the country but one needs to put a lot of factors into consideration before applying for a loan.”
Chirwa cited interest rate, repayment term, hidden charges and floating or fixed Rates as some of the areas.
The Government of Malawi recognises the important role which small and medium enterprises (SME) play in the economic development of the country.
Government commitment towards the development of the SME sector has been seen through a number of national initiatives.
In 1995, the Government of Malawi with financial support made available from UNDP contracted a European based consultant to develop policy for micro and small enterprises.
The policy document which has not yet been endorsed by Government cited limited access to credit, lack of clear policies supporting the promotion of SMEs, limited access to raw materials, limited access to markets, lack of entrepreneurship skills, unfavourable fiscal policies and lack of access to information on investment opportunities as some of the challenges faced by SMEs in the country.
Recently the Government has implemented a number of policies aimed at stimulating the development of industry, which included development of the industrial development policy, approving provision of various industrial incentives, establishment of the Malawi Investment Promotion Agency, approving export processing zones (EPZ), duty free importation on industrial machinery and raw materials, etc.