Strategies Needed by SMEs in Developing Economies to Advance
One of the most viable strategies to achieve national development goals in developing and developed nations is to promote small- and medium-sized enterprises (SMEs). SMEs increase competition, generate employment, and develop entrepreneurship while boosting economic vitality at the community level and creating sustainable livelihoods.
According to a world bank report released this year, Kenya’s SMEs provide half of the new jobs despite them constituting only 20 per cent of all firms in the manufacturing and service sector.
Despite their key contribution to the economy, it is estimated that their contribution to production is minimal, with most investing in low-value addition.
Many small and medium enterprises (MSMEs) in the country are in the informal sector, contributing to approximately 40 per cent of the GDP. Notably, only 1.56 million out of the 7.41 million established in the country are registered. An indication that a conducive environment and support is needed for them to grow and unlock their potentials.
So what needs to be done for the SMEs to thrive?
Formalizing the informal segment of the SMEs sector will go a long way in helping the youth gain an identity and be ready for more business opportunities.
Linking the large enterprises and small SMEs will be important to help in the growth of SMEs value chain, leading to a vibrant economy.
For this reason, many governments design dedicated support programs and policy initiatives aimed at the creation and development of a national SME sector.
For decades, the market has been a challenge; therefore, coming with a solution towards local and international market access would be a big boost for SMEs. Dealing with cheap imports and unfair competitions will see the sector thrive dramatically.
The counties can develop programs supporting SMEs’ innovations, patenting, and product design to help them grow. In this case, through the Kenya Association of Manufacturers, the government is set to create an SME HUB tasked with providing strategic leadership and support to see SMEs compete globally.
Globalization brings along several benefits, much needed to keep SMEs competing in the fast-changing market. With a strategic outsourcing partner, product development costs and time can be minimized to faster market products.
What are the biggest obstacles to growth of SMEs in developing countries? Lets keep the conversation going.