Home | Comment & Analysis    Tuesday 24 March 2020

Are SMEs the drive chain moving African Economy?


If trade and industry are the two most important sectors in the African economy, the Small and Medium Enterprises (SMEs) sector is a vital domain shared between them. The Small and Medium Industries (SMIs) and Small and Media Businesses (SMBs) form the SMEs sector which is “the drive chain” effectively rolling and moving not just the two gears of the economy - trade and industry, but also bringing about the empowerment of women and the young while propelling forward innovation, technology and good governance on the African continent. In short, the SME sector is Agenda 2063 in a nutshell.

It was July 2019 AU Summit for launching AfCFTA in Niamey when I started my discussion on the relationship between economic sectors with the African Union’s Director of Industry, Mr Hussein Hassen Hussein. Although I am proud of championing the AfCFTA, my concern was an over-focus on trade might deprive Africa of entering the era of industrialization.

Naturally, the industry in Africa is important. It is the machine generating jobs. It increases GDP and changes the lives of groups of people and individual. The cement tycoon Aliko Dangote is the richest African and Black entrepreneur in the world with his industrial empire valued at about $US25 billion in more than 15 African countries. This is clear proof that trade and industry should always be part of the planning and making policies.

Mr Hussein Hassen Hussein indicated the developed countries in the world like Italy, Japan and China have enabled SMIs to gradually develop into big industries. His justification was SMIs are not costly and are easy to be developed. They simply need efficient coordination and training of people who work with these industries. “If we look at India, it has a large number of small-scale industries which are growing rapidly and have a government ministry assign to them,” he added.

The discussion with Hassen continued at February 2020 AU Summit in Addis Ababa. A-eTrade was sponsoring this business forum at Hyatt Regency Hotel. When the discussion with Mr Hussein turned to SMEs and the details of the AU’s strategy on SMEs, I realized the African Union and partners were well acquainted with issues and had an excellent grasp of what is required. SMEs sector is trade, industry, community, women and youth employment!

Mr Hussein Hassen Hussein who is also the Acting Director of the Trade and Industry department with the AU states the best way to implement the set Agenda 2063 is through promoting and facilitating the SMEs in the continent.

The focus on SMEs in the context of trade and industry is not new. I have previously written an article, “the Role of SMEs in African Growth,” in November 2013 when AU organized Regional Workshop on SMEs Development in Africa. The event which took place in Kinshasa, DRC was also in celebration of Africa Industrialization Day. The theme was “SMEs Promotion for Inclusive and Sustainable Growth in Africa”

The concept note said, “In Africa, the SMEs sector is one of the most important industrial sectors capable of meeting the challenges of eradicating poverty. Generally, the SMEs sector accounts for nearly 90% of African economies. It is the largest source of employment, providing a livelihood for over three-quarters of the working population, especially women. The sector is the backbone of almost every economy on the continent.”

In conclusion, it is important to remember the words of an expert and international thinker on development, Prof. Ibrahim Mayaki, the CEO of NEPAD/AUDA, believes industrialization will create jobs for the youth in Africa, and Africa’s growth will come from there. He made his remarks at the NEPAD committee meeting during the 27th AU Summit in Kigali. "We need to produce goods that add value to popularize Africa and a popular economy of entrepreneurs. Trade and economic partnership are becoming a challenge, but Africa needs to think about trade protection if we are to have a constructive regional market; that cannot be achieved without the role of private sector SMEs." Mayaki said.

In my discussion with Hussein Hassen Hussein at his office in AU Addis Ababa, Mr Hussein indicated that around 13% of the trade volume in the continent is through informal trade across the border which is mainly done by women running SMEs, “The women face a lot of challenges in this endeavour so when we talk about promoting trade in the continent we have to empower and support this sector.” Hussein said.

In my view, there can be no doubt that SMEs is the largest and the most vital sector and indeed the drive chain in the African economy, it is the interlocking medium between economics, politics and social affairs.

* Mekki ELMOGRABI is a Press Writer on Economy, Development, and Stability in Africa, could be reached through e-mail: Chairman@mekkicenter.com. full Article: http://mekkicenter.com/are-smes-the-drive-chain-that-moving-african-economy/