Council warns of profit loss

The National Business

By DALE LUMA
MANY micro, small and medium enterprises will not make any profit this year, according MSME Council president Desmond Yaninen.
Yaninen told The National in view of the economy going into a recession that businesses would find it hard to function.
He said unemployment, poverty and crime would increase.
“When the economy shrinks, there is less money spent on goods and services,” Yaninen said.
“This means that MSMEs will experience a reduction in sales.
“And when there is less sales, there is less money to pay for operating expenses.
“And this will include laying off surplus staff.
“MSMEs will have to reduce their expenses in order to survive.
“Many MSMEs will be unable to pay their bills and will be forced to shut down.
“Ultimately, we will see an increase in unemployment, poverty and crime.” Yaninen urged the Government to protect MSMEs through:

  • TRAINING: The government has an important role to play through the SME Corporation which must develop a training programme to help MSMEs adapt their business strategy into something more viable. The SME Corporation has to be more visible and vocal during this period when MSMEs are looking for guidance;
  • SME LOANS: The sooner the Government can establish the MSMEs loans with commercial banks, the better; and,
  • FISCAL POLICY: In a recession, Government can stimulate economic growth via fiscal policy that focuses on government spending which can engage MSMEs in the value chain. This means the Government must borrow money and spend it in the economy to create business and employment opportunities.

“Previous governments had got it wrong by borrowing for infrastructure (development) and then instead of engaging MSMEs and local employees, they engaged Chinese contractors with Chinese builders, creating little employment opportunities for our people,” he said.
“Fiscal policy must have sufficient national content engaging MSMEs in procurement and service delivery to help them through.”
Yeninen said MSMEs could be classed as either exporters or importers.
Exporter MSMEs have products or services that can be exported to an international market and earn foreign currency. They include those involved in agriculture, tourism and alluvial mining.
Importer MSMEs resell imported items at a profit.