The SME Policy Formulation Process in Swaziland
Paul M. Thabede


• Background Information
• Scope of Participation and Involvement
• The Significance of the Role of Stakeholders
• Different Viewpoints
• The Consultation Process
• Final Product
• The Impact of Participation and Consultation to the Commitment of Stakeholders on the Policy Implementation

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The SME Policy Formulation Process in Swaziland
Paul M. Thabede

Background Information

For several years Swaziland has pursued a free market, open economic policy. Government intervention is mostly limited to the provision of basic infrastructure and general education and training. However, industry and commerce is primarily based on large and/or medium private sector formal units. This process began soon after World War II with large scale investments in sugar and wood products. From 1960 onwards large agro-industries and a more diversified development at Matsapha Industrial Estate took place. The agro-industries and those at Matsapha Estate are mainly medium to large scale firms primarily export-oriented and dominated by foreign investors.

The financial and commercial sectors have developed in similar patterns. Nearly all the major banks are controlled by foreign owned parent-companies. Lending is largely directed at the medium and large business sectors. Foreign capital has also been prominent in the hotel and tourism industries.

As early as 1970 (two years after independence) the Swazi Nation expressed aspirations to develop and promote indigenous Swazi entrepreneurship. This was expressed through policy statements, development plans and institutions such as the Small Enterprises Development Company, Loan Guarantee Scheme, donor support for NGOs and the recently established Enterprise Fund.

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Prior to the 1990's Swaziland's heavy reliance on foreign capital and management in most productive sectors and the linkages to the South African and world economies provided more benefits than problems as the economy was in a boom. However, since 1990 certain weaknesses have been exposed, e.g.:-

• population growth and unemployment;
• a narrow and weak Swazi indigenous enterprise sector;
• underdeveloped agriculture;
• outmigration of the country's most resourceful and well trained personnel to South Africa.

Due to these constraints Swaziland has been forced to rely on its own resources to create wealth and jobs for her ever increasing population. The country also faces the challenge of promoting a widespread and indigenously based development of commercial agriculture and the generation of a more developed and faster growing (yet viable) SME sector.

SMEs and practitioners have in previous workshops enumerated various constraints in the sector. These problems have militated against the development of SMEs.

The difficulties in solving the problems have been closely associated with the lack of a national policy on the SME sector. As a response to this outcry Government, through the Ministry of Enterprise and Employment, requested UNIDO in 1996 to execute a project assisting in the development of a strategy for the SME sector.

Scope of Participation and Involvement

The National Strategy on SME basically outlines how "the country co-operates to enlarge, strengthen and diversify the indigenous SME sector into a broad-based and competitively viable engine of widespread growth of employment and incomes."

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Stakeholders in the National Strategy for SMEs

NGOs:

• LULOTE (BMEP)
• CANGO
• UMTAPO WABOMAKE
• SWAZI BUSINESS GROWTH TRUST (SBGT)
• SWAZILAND ASSOCIATION OF SAVINGS AND CREDIT CO-OPERATIVES (SASSCO)
• IMBITA (SWAZILAND WOMEN'S FINANCE TRUST)

Private Organizations:

• SIBAKHO CHAMBER OF COMMERCE & INDUSTRY
• SWAZI NATIONAL BUSINESS COUNCIL
• BUSINESS WOMEN'S ASSOCIATION OF SWAZILAND
• SWAZILAND TRUCKER'S ASSOCIATION
• SWAZI COMMERCIAL AMADODA
• STANDARD BANK OF SWAZILAND
• FIRST NATIONAL BANK

Public Organizations:

• MINISTRY OF ENTERPRISE & EMPLOYMENT
• THE SMALL ENTERPRISES DEVELOPMENT COMPANY (SEDCO)
• THE ENTERPRISE FUND
• MINISTRY OF ECONOMIC PLANNING
• SWAZILAND COLLEGE OF TECHNOLOGY (SCOT)
• INSTITUTE OF DEVELOPMENT MANAGEMENT (IDM)
• GWAMILE VOCTIM
• SWAZILAND INSTITUTE FOR MANAGEMENT AND PUBLIC ADMINISTRATION (SIMPA)
• CENTRAL BANK OF SWAZILAND (CBS)

The process involved various stakeholders drawn from public, private and non governmental institutions and entrepreneurs. A list of the stakeholders involved is given above.

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The stakeholders formed themselves into a National Forum and appointed a steering committee to come up with the national strategy document.

Alongside this exercise a short term strategy - the Economic and Social Reform Agenda (ESRA) - was piloted by the Prime Minister's Office. One of the task forces formed was the Task Force on the Empowerment of SMEs. The task force members appointed by the Prime Minister's Office largely composed of those appointed into the steering committee by the National Forum.

The Significance of the Role of Stakeholders

Government, as a stakeholder, initiated the process by requesting assistance from UNIDO and providing the logistics for the workshops to take place. Government only played the role of a facilitator leaving the bulk of work to be done to the private and NGO sectors. The main thrust was the formulation of a strategy by the stakeholders which was to be firmly in their hands at the end of the project.

The input made by the public enterprises, the private and NGO sectors was very useful during the various work-group meetings and workshops. The private entrepreneurs provided practical experience of what is happening in the SME sector.

The stakeholders looked at the task before them and came up with the following policy thrusts:-

• the creation of an enabling environment for the growth of SMEs generally through a policy framework incorporating appropriate legislative, regulatory and infrastructural measures,
• measures supporting the creation of new SMEs, particularly (though not exclusively) in the rural areas, and
• measures supporting the strengthening and diversification of existing SMEs.

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Different Viewpoints

The major issue on which views of stakeholders differed was the treatment of land for industrial units. While some preferred outright purchase of land others were completely against this practice. They argued that land is not an expanding resources and therefore, should not be sold.

The Consultation Process

The steps taken in the formulation process were:-

1. the diagnosis of the current environment and situation of Swazi SMEs based on the UNIDO consultant's review of the evidence both in prior studies and through field observations,
2. the preparation of a Diagnostic Paper,
3. the circulation of the paper among stakeholders with interests in the development of Swazi SMEs,
4. the holding of two workshops and a number of intervening working group meetings set up at the first workshop, and
5. the summary and collation of the policies, programmes and plans into a National SME Strategy.

The steering committee appointed by the National Forum and the Task Force appointed by the Prime Minister's Office merged into one committee to produce the strategy on the Economic Empowerment of SMEs.

Consultations were made with various Government ministries and departments to address the various constraints for the development of SMEs.

Consultations were made through workshops and national conferences. The terms of reference used were those prepared for the ESRA Task Force. Draft reports were discussed by the National Forum before a final report was produced.

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Final Product

There were basically two final products:-

1. The National Small & Medium Enterprise (SME) Strategy, and
2. The Task Force Report on Economic Empowerment of Small, Medium and Micro Enterprises.

The stakeholders appreciated the contents of the final products. They, however, reiterated their fears that such reports, though action oriented, may end gathering dust at Government office shelves.

The Impact of Participation and Consultation to the Commitment of Stakeholders on the Policy Implementation

It may be too early to assess the situation in Swaziland. The final product has been presented to the Prime Minister's Office and still awaits final approval.

The stakeholders have, however, pledged their commitment to the implementation of the strategy. They have endorsed the steering committee as an organ to continually monitor such implementation.