Technology transfer and related policies for SME sector development in Malawi

1. Technology transfer and related policies for SME sector development in Malawi Lyson John Kampira Department of Science and Technology, Malawi

2. Outline of the presentation • Will cover: • Introduction; • Opportunities for SMEs growth in Malawi; • Initiatives to boost SMEs in Malawi; • Some technologies transferred to SMEs • Problems with technology transfer for SMEs; • The framework for SMEs operation in Malawi; • Current threats facing SMEs developmet; and • Conclusion.

3. Position of Malawi in relation to Zambia, Mozambique and tanzania

4. Introduction • Malawi’s economy relies heavily on agriculture, which contributes to 60% of the GDP; • 13% is from the manufacturing sector and 27% from others; • The agriculture sector employs 80% of the population while the industrial sector accounts for less than 20%; • Growth and development of Malawi’s industrial sector is hampered by a number of structural issues with only agro-processing, especially tobacco, cotton, sugarcane, food products, tea and beverages accounting for the manufacturing sector; • With low GDP, the need for increasing cash income compels Malawians to engage in small scale businesses; • The Small and Medium enterprises sector therefore constitutes an important and meaningful component of economic development as it supports economic growth, employment and poverty eradication. SMEs employ 5 to 20

5. Opportunities for SMEs Growth in Malawi • The SME sector in Malawi has the potential to grow due to the fact that there is; • Appreciable demand for most products and services on both local and international markets; • Very high surplus labour which can be used in high valued addition activities; • Bilateral, regional negotiation by government to create more market opportunity for local products; • Ever increasing road network and infrastructure which is increasing accessibility even to the remote areas in the country; • Improved telecommunication in terms of network coverage. This gives SMEs an opportunity to connect with customers or services beyond their immediate environments.

6. Initiatives to boost SMEs • With very high surplus labour, which must be used in high value-addition activities, Malawi is calling for targeted investment in technology by both new and existing investors; • Government is strengthening support to other sectors other than agriculture and the initiatives include: • Research; Industry and trade (SMEs department); commerce and industry; and science and technology institutions to: • Enhance the development of industries in Malawi, especially the SMEs through conducting industrial research and technology development and technology transfer and commercialization to facilitate the development of the SME sector;

7. Initiatives to boost SMEs Cont’d • Creation of the Department of Science and technology to promote technology transfer and commercialization; • Works in partnership with other institutions to implement technology transfer and commercialization programmes; • Small and medium enterprises support institutions provide credit and specialised training services to: • Support SMEs and establish conducive environment and friendly legislation for the SME sectors.

8. Some of the technologies transferred to SMEs • Sizing and installation of solar systems; • Design and installation of biogas plants; • Development and dissemination of heat exchanger for agro-processing, treadle pump for small scale agricultural irrigation, bakery ovens, electric egg incubators, oil expellers, ethanol production, etc. • Development and promotion of traditional salt extraction from saline soils; • Fish cages; • Bee keeping; • Dimentional stone tiles; • Energy efficient stoves; • Cassava starch production; • Mushroom spawn production; • Urea licking mineral block production; and • Water driven maize mills.

9. Problems with technology transfer and SMEs • Industrial research, technology development, transfer and commercialization has been generally slow due to: • Inadequate R&D facilities and infrastructural development; • Limited human capacity; • Limited capital investment; • Lack of an explicit technology policy and act addressing the SMEs; and • Lack of leadership in the area.

10. The framework of SMEs operation • The S&T institutions are providing technical support for private sector development to facilitate the necessary industrial linkages between the SMEs and the large scale enterprises (LSEs). • To enhance the development of the industrial sector in Malawi, government and the private sector view the following programmes as important tenants for achieving the objective: • Policy and legal frame work development: Include adoption of the Malawi Growth Development Strategy, Science and Technology Policy, the Integrated Trade and Industry Policy, the Intellectual Property Rights Policy and the Biotechnology Policy, Biosafety Act, Science and Technology Acts and other related acts. • Industrial Research Services: includes appraisal through contract research of raw materials as inputs into industrial manufacturing processes and evaluation of intermediate products to improve quality and process efficiency, and develop new products;

11. The framework of operation Cont’d • Technology Development and Assessment Services: includes development, adaptation and assessment of technology suitable to local condition and provision of guidance for selection of technologies for the manufacture of new products;

12. The framework of operation Cont’d • Technology Information Services: includes provision through the Technology Services (TIS) Library, information and documents related to technology; information searches on technology in computer databases or databanks in international networks; provision of process know-how information and industrial investment opportunities profiles and related information. The following databases are being developed to enable provision of information to the industry: • Industrial Raw Materials Database:contains information on local and imported raw materials used in manufacturing industry in Malawi; • Project Database:contains information on projects completed, undertaken and proposed, impact assessment reports on projects, etc; • Company Database:contains company profiles and provides information on company activities, which can be selected, for subcontracting in technology transfer projects; • Database of Specialists:contains profiles on specialists in various fields at local and foreign level who can be consulted in specific projects of interest; and • Database of Appropriate Technologies in Malawi:contains information of appropriate technologies being used in Malawi.

13. The framework of operation Cont’d • Engineering Services: includes design and fabrication of machinery, equipment and spare parts, production process and plant layout; and • Consultancy Services: includes technical analysis and appraisal of industrial projects, economic feasibility studies and preparation of business plans, identification and selection of appropriate technologies for micro and small enterprises, applied research to improve industrial processes, assistance in quality improvement and skills capacity building. • Government programmes: These include One Village One Product (OVOP) programme in selected areas with resource that give the community comparative advantage over others, irrigation and farming schemes which increase agricultural productivity, establishing cooperatives in various sectors; and • Establishment of Manangenment and Technical institutions: These include Technical Entrpreneurial Vocational Education Training Authority (TEVETA), Malawi Entrepreneurship Development Institute (MEDI), Development of Malawian Enterprises Trust (DEMAT), (Small Enterprises Development Organisation of Malawi)SEDOM where enterpenuers can learn business management and techinal knowledge for managing and establishing entrepenual activities.

14. Current threats facing SMEs development • Absence of an explicit technology policy and act addressing the SMEs; • Limited access to credit; • Limited access to raw materials and farm inputs; • Limited access to markets; • Lack of entrepreneurship and management skills; • Lack of collaboration among SMEs support institutons; • Unfavourable fiscal and taxation policies; • Export market constraints; • Lack of access to information; • Lack of technical skills; • High production costs; • Lack of incentives.

15. Conclusion • To facilitate growth of SMEs in Malawi, there is need to: • develop an explicit technology policy and act addressing the SMEs; • Improve access to credit; • Improve access to raw materials and farm inputs; • Improve access to markets; • Develop human capacity on entrepreneurship and management skills; • Improve collaboration among SMEs support institutions; • Promote favourable fiscal and taxation policies; • Improve access to information; and • Set up proper communication mechanisms to encourage owners of SMEs to seek newer innovations for the development of their businesses.

16. Thank you