How Africa’s top entrepreneurs can find the path to global markets
Thursday, April 10, 2008
Swaziland alone has 70 000 such micro enterprises. Why is this the case?
Money? That’s usually what an SME owner will say. Indeed, SMEs needs capital to start up and expand. In developed economies, most start-ups are self-financed with help from the four Fs: founders, family, friends and foolhardy strangers.
In Africa this strategy is possible only for a lucky few. For unproven entrepreneurs, or those lacking adequate collateral, capital can be very hard to come by. Here, most banks are lending at prime (currently 14.5 percent), plus between 2 and 4 percentage points for the riskier SMEs – a heavy debt burden for a start-up enterprise.
But capital, although essential, is rarely adequate, particularly for companies wishing to target external markets.
In the northwest corner of Swaziland, Sdemane Farming is exporting baby vegetables to Europe through South African distributors. Its quality is excellent and buyers are eager for more products. Its success is due not only to having secured capital, but to the entrepreneur behind the business.
In 1996 Temba Dlamini joined a foreign-owned company exporting baby vegetables. He steadfastly worked his way up, becoming the farm manager in five years. In 2005 he bought the farm and pack house with the help of a loan from a local financial institution. But it is his vast technical knowledge, selfless commitment and strong relationships with key international distributors that ensure the success of his business. Is such an entrepreneur born or bred? Given Dlamini’s passion for success, we think it’s a bit of both.
So, what will it take for more African SMEs to link into the international markets?