The Entrepreneurial Ecosystem and SMEs: A Source of Economic Opportunities

The future prosperity and social and economic well-being of any country and the world in general depends, among other things, on the capacity they exhibit to successfully and sustainably promote a dynamic entrepreneurial spirit that incorporates innovation as one of its guiding principles.

International evidence shows initiatives aimed at promoting Entrepreneurship can effectively boost employment and increase income at a general level, especially among young people in developing countries.

In this way, support for Entrepreneurship is one of the best tools to generate a business ecosystem, capable of absorbing the accelerated technological and productive advances that are taking place worldwide and that increasingly affect our lives. Throughout this process, small and medium-sized enterprises (SMEs) will play a fundamental role.

The Role of SMEs in the Productive Fabric

SMEs have historically been one of the most important actors in economic activities. They play a fundamental role as generators of employment and, therefore, are one of the main producers of income sources.

SMEs are thus important drivers of economic activity in many countries around the world and, therefore, their promotion becomes a necessary tool that functions as a catalyst for local economic and social development.

In Europe, more than ninety percent of companies are SMEs and they contribute more than fifty-three percent to the employment sector. In sub-Saharan African countries, SMEs contribute ninety percent to the employment sector.

Crucial in the process of overcoming poverty, inequality and unemployment, SMEs play a fundamental role, particularly with regard to the labour and productive inclusion of marginalized groups, such as female heads of household, people with disabilities, rural workers and, especially, young people.

It is for these reasons that the development, promotion and growth of the Entrepreneurial ecosystem and SMEs, especially in rural areas, have become a critical dimension for most countries in the world, mainly for those in the process of development. Mozambique is no exception.

SMEs in Mozambique

As in other parts of the world, in Mozambique SMEs are the most significant business segment. However, in the specific case of our country they represent an overwhelming percentage, reaching 98.7% of the total number of registered companies. In turn, they assume more than a determining role in the performance of our national economy, contributing with about twenty-eight percent for the Gross Domestic Product and about forty-two percent of formal employment.

The promising future of Mozambique, especially characterized by the natural resources megaprojects will obviously require the participation of large multinational companies that actively invest here, generating employment and wealth.

But to ensure that the improvement of living conditions through employment and personal satisfaction and fulfillment reaches everyone equally in a balanced way, the engine of that process must be the success of small and medium enterprises. Because of that we must address the most pressing challenges facing SMEs.

According to a study conducted by IPEME / USAID, together with Baker Tilly Mozambique, the obstacles to the consolidation of SMEs are the following:

  1. Low-skilled labor;
  2. Inefficient financial management;
  3. Rigid financing structure;
  4. Limited planning capacity and strategic vision;
  5. Barriers to foreign trade;
  6. Unsatisfactory public infrastructure;
  7. Corruption and complexity of public processes;
  8. Relationship between the public and private sectors.

Many of these issues, especially the last four, are clearly structural in nature and it is above all a public responsibility to combat them and in this sense, the Government of Mozambique is already carrying out programs that aim to improve the business environment. However, from the private sector, large companies can also and should also be involved in the promotion of the Entrepreneurial Environment and in supporting the activity of our SMEs.

Large companies and support for SMEs in the Mozambican context

Support for SMEs can come in many forms, but support from large companies is crucial to enable them to improve their organizational structure, adopt new technologies and gain financial stability.

Under these premises, DHD Holding and the SOICO Group have promoted initiatives and specific activities with the aim of stimulating economic growth and strengthening the Mozambican entrepreneurial fabric.

The 100 Best SMEs Award, for example, is an initiative launched in 2012, designed with the National Business Community in mind and with the objective of publicly recognizing good management practices among local SMEs.

This award not only promotes competition, good practices, exchange of experiences and boosts the activity of Small and Medium Enterprises, but also identifies examples of Entrepreneurship, wealth creation and employment generation that serve as inspiration for other entrepreneurs.

On the other hand, believing in the enormous potential of the Entrepreneurial Community in Mozambique and recognizing at the same time the obstacles they face, fundamentally with regard to access to financing, from DHD Holding we decided to support Izyshop, a Mozambican start-up that offers an online platform, connecting producers and retailers to consumers with home delivery on the same day.

Believing in this start-up’s vision for international growth, we support it, convinced that from DHD we can contribute to add management and communication value to the business, helping in its pan-African expansion process.

These are two examples which show how the commitments of large companies can play an active role in the productive development process of our country. To do so, we must support our Entrepreneurs and SMEs because they are today the actuality of our economy but above all they embody the potential of a prosperous future for all our citizens.