Growing-SME-Innovation-in-Zambia-Trevor-Simumba

British Council Zambia –
Shaping our Future
Conference (26 & 27
March 2013)
“Ways of Growing SME
Innovation and Finance”
Presenter: Mr.Trevor
Simumba, MD Sub-Saharan
Consulting Group Zambia
Limited
Sub-Saharan YOUR LOGO Consulting Group Research |Investment |Training | Consulting

Table of Contents
Who are SSCG?
Sustainable SME’s
Innovation and Finance is a Challenge
Importance of Innovation
Banks Risk Aversion
Key Recommendations
Contact us
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Trevor Simumba, SSCG Zambia

Inspiring
Entrepreneurship,
Fostering SMEs
Development in
Africa
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Trevor Simumba, SSCG Zambia

Overview – Who we are?
Sub-Saharan Consulting Group (SSCG)
• We are a UK based global management consulting firm that focuses at providing research
intelligence, corporate services, business management solutions and advisory to organisations in
Sub-Saharan Africa.
• With extensive expertise in Africa – we provide expert knowledge, networks, advice and support to
organisations wishing to engage in business activities in Africa.
• Our regional subsidiaries and operation coverage in Nigeria, Zambia, Kenya, Uganda and Malawi
allows us to work locally and close to business communities in Africa.
• Our aims & objectives are to support SMEs development, foster innovative mind-set and promote
the cause for entrepreneurship in Africa.
• Leveraging on innovation, entrepreneurship, international experience, local knowledge and market
intelligence, we provide advice on barriers, disseminate knowledge on the most pressing issues
that affect businesses, investors, public organisations and entrepreneurs today, identify and present
investment opportunities to investors to enhance sustainable economic and business growth in the
African continent.
Trevor Simumba, SSCG Zambia

Sustainable SME’s
SME sector can form the bedrock on which all economic activity is
built, and that SMEs can be the mainstay of an economy
Economic development is for people, that is, for citizens of that
country.
If the benefits of economic growth fail to reach the majority, in the
long run there is no development.
The SME sector is one of the principal driving forces for economic
growth and job creation
Trevor Simumba, SSCG Zambia

Innovation and Finance is a Challenge
Access to finance is still a major limiting factor for SMEs in Zambia.
A 2007 World Bank survey stated that only 16 per cent of firms surveyed reported having
a loan or line of credit from a financial institution, compared with 23 per cent for the
region and 35 per cent for all countries surveyed.
In general, banks refuse credit to SMEs because they are perceived as risky and
unprofitable.
Promote innovation and entrepreneurship as an intervention to job creation and poverty
alleviation in Zambia.
We need to showcase existing tools (banking, finance, Innovation, creativity, technology
& entrepreneurship) that support business growth.
The consequent “intermediation gap” is reflected in narrow and shallow financial
markets—a phenomenon that restricts broad-based economic growth
In particular, the rural based SMEs and micro enterprises face serious problems to
access financial services.
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Importance of Innovative SMEs
Innovation is recognised as an essential component of the economic
growth process
it can be broadly defined as the development, deployment and
economic utilisation of new products, processes and services (OECD,
2001b).
Job creation can come through entrepreneurship and innovation
the ability of entrepreneurs and firms to seize upon global business
opportunities by commercialising new products and processes faster
than their competitors is critical in raising the economic wealth of a
nation.
However, many SME’s in Zambia and beyond have very little support
for innovation and thus lag behind
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Going Forward
Banks see any risk as dangerous
BUT any type of transaction which provides credit involves a chance of
failure.
If the banks continue to fail to deepen and extend their activities,
alternative means will emerge in the market
Already we see alternatives in the market such as, Micro-finance, payroll
financing, CELPAY, Mobile Money (Airtel, MTN), Western Union etc.
Rather than categorically turning down requests from SMEs, banks can
learn how to calculate the risks.
By developing an entrepreneurial attitude, they can start generating
profits from this client segment, too.
To do so, banks need to improve their risk-evaluation skills.
Trevor Simumba, SSCG Zambia

Key Recommendations
Financing innovative SMEs is very risky and uncertain, and has led to a proliferation of government
programmes to close perceived financing gaps faced by innovative SMEs.
Concentrate policies for promoting availability of risk capital to innovative SMEs
mainly on early stages of the financing of the firm and use public funds only to
leverage private money
Encourage and facilitate venture capital funds. Venture capital is an alternative way
to finance SMEs when banks cannot intervene
Tutoring and mentor programmes. Sometimes, venture funds will provide nonfinancial
assistance and close tutoring for talented entrepreneurs.
Encourage, in conjunction with business and accounting bodies, small business to
recognize, measure, and report intangible assets (ICT skills, organisation, software
and networks, intellectual property rights) so that new and small firm assets can be
managed more effectively and more reliably valued.
Trevor Simumba, SSCG Zambia

Key Recommendations, cont’d.
Financing innovative SMEs is very risky and uncertain, and has led to a proliferation of government
programmes to close perceived financing gaps faced by innovative SMEs.
Subject new regulations which could adversely affect the provision of risk finance to
cost-benefit tests of their likely effect before implementation and monitor their
impact subsequently.
Increase the managerial and technical expertise of intermediaries whose role is to
evaluate and monitor companies.
Support development of E-finance to boost expansion of SME’s and make access
easier. This requires bringing down the cost of ICT and would support innovation esp
amongst youth
Regional and local equity initiatives (e.g. regional funds) should be encouraged
across the provinces. Such equity programmes should be created in parallel to the
development and support of regional and local business angel networks as well as
business incubators and industrial clusters
Trevor Simumba, SSCG Zambia

Thank you – You May Contact Us
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Where you can reach us
Oxford Business Park, Oxford, OX4 2JZ, UK
Po Box 33203, Lusaka, Zambia
Tel: + 44 (0) 1865 589022
Mobile: +260 966754902
Email: info@s-scg.com
Web: www.s-scg.com
Nigeria: Nigeria@s-scg.com
Zambia: Zambia@s-scg.com
Malawi: Malawi@s-scg.com
Uganda: Uganda@s-s-cg.com
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Trevor Simumba, SSCG Zambia