ASSIGNMENT HAND-IN FORM
I certify by my signature that this is my own work. The work has not, in whole
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used from other sources it has been properly acknowledged and referenced.
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Programme Name: BACHELOR OF BUSINESS ADMINISTRATION
Year No. :3
Module Title : ENTREPRENEURSHIP AND SMALL BUSINESS
MANAGEMENT
Assignment No. And Title :1
Semester No. :1
Student Name. : PAUL MULAUZI
Student Registration No. :BBA/LL/G/C9/43/21
Module Tutor :MR. CHALAMBA
Date of Submission : 15/06/2024
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For office use only
CHALLENGES THAT SMALL BUSINESSES FACE IN MALAWI TO EXPLOIT THEIR
ENTREPRENEURIAL OPPORTUNITIES WITH RELEVANT EXAMPLES
Small businesses in Malawi face several challenges that hinder their ability to
fully exploit entrepreneurial opportunities. These challenges encompass
financial, operational, socio-political, and cultural dimensions.
Financial Challenges
One of the primary barriers is the lack of access to affordable financing.
Small businesses often rely on informal credit mechanisms, which come with
high interest rates and unfavourable terms. Formal financial institutions
impose stringent conditions that are difficult for many small businesses to
meet. For example, small agrobusinesses in Ntchisi District struggled to
expand until they received low-cost loans through the Financial Inclusion and
Entrepreneurship Scaling (FInES) project. This intervention enabled them to
double their maize and soya production(World Bank Blogs, 2023).
Operational Challenges
Operational inefficiencies are prevalent due to a lack of essential business
skills, such as financial management, marketing, and strategic planning.
Limited access to professional training and resources exacerbates these
issues, Additionally, poor management practices, including the inability to
separate personal and business finances, further hinder growth and
sustainability For instance, a confectionery business in Salima was able to
double its revenue after participating in capacity-building programs offered
through the FInES project (Inclusive Business, 2023). However, many other
businesses continue to struggle due to insufficient management skills
(Inclusive Business, 2023).
Socio-Political Challenges
Political instability and corruption significantly affect small businesses,
particularly those dependent on government contracts. Political power shifts
can result in businesses losing access to contracts and opportunities if they
were previously favored by a different regime. Corruption, such as bribery to
secure contracts or evade taxes, further complicates the business
environment. (Inclusive Business, 2023).
Cultural and Social Factors
Cultural attitudes towards savings and business partnerships present
additional challenges. There is a general lack of a savings culture among
small business owners, contributing to cash flow problems and limiting the
potential for reinvestment. Furthermore, many entrepreneurs are reluctant to
form partnerships, which could provide additional capital and expertise
(Inclusive Business, 2023).
Market Access and Networking
Limited access to markets and networking opportunities also constrains
small businesses. Many SMEs struggle to access larger, more lucrative
markets due to a lack of market information and poor negotiation skills.
Moreover, business networking is not widely practiced, restricting the
formation of beneficial connections and collaborations (Inclusive Business,
2023).
Government and Institutional Support
Government and institutional support, such as the Financial Inclusion and
Entrepreneurship Scaling (FInES) project, aim to provide low-cost loans and
support to innovative enterprises. However, the impact of these initiatives is
often limited due to widespread access issues and the entrenched nature of
the challenges (World Bank Blogs, 2023).
RECOMMENDATIONS
To address these challenges, several strategies can be implemented:
Improving Access to Finance: Developing tailored financial products for small
businesses and easing the conditions for formal loans.
Capacity Building: Providing more training programs in business
management, financial literacy, and digital skills.
Encouraging Partnerships: Promoting business partnerships and networks to
leverage additional resources and expertise.
Combating Corruption: Strengthening anti-corruption measures and
promoting ethical business practices.
Expanding Market Access: Enhancing market information systems and
training SMEs in negotiation and compliance with market standards.
These interventions can help small businesses in Malawi better exploit
entrepreneurial opportunities, contributing to the country’s broader
economic development.
References
World Bank Blogs, 2023. Supporting Malawi’s small enterprises to spur
economic growth and create more job opportunities. [online] Available at:
https://blogs.worldbank.org/africacan/supporting-malawis-small-enterprises-
spur-economic-growth-and-create-more-job-opportunities [Accessed 15 June
2024].
Ruskin Felix Consulting, 2023. Malawi: Entrepreneurship Opportunities and
Challenges. [online] Available at: https://www.ruskinfelix.com/malawi-
entrepreneurship-opportunities-and-challenges [Accessed 15 June 2024].
Inclusive Business, 2023. Key issues affecting Malawi’s MSME sector
development. [online] Available at: https://www.inclusivebusiness.net/ib-
voices/key-issues-affecting-malawis-msme-sector-development [Accessed 15
June 2024].
