We are now in the age of a market-driven
economy, as opposed to the manufacturing-driven economy that dominated in the
last industrial-age. At an African
level however, we are yet to emerge from the agrarian model into a full-throttle
manufacturing-driven economy. This means that Africa is not ready to serve
the global market directly with its immature industries, under-developed infrastructures
and vague policy measures that do not prescribe the level of local private-sector
participation. Africa can only serve the
global markets via international partners with the technology know-how; a
strong appetite to deliver value to customers; and vision for sustainable
development in the African economies they participate in. This grossly has an impact on African
economies supply-side. Hence, it becomes
imperative for SMEs to play a crucial role by becoming the ‘middle-man’ in the
market, through process and product innovation.
Hence, there are three (3) aspects to consider when looking at
reconfiguring local supply chains: a) import process innovations from BRICs
(Brazil, Russia, India, China, and South Africa) countries; b) reallocate
R&D to where the researchers and the market growth is, Pankaj Ghemawat, 2007 and c)
product and service innovation to cater to under-provided segment markets.
Importing
Process Innovations
In Zimbabwe there is an urgent need to shrink
the country’s trade imbalances. Thus, on
the supply side, numerous shifts are already in play. The rise of protectionism and concerns about high
unemployment rate of over 60% in a country that is estimated to account for at least 25% of the global
supply of rough diamonds, according to Bulawayo24, (May 22, 2012) is quite
unfortunate. In 2009, the Zimbabwean
government is said to have set up a diamond processing plant at Harare
International Airport in an effort to process the diamond for immediate export
out of the country. However, according
to the Industrial Development Policy (IDP), the key strategic objective is for
ALL the sectors to espouse a value addition approach. This means that exporting ONLY processed
diamonds is not what the IDP had in mind.
A total of 2,000Ha of diamonds out of a capacity of 67,000Ha, can be processed, polished and packaged
locally. It is estimated that this could
bring about approximately 3,000 jobs in the industry. Deriving lessons learned from South Africa, India
and China about value-addition in such supply chain of diamonds and extraction
of natural resources would provide one of the best market opportunities for
SMEs.
Re-allocation
of R&D
Developed countries can benefit enormously in
placing their R&D in the areas in which there is market growth and
potential. Whilst, the Global
Competitive report, (IMD, 2011) projects a low number of supply of engineers
and other technical personnel in the BRICS country compared to the Western
countries; the education sector has a high number of graduates of universities
and technical schools particularly in India and China. Thus, a company in the high-growth industry
like high-tech with interest in emerging market economy like South Africa can
start thinking about basing their R&D efforts in those countries. In other words, SMEs can act as an incubator
for large corporations with interest these markets. For example, in 2008, Intel had designed one
chip in India which led to the rolling out of XEON 7400 processor worldwide, (Pankaj
Ghemawat, 2007).
Product and
Services Innovation
SMEs have to start developing products and
services that are essentially unlike what they are used to selling. Hence, how an SME prices, provides an
infrastructure for service and even taste of the good becomes very
central. According to a brief in African
Business, July 2012, in Tanzania, farmers in Arusha are using a new technology
called the Bio-Agtive Emission Technology (BAET). The BAET has the ability to transform toxic
farming machinery fumes into soil fertilizer.
This product was developed by a private company based in U.S.A called N/C Quest Incorporated. The BAET is described as a paradigm shift way of thinking by both
its creators and end-users.
In conclusion, whilst SMEs continue to be the
engines that spur economic growth, it is important to clarify the unit and
level of analysis (Linton, 2010) of their contribution to each sector. What Africa needs more of, are the type of
SMEs that develop and improve on existing innovations in the market. This can either be done by collaborating with
large cooperation in need of a type of ‘surrogacy’ to nurture the new product to
be developed for the market or alternatively; SMEs gain access to financing explore
products and services developments that are both market-driven and offer a
value-addition component to the supply chain.
Copyright @ August 5, 2012.
This article was first published online on BlogSpot by Tambu Ndoro, Revenue Strategist & CEO-Founder at Hanga
Consulting Private Ltd©2011. www.hangaconsulting.com. Hanga Consulting is also a premier member of
the SME Association of Zimbabwe: www.smeassociationzimbabwe.co.zw/
