SOLUTION AT Australian Expert Writers
Summative Essay 2
Robert Alexander Cheleuka: A180D5205964
Quantitative Methods: UU-DOC-801
TUTOR: Dr. Evangelos Tsoukatos
Assessing The Challenges Faced By Micro, Small and Medium Enterprises In Malawi
The Case For Blantyre City, Malawi
1.1 INTRODUCTION 3
1.2 PROBLEM STATEMENT 3
1.3 RESEARCH PURPOSE 4
1.4 RESEARCH OBJECTIVES 5
1.5 RESEARCH QUESTIONS 5
1.6 CONCEPTUAL FRAMEWORK 6
1.7RESEARCH APPROACH 8
1.8 METHODOLOGY 8
1.9RESEARCH DESIGN/STRATEGY 9
2.0 DATA COLLECTION INSTRUMENTS 9
2.1 SAMPLING 10
2.2ETHICAL CONSIDERATIONS 10
2.3DATA ANALYSIS 10
This paper will highlight the challenges that Micro, Small and Medium enterprises face in Malawi. The analysis of these enterprises is very important because Micro, Small and Medium enterprises make up a significant portion of the contribution to the economy of Malawi by generating about US$2 billion per annum according to FinScope (2012). The paper has also explained the research problem, the purpose of the study and also the study approach to be employed in this study and the reason why this type of approach is chosen.
Micro, Small and Medium Enterprises (MSMEs) are a catalyst for national development. Well managed MSMEs create jobs, boost the export base (as in the case of smallholder rice farmers) and assist in managing of the balance of payments for the government. Use of modern technology lowers the cost of production thereby making it easier to penetrate and access new markets. However, the current situation with Malawi MSMEs is different according to Malawi Government (2010) who described that challenges facing them range from management of the enterprises, not advanced in technology, also lack of connectivity to local and international markets for their produce and access to inter markets, Gockel and Akoena (2002).
Carter (2012) described restriction of access to markets as a hinderance to MSMEs. MSMEs face competitive challenges related to size and distortions in markets while according to Mkumbwa (2019), fortified that lack of adequate skills in first time entrepreneurs leads to business failure as most of the entrepreneurs start businesses with the wrong reasons, Lewis Paul Jnr (2008). Negative perception by potential lenders has also negatively impacted on the growth of MSMEs (Zidana,2015). On the other hand, Arinaitwe (2006) describes unfavorable conditions, gross under-capitalization, poor infrastructure, high operating costs, corruption and lack of government support. There are also frequent power cuts in rural areas and load shedding in urban areas. Malawi government (2012) also describe the HIV pandemic, inadequate business skills, lack of finance, growth and registration procedures as some of the causes of MSMEs failure in Malawi.
Even with all these adverse factors, various studies reveal that most of small businesses start every year but significant numbers of them fail right in their infancy stage, which is supported by Biyase (2009), Fatoki and Smit (2011). Undoubtedly, to say, the most recent covid-19 pandemic will have an additional negative effect on the MSMEs. These studies indicate that 70% of small businesses fail within the first year of their establishment. Therefore, the purpose of this study is to analyze challenges faced by MSMEs in Blantyre district in Malawi.
The purpose of this study that is to be undertaken is to assess the Challenges Faced by Micro, Small and Medium Enterprises in Blantyre. As Micro, Small and Medium Enterprises have a great impact on the economy of Blantyre, and the whole nation as well through creation of jobs, product and service provision to the public among others, assessing the challenges that these Micro, Small and Medium Enterprises will have a positive effect, as the study will identify challenges that these entrepreneurs face and come up with possible solution to the problem.
The overall objective of this study is to examine the challenges faced by MSMEs in Malawi and answer the main research question. The study is also expected to come up with policy recommendations which Blantyre district in Malawi can implement through the policy makers involved. This study will employ a mixed method approach thus qualitative and quantitative approach. The study will also employ a questionnaire for collecting data in quantitative approach and interviews and Focus Group Discussion for qualitative approach as data collection tools. The questionnaires and interviews will be designed in such a way that it will answer the research questions that is developed to make sure that the research problem has been addressed.
The participants will be randomly and purposively sampled both from urban and rural set ups. These participants will be every entrepreneur both that have physical business establishments and those who have no-physical business establishments. The participants will be within the age range of 20 and 45 years. Both male and female participants will be targeted and also belonging to any nationality and tribe regardless of any political affiliation. This age group has been targeted because it is the age group of people that is very active in business affairs.
To assess the challenges faced by Micro, Small and Medium Enterprises in Malawi
To determine major challenges that MSMEs face.
To determine the extent to which the challenges affect their operations
To evaluate the contribution that MSMEs make to social and Economic Development
What are the major Challenges facing MSMEs?
What is the extent to which the challenges affect their operations?
What is the magnitude of contribution that MSMEs make to the economy?
GOVERNMENT POLICY AND SUPPORT
Abor and Biepke (2006) describe that businesses in the sub-Saharan Africa fail due to lack of support from the Government. In support of this statement Kim (2011) explains that SMEs lack support services since they are not well equipped with appropriate cost- effective management solutions.
DIFFICULTIES IN ASSESSING LOANS AND LACK OF FUNDS
FinScope (2012) indicate that 59% of businesses are not included in financial services while 31% are getting financial help and three quarter do not borrow funds as they are doubted to pay back the loan while on the other hand Chukuemeka(2006) explains 80% of SMEs are not growing due to poor financing and Argent (1976) accounts of small businesses do not grow or collapse due to financial measures.
LACK OF MANAGERIAL SKILLS
According to King and McGrath (2002) explains that the majority of SMEs are not educated and have got no business skills in their minds, therefore they may not be well equipped to carry managerial routines for their enterprises.
LACK OF ACCESS TO MARKET INFORMATION
Different studies from Oreku, Kimeli and Mtenzi (2009) and Rudjiko and Cant (2012) mention access to markets is restricted and also explain that there is limited access to market information as there is only few who have the access to communication technologies.
LACK OF INFRASTRUCTURE AND TECHNOLOGY
Poor roads may result in transportation costs and difficult operations, Opera(2011).Different studies from Atieno(2009); Coulth and Loos(2007); Nyoni(2010) indicates that lack of poor network in the development countries also pose as a challenge of small business
THE CONCEPTUAL FRAMEWORK
Below is figure 1, conceptual framework sourced from Odinga (2012)
GROWTH OF SMEs
ACCESS TO FINANCES
-Access to credit facilities
TECHNOLOGICAL KNOW HOW
-Tools and equipment
-Transport and communication
The framework describes the independent variable as access to finance, technical knowhow and the infrastructure while dependent variables being the growth of SMEs.
This study will employ a mixed method approach which is also called triangulation thus qualitative and quantitative in nature. Creswell (2005) defines qualitative study as a type of research in which the researcher relies on the view of participants, asks broad, general questions, collects data consisting largely of words from participants, describes and analyses these words for themes, and conducts the inquiry in a subjective, biased manner and in a natural setting. The researcher becomes the instrument for data collection.
However, Saunders et al 2012 explains that quantitative research examines relationships between variables, which are measured numerically and analysed using a range of statistical techniques and Zikmund et al., (2010) assert that Quantitative Research Approach addresses research objectives through empirical assessments that involve numerical measurements and analysis.
The combination of qualitative and quantitative approach makes the study to be reliable and valid. The weaknesses from one study (either qualitative or quantitative) can be overcome by the strength of the other study as each approach has its strengths and weaknesses. Each approach is useful; qualitative study helps the researcher to get more views from the participants since the participant will be given chance to explain according to his experiences and behavior or views of participants are expressed (Choy,2014). While quantitative study involves the collection of data so that the information can be quantified or statistically analysed. This quantitative study is also reliable and takes a short period to administer and analyse as well (Creswell,2005).
In this paragraph, the methodology that will be used to conduct the study is outlined. It covers first the research design- detailing outline of how the investigation will take place i.e. how data will be collected, what instruments will be employed etc. The population and sample will be discussed, followed by data collection methods and entry to be used in this study. Ethical considerations throughout the study will be presented and data analysis methods of the research will be discussed at the end. This chapter will introduce the approach that will be taken to achieve the study objectives.
A research strategy is the plan on how a researcher is going to answer the research questions and research objectives. The study will use descriptive survey design. According to this study a descriptive research design is defined as a quantitative research method that attempts to collect quantifiable information to be used for statistical analysis of the population sample. Croswell (2005) fortified that descriptive survey design is a primarily quantitative research method that in which a researcher administers some sort of survey or questionnaire to a sample and in some case to entire population. This method will help the researcher to observe the employees’ attitude towards training and development that enhance their performance as well as productivity. The descriptive research design method can also be used when collecting information about people’s attitudes, options habits or any other social issues (ibid).The researcher will use this method since it utilizes a questionnaire as a tool of data collection and also a framework that directs the collection and analysis of data, and apart from that the data collection is quick to conduct and is cheap.
Data collection method simply refers to how the researcher obtains the empirical data to be used to answer his or her research questions. Data collection instrument ensures its validity and reliability. According to Mugenda and Mugenda (2003), the accuracy of data to be collected largely depends on the data collection instruments in terms of validity and reliability. A good-structured questionnaire can be used to collect primary data that contains relevant questions about the challenges faced in these micro, small and medium enterprises.
In data collecting, primary data will be collected directly from employee’s first-hand experience. A structured questionnaire containing will be designed and administered to all employees working for the SME who have been trained in the case companies selected by this study. The purpose of the questionnaire is to investigate the effect of training on employee performance of the case companies.
Apart from the questionnaire giving us benefits it also has limitation which includes indifference attitude of respondents, non-attendance and lack of cooperation. This instrument of research is referred for external judgment to ensure validity (Salah, 2016). On the other hand, secondary sources include all relevant available data that have been prepared, collected, and analyzed by others which include research publications, periodicals, essays, standard records, evaluation reports and other relevant documentaries (ibid).
The study focuses on the MSME’s in the Southern Region of Malawi. The study is limited to those MSME’s that are members of the Malawi chamber of commerce in Blantyre City operating in different sectors of the economy. In choosing the MSME’s to participate in the study, purposive sampling will be used and MSME’s that are members of Malawi chamber of Commerce in Blantyre City will be selected. Simple random sampling will then be applied when selecting respondents from the SME’s this will be done to eliminate bias. These will be specifically chosen because they are among the most organised and apt to receive organised training in Malawi. The target size for this study is 200 employees from different MSME’s.
This makes it a more appropriate section of SME’s for the study to represent the situation for the country (UNESCO, 2018).
All research ethics were strongly followed. Confidentiality of all the participants in the study was maintained by use of identification numbers other than the actual names. The organisations where data was collected from were properly informed of the reasons why the research was being conducted as well as the respondents were also well informed of the research.
There are several methods that can be used to analyse data in qualitative and quantitative research. The choice of which method to use depends on the question’s researchers define at the start and on the specific methodologies they choose to obtain the desired data (Strauss, 1987). Methods of qualitative data analysis include analytic induction, grounded theory, narrative analysis, thematic analysis, and content analysis. (Haregu, 20)
This paper has outlined the topic of the research study which is to assess the challenges faced by Micro, Small and Medium enterprises in Blantyre in Malawi. The paper has also outlined the research problem, purpose of the study and research approach giving reasons as to why the type of approach has been chosen, research questions relevant to the purpose of research including data collection tools and related analysis.
Biyase,L.(2009). DTI to look at how crisis hurts small enterprises. Available from: www.busrep.co.za/index.php?fSectionId=561&fArticleId=4947848 [Accessed: 12/08/2014].
Carter, S, Jones-Evans, D. (2006). Enterprise and Small Business: Principles, Practice and Policy. (2nd Ed.). Harlow: Prentice Hall.
Coleman, S. (2000), ‘Access to Capital and Terms of Credit: A Comparison of Men and Women-Owned Small Businesses’, Journal of Small Business Management, 38(3), pp. 37-52
Choy, L (2014). Comparison and Complimentary between Qualitative Journal of Humanities and Social Sciences,19(4),99-104).
Creswell. (2005). Educational Research: Planning, Conducting and Evaluative research. (2nd ed). Upper Saddle River.N.J. Pearson.
Fatoki, O. O., &Smit, AVA. (2011). Constraints to credit assess by new SMEs in South Africa: A supply-side analysis. African Journal of Business Management (AJBM), Vol. 5 No. 4, pp.1413-1425.
Gockel, A.F and S.K Akoena (2002). Financial Intermediation for the Poor: Credit Demand by Micro, Small and Medium Scale in Ghana. A Further Assignment for Financial Sector Policy, IFLIP Research Paper 02-6.
Government of Malawi (2012). National Export Strategy, Ministry of Industry and Trade, Lilongwe.
Government of Malawi (2012). Micro, Small and Medium Enterprises (MSME) Policy for the Republic of Malawi, Ministry of Industry and Trade.
Zidana (2015). Small and Medium Enterprises (SMEs) Financing and Economic Growth in Malawi: Measuring the Impact between 1981 and 2014.
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