SMEs Too Have Great Potential for Export Business
Engaging in export business for Small and Micro Enterprises (SMEs) gives them a sense of superiority within their sectors. There has however been a long-held belief, albeit lopsidedly, that export business is a preserve of large companies. This has had many SMEs shy away from it. A report by the World Trade Organization (WTO) in 2016 indicated that only 3% of SMEs internationally were exporting compared to 14 percent of the larger enterprises.
International trade is an avenue to spur growth of SMEs. It opens them up to markets beyond their geographical locations and gives an opportunity for the SMEs to increase productivity and revenue streams. A research done in Egypt in 2017 indicated that venturing into international trade raises profits of SMEs by about 20%. It goes without saying that the productivity of the companies is boosted as a result. SMEs are huge employers in many developing economies and it is therefore of interest to see them grow.
The small enterprises have to be ready and willing to prepare for the export market no matter how tedious the process may look. In Kenya, we have the Export Processing Zones Authority (EPZA) whose core business is to attract and facilitate export-oriented investments. EPZA categorized companies have special taxation policies and requirements for companies to comply with in order for them to be listed under the Export Processing Zones programme. EPZA facilitates companies to get necessarily documentation for licensing in order for them to operate within the Export Processing Zones.
EPZA companies in Kenya enjoy fiscal, physical and procedural incentives that allow the companies an opportunity to have an easy and fast operation process all that which is oriented to export. EPZA mandate is to increase the level of export income in the country and thus the incentives are to attract more enterprises to join the authority. This is with the appreciation that an increase in export earnings boosts a country’s gross domestic product.
EPZA acts as a liaison for their clients with other relevant agencies like the Kenya Revenue Authority (KRA) and the Kenya Ports Authority (KPA) to ensure they get the required services at ease. EPZA also acts as a marketing agent for the clients both locally and internationally which then exposes them to potential markets which they may not have ventured into.
An SME engaged in production should be prepared for the export market and be ready to put in some work. There is however need to do research on the existing gaps in the international market before venturing into such a business. There is also the question of international standards when it comes to the export market. There are standards for various products that one has to comply with in order to qualify to trade in some of the markets. Some standards also change from region to region. What the European Union (EU) market may be looking for may be different from what the Asian market is in need of. What this means then is that it is important to secure international certifications before venturing into export business.
For SMEs, increase in revenue and productivity is the key goal. This can be achieved through expanding market avenues as well as responding to the needs of the market at all costs. Produce with the world in mind and not just the local market.
By Sarah Makena