By Charity Mbasela Kauseni
Foreign investments act as a catalyst for economic growth; hence the need to marry such investments with Small and Medium Enterprises -SMEs- based on how well they boost economic activities. In simpler terms, foreign investments may refer to the investments of ideas in a domestic company as well as assets of a country by a foreign investor.
Equally, Small and Medium Enterprises are recognised as the main source of economic growth that help create employment for many youths and build investor confidence. They also help promote private sector development with partnership in many countries today. Without doubt, SMEs have a central place in economic development of any nation.
Foreign investments create jobs and foster economic development through access to international markets that offer a host of business opportunities including larger and new Niche market possibilities to exploit scale and technological capabilities.
For SMEs, they create a strong foundation that strengthens the entire body of any business or company which will help attract various investors to the door step. Even so, they do face challenges when it comes to attracting foreign investment. This is because SMEs sometimes have limited business, financial and human resource muscle to partner with foreign investments for expansion.
Additionally, inedquate working capital affects SMEs. For example, good ideas presented by SMEs die a natural death for lack of capital. Across the SADC region, SMEs face stiff competion from larger companies but they thrive by creating working relationship with big name companies for investor confidence.
Lastly, low capital utilization and lack of management strategies, poor educational background of operators can be a large financial set back within a company, while facing external challenges. With an enabling environment, SMEs are always likely to gain confidence with the right resources that are required in the growth of a company.
