Technical Assistance to Support to Industrialisation and Productive Sectors (SIPS) in the SADC Region

Introduction MSMEs to bridge the gap in SADC Micro, Small and Medium Enterprises (MSMEs) are defined according to the number of the company's employees, its capital turnover or balance sheet. The thresholds differ from country to country, generally depending on whether the country is developed or still developing. In the European Union for example, a micro enterprise employs fewer than 10 people and has annual turnover of about USD 2 million. A small enterprise is one, which employs a maximum of 50 people and has an annual turnover of maximum USD 12 million. A medium-sized enterprise in the same region employs up to 250 people and has an annual turnover of up to USD 300 million. In Africa, the thresholds are much lower. For example, in Botswana, a micro enterprise is a company with less than 6 workers and has annual turn-over of about USD 5,000. A small enterprise in the same country employs less than 25 people and has maximum annual turnover of about USD 130,000. The fragmentation of production processes across national borders into global value chains (GVCs) has given rise to new opportunities for firms in both developed and developing countries to increase their participation in regional and global value chains (R&GVCs). In Southeast Asia, for example, regional and global value chains have played significant role in supporting economic development, allowing the region to achieve remarkable export-led growth, and become a leading investment destination for multinational enterprises (MNEs) (Nasir, et al., 2021). Countries promote integration of MSMEs into regional and global value chains by creating policy and regulatory incentives, mainly in the areas of trade, investment, infrastructure, institutions, supplier strategies and governance. The SADC Regional Indicative Strategic Development Plan (RISDP) 2020-2030 envisages increased participation of MSMEs in the economy, playing critical roles as suppliers of inputs and services in regional value chains. MSMEs that are active in RVCs are also likely to attract more investment, which enables them to take positions in critical segments of global value chains (GVCs)