Malawian graduates encouraged to aim for entrepreneurship as opposed to focusing on being employed

Simbi Phiri

* Government stimulated to recapitalize local entrepreneurs for job creation opportunities

Analysis by Duncan Mlanjira

When pursuing their higher education, the majority of Malawians get obsessed on securing employment upon their graduation instead of aiming for entrepreneurship, which — if deliberate steps are taken to strengthen and stimulate it — can help create job opportunities.

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This is what has been observed by renowned and successful Malawian engineering entrepreneur, Simbi Phiri during his interview on Cruise 5 — a one-on-one panel discussion programme on Zodiak Broadcasting Station.

Simbi, whose business interest is based in South Africa, contends that it is the norm for most highly educated Malawians to opt being employed rather than take the risk of being independent by venturing into serious entrepreneurship.

He hinted that entrepreneurship is what the financial authorities can consider supporting to encourage more highly educated experts to venture and grow their entrepreneur businesses so that can sustain on their own into bigger industries so that they keep the country’s economy stable.

Simbi believes that most Malawians have the wrong mentality and perception that entrepreneurship is an option for those who failed to attain higher education.

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Yet they fail to see the bigger picture based on how and why Malawians of Asian origin do their businesses, which is mostly family controlled. The Indians’ businesses, Simbi said, are controlling the economy, which is second to the corporate world.

“Indians educate their children and once they graduate, they run their family businesses [applying what they learnt during their education],” Simbi said, hinting that Malawian small and medium entrepreneurs, who didn’t undergo higher education, cannot be expected to compete at par with the Malawians of Asian origin.

Limbe, hub of business for Malawians of Asian origin

He gave an example of shoddy and mediocre road construction projects, which the country is given to commission but in under two years, they develop potholes — with some of the bridges getting washed away.

He attributed the inefficiencies due to lack of rigorous inspection on the part of the government, hinting that it borders on corruption where a contractor is asked by procurement authorities to build a 3km stretch of a road at US$1 million — which is the cost of building just a kilometre of a standard road as of today’s estimate.

He suggested that if a foreign company is contracted to construct a road or any other project, it should be mandated to subcontract to other local contractors — consultant engineers, inspectors, construction material suppliers etc — who should be recapitalized by the government to procure the right equipment to independently and efficiently carry out their part of the project.

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He said going forward, such local construction contractors can further be recapitalized to meet the required engineering grade which can assist them to be at par with foreign companies for them to bid for and successfully deliver larger projects.

He gave an example of his Khato Civils, which he bought off from an Italian family when it was on a grade 4 on South Africa’s high engineering standard and within a reasonable period, it managed to attain the highest grade 9.

This, Simbi said this was due to Khato Civils being subcontracted by reputable construction companies and the proceeds from such projects, Khato Civils managed to acquire bigger assets — both in equipment and human capital — which earned it to be at par with construction giants such as Group 5.

Last month, the government emphasized the need for equitable awarding of contracts to see to it that 60% of contracts should be awarded to Malawians with the remaining 40% for international investors for purposes of equitable wealth distribution.

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This followed the furore that was created when Mota Engil was seen as dominating in being awarded construction contracts that led to the Anti-Corruption Bureau (ACB) to cancel a staggering K48 billion contract that was awarded to the Portuguese company to upgrade the Marka-Bangula railway line.

The procurement process was challenged as it bordered on some alleged corrupt dealings and thus the ACB suspended awarding of the contact just a few days after Ministry of Transport and Public Works published a notification for intention to award Mota-Engil.

The Portuguese company emerged as the successful bidder at the lowest price of K48,244,861,524.98 against two other bidders — China Railway at K59,906,673,465.11 and China Civil Engineering’s K79,766,540,032.76.

Thus Simbi’s suggestion that this kind of scenario — where foreign companies seem to be favoured at the expense of local contractors — shouldn’t happen if local entrepreneurs can be constantly recapitalized to acquire proper equipment and human capital to compete favourably on the market.

Such local contractors, once they win and successfully carry out more bigger projects, would be able to repay the loans government shall provide them as recapitalization.

Barack Obama

In the US, President Barack Obama inherited financial crisis on Wall Street that throughly infected the broader economy in which over half of that country’s 25 largest financial institutions had either failed, merged or restructured to avoid bankruptcy.

This is contained in his book, ‘Barack Obama-A Promised Land’ (@ 2020 by Penguin Random House LLC) in which he narrates that he inherited an economy whose stock market lost 40% of its value followed by foreclosure filings on 2.3 million homes.

Household wealth was more than 5 times the percentage loss that occurred in the aftermath of the 1929 market crisis.

Obama’s administration needed a stimulus package which he pushed to be enacted into law as American Recovery & Investment Act in less than a month he took office and by the summer of 2009, the economy stabilized.

In that short time, some of the corporate companies that were recapitalized through the American Recovery & Investment Act managed to repay the loans back to government.

Obama had steered America from economic disaster that eventually led unemployment insurance payments keeping families afloat; tax cuts for small businesses allowed more workers on their payroll;  companies that were on the threat of closing were still operating while mortgage refinancing kept people from losing their homes.

This is almost what Simbi is hinting at in suggesting that the government can refinance entrepreneur businesses to be kept afloat and earn a status of being given contracts from the same government or the corporate world in order to inculcate Malawians to think outside the box rather than being obsessed at getting employed.

“We have too many brains which goes into government for employment, which should have aimed at being entrepreneurs [in order to create job opportunities for themselves and those they could employ],” he said.

Chitera with the first FDH Graduate Start Ups recipients 

Last month, FDH Holdings Plc launched FDH Graduate Start Ups, through which new graduates are encouraged to conceptualize their ideas and engage with the financial institution for possible refinancing.

The programme started with graduates of Malawi University of Business & Applied Sciences (MUBAS), formerly the Polytechnic of Malawi, who were engaged to present their real-time business ideas and plans for possible injection of working capital.

The students — who formed nine real time companies — pitched their business ideas to a panel of 7 executive management of FDH Holdings, which identified 5 for further nurturing and assessment to qualify for refinancing.

This FDH initiative is first of its kind in the financial services industry as well as the corporate world that was born following a symposium MUBAS’ Faculty of Education and Media Studies had that impressed FDH Bank’s then acting MD George Chitera when he attended it as guest of honour.

Chitera then impressed on the rest of the FDH Holdings’ management team, which resolved to gather the students again for the real time presentations named FDH Graduate Start Ups.

MUST’s innovation design lab

In August last year, Malawi University of Science and Technology (MUST) partnered with Technical, Entrepreneurial & Vocational Education and Training Authority (TEVETA) to identify and train community innovations that can be commercialized.

The initiative, which MUST Vice-Chancellor Address Malata said is aimed at producing skilled workforce that will support and advance the MW2063 industrialisation agenda, is to encourage scientific innovation and technology as a vehicle for advancing creativity and design.

MUST has a design lab that is training these young innovators from various rural communities whose innovations shall be patented for commercial purposes.

This is where the government comes in to recapitalize such business concepts as well as helping to create markets for the products.

Simbi, entrepreneur par excellence

Simbi said it’s high time Malawi became a producing country by investing into food processing as opposed to exporting food produce and importing the proceeded food such as cooking oil, butter, first line medicine and many others — including toothpicks.

Relying of foreign investors and imports is what Simbi said contributes to constant scarcity of forex, saying if government contracts are given to local contractors and entrepreneurs, the money remains in the country and there is a long chain of beneficiaries through subcontracting — something he said is inevitable in any industry.

Thus Simbi reiterated that people should stop the obsession they have of eyeing to be employed rather than aiming to utilize what they learnt in their academic pursuits to manage their entrepreneurial concepts.

He said he has never been employed after finishing school here in Malawi and relocated to his mother’s country of birth, Botswana — where he worked as a partner in an engineering company before relocating to Johannesburg where he was a partner in consultant company, LET Engineering.

He then bought off Khato Civils and together with his wife brought it to become one of the top engineering companies which can ably tender and successfully complete a project worth over 5 billion rands.

He maintains that “Malawians have the resilience which needs to be supported”, adding that not all can become employees but people “must aim to be entrepreneurs whose ideas and concepts need to be refinanced to achieve their goals of contributing towards the economy”.

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