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Abstract:
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The last few decades have witnessed the meteoric rise of China as a world economic
champion in terms of development, growth and impact, a move that seems to destabilize the
economic and political dominance of the Western countries. However, the Chinese economic
growth is not an accident but is a well-orchestrated plan meant to transform the country and
its business enterprises. From a state controlled socialist economy, China has adopted open
door policy, market oriented approach and political changes meant to navigate the country
into a global market leader. At the heart of Chinese economic development is the Small
Medium Enterprises (SMEs) sector. Recognising the central role played by SMEs, the
Chinese Government integrated SMEs agenda in its national and social development strategic
planning leading to development of numerous legislations and policies meant to promote and
boost SMEs growth. Currently SME businesses are spread in all major sectors from
manufacturing, constructions, agriculture to service industries. Some laws implemented to
promote SMEs include eradicating barriers to growth, establishing equal level playing ground
rules for all businesses, promoting scientific and technological innovations, and creation of
conducive competitive atmosphere. As a strategy to ensure local and regional growth of
SMEs, the government classified the businesses in terms of their absolute advantage. The
move has seen categorisation of development into four main categories, namely township and
village-based enterprises, private enterprises, state-owned businesses (SOEs) and jointventures. It is this strategy that has seen industries rise in all major regions resulting to
development and employment creation across China. Comparing the Chinese Government’s
role in supporting SMEs and African governments shows a sad reality. Although SMEs in
Africa accounts for 95% of all businesses, 50% of GDP and 60% of employment, their rate of
failure range from 50% to 90%. Unlike China, African governments have been accused of
making it difficult for SMEs operations. With little or no incentives, SMEs have to contend
with heavy taxes, high cost of production, lack of finances and poor legal and legislation
structures. This paper presents Chinese Government as a model of how African countries can
promote SMEs to steer development and transformation of their economies. The paper
recommends that African governments prioritise SMEs as key pillars of economic and social
development of individual countries and the continent as whole. |