Business

‘Standards may impact negatively on SMMES’

Bereng Mpaki

THE Consumers Protection Association (CPA) has expressed concern over the possible negative impact that the development of a standards body could pose on small enterprises.

The Ministry of Trade and Industry this week finalised a preferred paper for the business model for Lesotho to adopt in operationalising its standards body, the Lesotho Standards Institution (LSI).

The development of the model was done with the assistance of experts from Britain and Botswana’s respective standard bodies in a process that started last August.

These developments came to light during a wrap-up meeting this week, whose objective was to present to the stakeholders the final draft of the proposed business model and its financing plan.

The standards body was necessitated by the Lesotho Standards Institution Act of 2014.

The project is funded by the African Development Bank under its Economic Diversification Support Project (EDSP).

The project is housed within the Private Sector Competitiveness and Economic Diversification Support Project (PSCEDP).

Speaking on the sidelines of the meeting, CPA Executive Director Nkareng Letsie said while the advent of standardisation in Lesotho may bring with it certain benefits in terms of facilitating the country’s production base, this could spell doom for the small business sector.

Mr Letsie said complying with standards would increase production costs for small businesses which they may not be able to afford.

“We should also bear in mind that the cost of complying with the standards may be too high to the extent that it may force some businesses out of operation,” Mr Letsie said.

“So, I think this may lead to a situation where the private sector is not as productive as expected, thereby also affecting generation of the much needed jobs.

“Often, whenever standards are being introduced, they tend to negatively affect small businesses which are still trying to find their feet in business more than they affect larger businesses.

“For instance, there are large manufacturers of products we use on a daily basis which not do not seem to be certified. But due to the trust we have attached to them, we are able to use their products regardless of lack their compliance to standards.

“So, by introducing standards, it looks like we are supporting large corporates over our smaller business through increase in production costs.”

He said on the upside, the arrival of standardisation in Lesotho would discourage counterfeit goods.

Mr Letsie recommended a gradual introduction of standards especially for small businesses, while they are assisted to bring their production in compliance with the standards.

“We advocate for a gradual adoption of standards. We should gradually help small businesses and allow them a grace period in which to prepare their production systems before they can be deemed ready to be certified. Those who do not comply with standards should not be prevented from production.”

For his part, Molebatsi Rabolinyane, the director of standards and quality assurance in the Ministry of Trade, said the next step after development of the business model is to operationalise the standards body.

“The next step is for the ministry to implement the business model, for example, we will have to recruit the chief executive officer of the institution and then the rest of the personnel as dictated by the business model.”

He said the actual operation of the standards institution would depend on how soon the ministry receives funding from the government.

“However, so far government has demonstrated its commitment to the project in different ways.”

He said the institution is estimated to cost an initial M20 million, which will be used to acquire the resources needed by the institution.

He noted that financial constraint was one of the major challenges that has delayed the implementation of the standards body.

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One Comment

  1. I don’t understand why anyone would even suggest that the standards institution shut down below standard businesses, it should just be a merit the business owner can boast to his consumers with.

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