Building linkages between micro-, small and medium-sized enterprises and multinational companies from the global South: the case of Southern Africa

Abstract

This report examines the linkages between micro, small, and medium-sized enterprises (MSMEs) and multinational companies in Southern Africa, focusing on the impact of the African Continental Free Trade Area (AfCFTA) and foreign direct investment (FDI) from the global South. It highlights the importance of enhancing international trade in intermediate inputs and the role of FDI in integrating local MSMEs into global value chains. The theoretical background discusses various types of linkages, including backward and forward linkages, and their implications for local economic development. An empirical analysis based on surveys of MSMEs and multinational enterprises reveals the characteristics of local businesses, their engagement with foreign affiliates, and the challenges they face. The report concludes with policy implications aimed at strengthening the capacities of local producers, promoting product certification, and fostering relationships between MSMEs and multinational enterprises to enhance economic resilience and growth in the region.