Botswana is a small country with a population of 2 million. The country located in the sub-Saharan Africa, is well known for its Kalahari desert which occupies 70% of the landmass and its mineral wealth in diamond.
Almost all of Botswana’s US$14.79 billion GDP is made up from the mineral extraction industries, with over 50% coming from diamond export revenues in the mineral sector, followed by livestock trading and others.
The country is ranked 149 among 188 global economies in the World Bank’s ranking for competitiveness for doing business, which measures the ease of starting and run successful enterprise in Botswana.
Some of the most noteworthy challenges experienced by SMEs are inadequate marketing skills, business premises and other start-up business problems. This is according to A 2002 research paper “Government Policy and Entrepreneurship Performance“ by the Department of Accounting and Finance at the University of Botswana.
In a 2012 editorial by the Sunday Standard, editor Outsa Mokone said ”[Botswana's] regulatory framework is not only outdated but also excessive, intrusive, tedious and outright unfriendly”, and that It takes two full months to register and start operating a business in Botswana.
The country has an unemployment rate of only 18%, which is marginally better than its SADEC neighbors of South Africa where it is at 25%, Namibia at 29%, or Zimbabwe which is unknown.
Writing in the Washington Post in November 2014, the Head of Stanbic Bank in Botswana, Onkabetsi Morapedi said there was a noticeable growth, particularly in the last five years, and an increasing number of SMEs in the country.
“More opportunities have arisen in time, largely in the form of tenders or purchase orders,” Morapedi wrote.
And an overview of the country by the World Bank released in April 2014 shows that Botswana has rapidly grown into becoming one of the fastest growing economies and moved into the ranks of upper-middle income countries from being one of the poorest countries in Africa since independence from Britain in 1996.
We look at the five ways Botswana stakeholders are assisting the country’s SMEs:
1. Government financial intervention and targeted interventions are working to assist a number of qualifying and value-creating SMEs. According to the Department of Industrial Affairs website, its mandate is to be the leading industrial development entity and support upcoming and expanding small ventures with financial assistance in industries like manufacturing, tourism, agriculture and other industries with fixed capital investment of between P75 000 and P2 million.
Policies like the Local Procurement Preference Scheme which encourages the development of manufacturing industry in the country and the Credit Guarantee Scheme which provides guarantees and loans to citizen-owned businesses and individuals.
2. Quick turnaround time in SMEs insolvency is what Botswana is best known for when it comes to supporting SMEs, according to research by Consultancy Africa Intelligence, a South African-based research and analysis institute. The institutes’ 2012 report shows Botswana ranks first on the continent for resolving insolvency and features well regarding recovery rate.
3. Diversification of agricultural products in the minority industries like agriculture such as manufacturing by-products like tanning, the process of treating animal skins to produce leather is a relatively new concept in Botswana, but that will propel the country’s industries forward.
This is according to the Organisation for Economic Co-operation and Development, an international economic organisation that stimulates economic progress and world trade, in their findings on the African Economic Outlook of 2008. Entrepreneurs have been encouraged and incentivised by government to look into agricultural product diversification as it opens up new markets, new economies and job creation.
4. Institutional support agencies address the need for coherent and holistic support for the development of small, medium and large scale enterprises through the soft window and package offered through the subsidiaries.
The Department of Industrial Affairs and Small Small Business Enterprise in Botswana, in their official website, claims to streamline SME support from institutions like the Local Enterprise Authority and Enterprise Botswana, which promote and facilitate entrepreneurship and SME development, skills education from the Department of Vocational Education and Training and the Botswana Bureau of Standards, for quality assurance of SME-manufactured products. But their relative success is yet to bear real fruits.
5. Coordination of SME policies administered by various stakeholders within government and between government and various stakeholders in the economy encourages government to play a leading role in buying locally produced products from SMEs, the Botswana Institute of chartered Accountants said in 2013. Presenting a research paper ”Promoting the Growth of Small and Medium Enterprises” at the Africa Congress of Accountants, the president of BICA Tshego Modise said these initiatives are led by Citizens Entrepreneurial Development Agency, Botswana Innovation Hub and the Botswana Institute for Development Policy Analysis. Modise further encouraged successful businesses to be show-cased as exemplary models.
By Siphelele Dludla