Small, Micro, and Medium Enterprise (SMMEs) are the new economic language for developing countries. Encompassing small scale business, community cooperatives, hawkers, roadside traders and medium scale businesses, SMMEs give over 30 % of Botswana workforce the breadwinner status.
Currently contributing over 20% to Botswana‘s economy the SMME sector plays an integral role in Botswana’s economic path. This observations emerged at Botswana Institute of Chartered Accountants (BICA) dinner last week in Gaborone. The same observation has also been registered at different forums.
Renowned entrepreneur and well known former corporate executive Kate Mphage labeled SMEs as a pivotal sector towards moving Botswana ‘to a developed economy status. “There is great potential in SMMES as far as generating much needed employment and economic diversification is concerned” she said.
The former Mascom wireless executive is of the view that the nature of SMEs being businesses that are undertake by perceivably low income citizens and under privileged members of the society posse’s great ability to turn around economic status of the ordinary Batswana. “Imagine Botswana without the braiding, water melon selling, the roadside cooking ladies, the sewing ladies and taxi drivers. Each country in Africa has these buzzing hubs that reflect ordinary people making a living outside the formal sector,” she said.
Mphage underscored the imperative need to develop and resource SMMEs to unleash the great economic potential of the sector. She however highlighted the business challenges that come with the nature of the sector itself: “it is very paramount to always emphasize the benefit that accrue to all other economic industries and sectors in the economy when the SMMEs sector thrives, yet the sector is faced with challenges in the area of finance, poor quality of products, access to bigger markets and simple book keeping,” she explained. Ms Mphage pointed out the need for all stakeholders from government, funders, financial advisors, among others to rally behind contributing to SMMEs flourish, noting that the country and every one stands to benefit from a booming SMME sector.
BICA’s ROLE IN ECONOMIC DEVELOPMENTS
Addressing an audience that was dominated by Botswana Institute Chartered of Accountants (BICA) members, Mphage said accountants could play a pivotal role in assisting SMMEs as they were located in important financial institutions and departments and had the necessary skills required in turning small-scale entrepreneurs’ ideas into flourishing businesses.
BICA President, Rudi Binedell said accountants have a big role to play in economic development in Botswana. He said BICA intends to be a reputable stakeholder in government’s efforts to advance economic diversification and sustainable growth. He said the accounting body increased its membership to 3 355 members by the end of December 2016, from 2 085 in 2015. Binedell said they had drawn up a new strategic plan for the years 2017 to 2021.
The plan aims among other objectives to increase the number of qualified, professional citizen chartered accountants. Nametso Latsheng, Head of Capacity Building at BICA observed that the current economic challenges faced by Botswana could be solved by rigorous engagement of the SMME sector. “It is very critical now to come up with innovative ways, strategic blueprints and policy crafts that can change the situation around. We need to fast track employment creation – SMMEs sector can do wonders for our economy,” he said.
SHARING THE EXPERIENCE
In previous likeminded interactive seminars and economic forums, SMMEs have also been underscored as a critical sector for the economy. They could be used to realize the much needed diversification and sustainable growth. Renowned businessman, Dr Tiro Mampane of Boitekanelo Group of Companies which includes Boitekanelo College, observed earlier this year at First National Bank (FNB) 2017/18 Budget review seminar that trade laws and setting up business regulations need to be reviewed to accommodate more SMMEs to enhance economic growth.
He noted that Botswana must introspect on its trade and business laws. He indicated that the ease of doing business locally needed to be improved by rooting out cumbersome procedures which might end up discouraging investors. According to Dr Mampane, SMMEs must be empowered to create wealth and ensure economic survival for rural and low income people. “If you look into other businesses you will realize that they don’t necessarily require, for example a physical office to operate, thus they should be exempted from some trade licenses requirement,” he said.
In its quest to empower Batswana and realize economic diversification while also creating employment and sustainable growth the Government of Botswana has setup various business facilitation arms and also introduced a number of programs and initiatives. The Youth Development Fund under the Ministry of Youth Empowerment, Sports and Cultural Development intends to finance young people to start up medium enterprises in almost every sector from agriculture, manufacturing and ICT.
Gender Affairs Fund in the Ministry of Gender funds women in groups and partnerships to a tune of up to P350 000 to turn community cooperatives and indigenous small and medium businesses into profit making entities. The Local Enterprise Authority ( LEA) under the Ministry of Investment Trade & Industry is a co-ordinate and focused one-stop shop Authority operating as a parastatal that provides development and support services to the local industry needs of SMMEs. The Authority's key sectors are manufacturing, tourism, agriculture, and any services that support the three business sectors. In particular, LEA targets women, youth, and the unemployed.
LEA also endeavors to build competencies in quality and efficiency, and to encourage import substitution and export oriented products and services. In delivering their mandate and mainly supporting the Small Micro & Medium Enterprises LEA conduct entrepreneurship awareness workshops annually across the country to cultivate the spirit of entrepreneurship in youth and the unemployed. LEA provide capacity building incubation, training and facilitates funding and access to markets.
Adding to these efforts is the Citizen Entrepreneurship Development Agency (CEDA) which operates as an investment arm and financer to viable projects and feasible business ideas. CEDA funds various project to a tune of up to tens of millions, for SMMEs CEDA recently introduced a tailor made funding initiative for small and medium scale businesses called “Mabogo Dinku”.
Through the program, CEDA provides subsidized loans for various micro-entrepreneurs to enable citizen participation in enterprise development. Mabogo-Dinku loan offers micro-enterprises an opportunity and enables citizen participation in enterprise development. The loan provides micro-enterprises with funds for their business needs ranging from working capital to small asset finance. Mabogo Dinku offers short term loans from P500.00 to a maximum of P150, 000.00 per person, payable in 3-12 months to citizens who are micro-entrepreneurs to assist in the growth of their business.
Strive Masiyiwa, a Zimbabwean multimillionaire is of the view that education must be provided to small medium entrepreneurs. He writes that Entrepreneurship should be taught as a subject in all schools across Africa. “By far the biggest employer of people in Africa is what is generally called the "informal sector."
“Whilst most of the people in this sector are generally literate, having been to school, there's very little in our education system that actually prepares them for a life running their own business.” According to Masiyiwa, governments should publicly acknowledge that the "informal sector" is the central activity in their economies. “Whether people are smallholder farmers, street traders, or tradesmen and women, don't be ashamed to acknowledge them as real economic players. They are contributing to the economy just like the biggest businesses that you have in your country,” he says.
Masiyiwa who owns multinational businesses agrees with Mphage’s sentiments that SMMEs importance must be recognized with action. “Acknowledge the importance of this sector by putting in place policies that enable them to prosper. When they prosper, they will grow, employing more,” he says. He is of the view that governments should introduce entrepreneurship training into the formal education curriculum.”By the time someone has completed seven years of school, they should be able to put together a basic profit and loss statement, and a basic balance sheet. They should also be able to read financial statements.
Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.
The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).
The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.
The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).
However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.
“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.
Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.
The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.
In July this year Bulb World products will hit South African Shelves: Pick n Pay, Checkers and Africa’s largest retailer Shoprite.
The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.
“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.
Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.
“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.
While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.
“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.
“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said
The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.
The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.
For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.
It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.
“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.
The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.
This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.
ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.
It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.
Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’
It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.
Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.
However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.
The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.
It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.
Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.
Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.
Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.
According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.
“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.
The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPostthat two entities have been working hard to earn is market locally.
“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”
As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.
Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”
He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”