The SMME’s power  

SHARE   |   Monday, 14 August 2017   |   By Kabelo Adamson
The SMME’s power  

The permanent secretary in the ministry of Investment, Trade and Industry Serame announced government commitment to see the Small, Micro and Medium Enterprises (SMMEs) develop and contribute to economic and export diversification. She was speaking at the signing of the Memorandum of Understanding with the Anglo American group which will see the two collaborating in the programme known as Tokafala Enterprise Development. The initiative is aimed accelerating the growth SMMEs and supporting and building capacity of selected Enterprise Development Institutions. It is one of the ways to improve the SMMEs to eventually contribute significantly to the local economy in many ways. However, the question is how important are the SMMEs to the economy and for a developing one like Botswana. Economists are finding it difficult to answer the question because of insufficient data on the SMMEs in Botswana.

No data 

Keith Jefferis of Econsult firm said he could not answer the question on how important the SMMEs are because, “we don’t know how many they are, what they do, where they are, how many people they employ, how much economic output they produce?” Jefferis said his main concern is that there is no enough information on SMMEs and therefore he cannot measure their role in the economy. He said there is a need for better information on the SMME sector which should be carried out through a nationwide survey. “Ideally this would have been done a decade or more ago, so that the effectiveness of the various policy interventions and institutions could be assessed. Without that, any comment on policy and effectiveness cannot be based on empirical evidence,” he said, adding that it is never too late to start as the survey is still needed. Head of Research at Motswedi Securities, Garry Juma said the SMMEs are important in the growth and employment creation in Botswana. He said this sector has been a success story in most countries around the world in as far as contribution to GDP and employment creation. Juma cited a report commissioned by the EU in 2013 entitled “Investing in Empowering European SMEs to Innovate and Grow” which shows that 99% of all European businesses are SMEs and 85% of net new jobs in the EU between 2002-2010 were created by SMEs. In South Africa he said a 2006 Finscope survey showed that SMMEs accounted for 40% of GDP, with 90% of the jobs which were created between 1998 and 2005 coming from the SME’s sector while in Tanzania it contributes about 50% of industrial products' GDP. “There is a lot that the government of Botswana is doing is supporting the SME’s, although a lot can still be done to support this important sector,” he said.

Create full ministry

Juma believes the establishment of government agencies such as CEDA, LEA, and Young Farmers’ Fund are indications of concerted efforts to grow the sector. “Most of the government departments give preference to SMMEs when they procure their products and services,” he said in an interview. Other countries in the continent such as South Africa are said to have the whole ministry in charge of small businesses and Juma said Botswana could borrow a leaf from such. According to a research paper titled “The importance of SMEs in developing economies,” SMEs remain important not only in developing countries but also in developed and industrialised countries. In developed countries, the policies aiming to increase employment of small enterprises, observed up to now, are postponed and it has been tried to constitute some policies enabling formation and competition of small enterprises making changes in production, sale and management,” the paper observed. SMEs are said to contribute to employment and income generation and export revenues in developing countries; however, in order to tap into the potential of SMEs for development and poverty reduction, transition and developing country governments, development partners and SMEs themselves need to address a number of challenges, according to the report. These include firms transitioning into the formal sector as well as becoming competitive. Moreover it is said that at least a proportion of these nationally competitive SMEs have to achieve a level of competitiveness that will enable them to integrate into the global value chains through trade (exports and internationalisation) and investment, including linkages with FDI. Meanwhile Tokafala Enterprise Development is an initiative started by Anglo American aimed at producing globally competitive and sustainable enterprises. The programme, according Serame, is aimed at accelerating the growth of Small, Micro and Enterprises (SMMEs) by supporting and building capacity of selected Enterprise Development Institutions. The programme which started in 2014 targeted 600 micro enterprises, 44 small enterprises and 9 to 15 medium enterprises, the objective being to sustain up to 6 000 jobs and creating 400 more. A number of enterprises, including those in the retail and hospitality, information and communication, services and consultancies and many others are said to have enrolled in the programme.