Botswana SMEs struggle to penetrate export markets
Pauline Dikuelo | Friday February 8, 2019 12:48
This is as a result of promoters’ poor quality of their products, lack of entrepreneurial skills, lack of finance and inconsistency in production. For the past decades, high numbers local SMEs have failed in their first phase of operation, which is normally the first three to five years. Those that survive usually continue to operate in conditions of uncertainty due to volatile market, intense competitive rivalry, lack of marketing skills, shortage of serviced land just amongst others.
According to LEA’s 2017/2018 annual report, SMEs continue to struggle to access markets for their products, owing to a number of factors like low product and service quality, preference of imports by some markets, incapacity and inconsistency in production and absence of deliberate policy instruments or mechanisms to protect the local suppliers.
As at March 31, 2018, the Authority assisted 998 SMEs to develop business plans, 926 of which were for micro enterprises while 72 were small and medium enterprises.
Only 144 of the 998 submitted business plans were funded to the value P51.9 million. The main sources of funding for these plans were government aided funding schemes namely Citizen Entrepreneurial Development Agency, Youth Development Fund and Department of Gender Affairs. “Acquisition of funding by SMEs continues to be a challenge for SMEs as most are considered high risk especially by the private lenders,” read the report.
Though various sectors have their own definition of SMEs, usually it refers to a business that has a turnover that ranges from a pula to P10 million. Most of them are concentrated in the service and supplies industries; while a few that are in manufacturing are starting to pick momentum. In their efforts to help the SMEs to grow past infancy stage, the Authority has been capacitating these by providing them with on-site enterprise monitoring, business counseling and coaching services.
“The Authority during the year facilitated procurement and buyer seminars at various regions. These interactive sessions created a platform for the local buyers, both government and private to deliberate on market requirements, expectations, challenges and forge supply opportunities,” the report said.
During the last half of the 2017-2018 financial year, the Authority engaged in a process that sought to transform, turn around and re-position LEA as a centre of excellence that will fully develop the SME sector in Botswana. The process included a robust situational assessment of the organisation as a whole, the identification of key factors that inhibit the successful delivery of the LEA mandate as well as strategic mitigation measures.
The review covered amongst others the institution’s product and service offering, with the view align our services to the different categories of SMEs being their main customers, as well as ensuring the relevance and value addition of our interventions to a wider spectrum of SMEs in Botswana.