SMMEs for the Intensive Care Unit

| Friday July 16, 2010 00:00

Mmegi: Please explain what the LEA incubators are. How do they work?

Matome: This is an intensive care unit where we nurture an idea or a very young company to make it stronger on-site. For the last three years, we have had branches all over the country and have helped people with all sorts of interventions. We call this basic development services and we provide these to people already out there in business.

For the incubation programme, we have decided to bring companies between zero and 12 months (start-ups) onto the incubation sites. In this incubator, we provide shared services such as space (cubicles) where they come in, see how they can grow and develop themselves. We also provide them with other services such as common fax machines, meeting rooms, post office boxes, printing and typing services. These shared services are those that businesses often find expensive when they start up and build themselves.

We also provide in-house strengthening for each and every company in the incubator. We provide them with technological advice which can either be hardware such as equipment or process technology. At each of the incubators, LEA has a senior staff member installed as a technology coach who looks at both hard and software technology issues.

Apart from this, the incubators provide business development services, which include setting a path for growth of your business. We also provide them with business management strengthening interventions, which include training on ways of running a business such as marketing, accounting, costing and positioning your business.

There's also the mentoring and coaching aspect, and that's why we have incubator staff. We expect the incubatees to be in the incubation programme for between one and three years because, like anywhere else, someone has to graduate. The path of growth will show how long you have to grow so that others can also gain access to the programme.

Mmegi: What is the structure of these incubators?

Matome: The incubator programme is housed under one of the divisions within LEA. There's the incubator manager and under this, there's the technology and venture coach. This venture coach helps provide business development management interventions.

Remember that these are huge structures that need to be managed. At the incubators, we provide shared equipment. For instance, we have just spent between P1.5 million and P2 million for equipment at the leather incubator. Instead of being saddled with the cost of heavy equipment right at the beginning of their lives, these small businesses will be able to go and use this shared equipment.

Mmegi: How many incubators do you have and what is their focus?

Matome: We were initially going to have seven incubators and these were going to be two light industrial and light manufacturing. One would have been in Pilane and the other in Francistown. We were also going to have a tourism incubator, taking the form of a hotel school. We also planned to have a horticulture incubator in Selebi-Phikwe, which would have been based on a farm.

We also planned to have another horticulture incubator at Glen Valley and a leather incubator in Gaborone. On top of this, we planned to have a General Entrepreneurship Centre, the mother of all of them. However, due to the problems associated with the global recession, we had to cut back on the numbers and sizes of these incubators.

At present, we have four which are either developed or under development. Those that are finished include one in Pilane for light industrial which opened last year and the leather incubator in Gaborone whose construction was finished in May. We are applying ourselves to getting clients into this one. We expect the Francistown light industrial to be done by the end of September 2010.

The last one is Glen Valley whose construction has gone back to re-tendering. This is the third time we are tendering for it. The other incubators are general construction, but the horticulture one is about teaching people the technology of producing horticultural products at farm level under a controlled environment, which removes the vagaries of weather. It will have greenhouse, tunnel and shade house technology, which is very expensive and there are not many buildings of that nature in the country. I'm still hopeful that in our tenure here, we will see the Glen Valley incubator come on board.

Mmegi: Why do you think they are the most ideal way of training future entrepreneurs?

Matome: If you take two people, one of them giving birth in a hospital and one giving birth at home ko morakeng. With these two scenarios, where would you want your wife to have the child and why?

Having explained the ingredients that go into the incubators, the chances of that business surviving their first and second year under that intensive care from the staff are much higher when they are on-site. It is not only about survival but the chances of growing in technology, output, business model and others are much higher as well on-site. Since these are sectoral incubators, such as leather, we will be able - over the incubation period - to produce models and stars into our economy in different sectors.

Mmegi: How many people have been trained thus far under the incubator programme?

Matome: We have 13 clients in Pilane, which was the first one that we opened last year. This incubator will help us as a harbinger for the development of other incubators through the experience it has given us about the challenges of setting these structures up. The Pilane incubator is supposed to take up to 26 clients. We went around looking for people to come to the incubator even from our client base, but Batswana are very curious people.  When someone sets up a business in Serowe, they want to live there forever. We have had that problem where people don't want to change their ideas; they don't want to move away from where they are and come to the incubator.

We have four clients so far in the leather incubator in Gaborone and these people are mainly from the Gaborone area, whereas we were hoping for the dexterity from areas such as Ghantsi.  For the Francistown one, we are expecting 19 incubatees and we have already started identifying these people. One would like to see these incubatees for Francistown going into agro-processing for downstream beneficiation of the agricultural sector.

Mmegi: How are the participants for the incubators selected and what happens to them after the completion of the programme?

Matome: After we have strengthened them through the various interventions during their stay in the incubator, there's a programme that says what they will do going forward. We have to find the incubatees a place to go and operate from and also find funding for them to purchase equipment that they will hardly afford after they have left the programme. We are currently negotiating for funding with institutions such as NDB, CEDA and commercial banks.

Besides this, we also keep mentoring the former incubatees.As for identifying them, there are two methods: we identify incubates from outside our database, but once they are identified, we have to conduct our pre-test screening on them to gauge their entrepreneurial drive. Besides this, we also have a client base of 4 000 people whose level of entrepreneurship we know. Our incubator managers go around the branches looking at the portfolios held and extract those zero to 12 month organisations that quality. They have to pass the criteria to come into the LEA database.

Mmegi: There are those who have said placing start-up organisations with established entities would give them more practical experience and be a form of internship. What is your view?

Matome: The Adopt-An-SMME concept is a fantastic idea. It's something that we have tried and continue to try for our normal clients who are outside the incubator programme. Consider that all the incubators will carry less than 100 entities, we therefore need other avenues that can help in this handholding issue. The Adopt-An-SMME idea is something that we believe in. Part of our day-to-day interventions involve finding organisations where we can attach these small businesses. However, it would seem Batswana are not disposed to giving to small businesses or working with them. They don't want to be helping novices. There's an idea that the start-up business will steal their ideas. Perhaps there's a need to incentivise them beyond asking them to help for the sake of benefiting the national economy.

Mmegi: Are there any plans to expand the incubator programme further?

Matome: We are entirely financed by Government and the amount of money that the government agrees to give us will determine what we can do. What we do not like is that all the incubators are in the eastern part of the country, and that's because the original sites from Integrated Field Services that we took over from are in the east.

We would like to have incubators spread out to Maun, Ghantsi and other areas, but we are constrained by the fact that the infrastructure or sites that we were given are in the east. The funding also limits us to between 70 and 74 clients in the incubators at any given time.

However, we have an idea for short-term or rapid incubators that can beautifully merge into the long-term incubator programme. Will look at this idea, but these are expensive facilities. We hope our Memorandum of Understanding with India will help in the procurement of equipment for up to five times less the value in Botswana.

Mmegi: How does the MoU signed between Botswana and India affect the Botswana SMME sector?

Matome: We signed ten substantive points on the MoU and these are categorised into four areas. One is capacity building of staff within LEA, the general service staff but also targeted at establishing processes and procedures of how to run an incubator. The Indians started incubator programmes in 1955 and through that experience over the years, they will be able to teach us a lot. We will be able to send our staff members to India.

Another area is capacity building of the clients that we look after, which is the most important. We will be able to take our clients to India and attach them there where they will learn ethics, aggression in business and so on. The third area is technology transfer, which will help us procure cost-effective, fit-for-the-purpose machinery for our SMMEs here.  The last area involves bringing SMMEs from India and Botswana together in joint ventures and linkages. There is a lot we can learn from India and the Managing Director of the Indian SMME development parastatal will soon be coming this side to help us with that.