The dichotomy within the institutional Framework of SMME development in Botswana

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The dichotomy within the institutional Framework
of SMME development in Botswana

• 23 October2008

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SMEs make up 95 of all companies in Botswana
Annual turnover Employment
Large gt P5m gt 100
Medium 1.5m-5m 25 100
Small 60k-1.5m 6 25
Micro lt 60k lt 6
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SMEs contribute 42 to total GDP.
95 SMMEs
5 (Large Enterprise)
58 (Large Enterprises)
42 (SMMEs)
Contribution to GDP
Firms
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Institutional Framework
Cross Cutting Mandate
SME Development
Large Enterprises Development

• Botswana National Productivity Centre (BNPC)
• Botswana Bureau of Standards (BOBS)
• National Development Bank (NDB)
• Botswana Technology Centre (BOTEC)
• Botswana Tourism Board (BTB)

• Botswana Development Corporation (BDC)
• International Financial Services Centre (IFSC)
• Botswana Export Development and Investment
  Authority (BEDIA)

• Local Enterprise Authority (LEA)
• Citizen Entrepreneurial Development Agency (CEDA)
• Rural Industries Promotions Company (RIPCO)

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Current SMME Participatory map Botswana
Advocacy BOCCIM SEPROT
Ministry of Trade and Industry Ministry of
Finance and Development Planning Ministry of
Agriculture Ministry of Labour and Home
Affairs Ministry of Communications Science and
technology Ministry of Local Government Ministry
of Education
Policy Formulation legislation
Implementing policy Finance Credit Accreditations
Standards Training Technology Investment
CEDA, LEA, BECI, NDB, BDC, BEDIA,BNYC,BOBS,
BNPC, BOTEC,NFRTC, RIPCO (B), UNIVERSITY, JAB,
BOTA
Venture Capital,
The Business Clinic
WFHB
Consultants
BIDPA
Enterprise Botswana
Support
Infrastructure (space provision)
District and town councils
SMME
Beneficiary
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Local Enterprise Authority

• LEA was established in 2004 with the following
  broad functions
• provide business development services e.g.
  screening, business planning facilitation,
  training and mentoring.
• identify business opportunities for existing
  future SMMEs
• promote domestic and international linkages,
  especially between SMMEs and Government, large
  business entities and other SMMEs
• Encourage exploitation of government large firm
  procurement opportunities
• facilitate access to finance, standards via
  competitive improvement programs e.t.c,
  infrastructure, and changes in regulations
• facilitate technology adoption diffusion
• promote general entrepreneurship and SMME
  awareness.

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Deliverables of LEA

• foster citizen entrepreneurship and empowerment,
• achieve economic diversification,
• promote exports,
• encourage the development of a competitive and
  sustainable SMME community,
• create sustainable employment opportunities,
• promote the development of vertical integration
  and horizontal linkages between SMMEs and the
  primary industries in agriculture, mining and
  tourism and
• improve efficiency in the delivery of services
  to businesses.

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Deliverables

• The deliverables of LEA are broad, cross cutting
  and demand a wide implementation span.
• Based on a comparison between the expected
  deliverables and the functions there is a
  disequilibrium in the continuum of implementation
  for the achievement of results.
• The challenge therefore is, how do we structure
  the institutional framework within Botswana to
  bring equilibrium and also ensure effective
  implementation of SMME development strategies?.
  
• LEA is charged with the overall development of
  the SMME sector in Botswana and it is housed in
  the Ministry of Trade and Industry.
• In the implementation of its mandate it is
  expected to collaborate with other key players as
  shown in the participatory map of SMME in
  Botswana.
• These key players are located in different
  Ministries guided by their own statutory
  obligations and mandates.

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Current Challenges

• While this may appear an acceptable institutional
  scenario, this poses considerable challenges,
  these being
• Lack of coherence in implementing SMME specific
  interventions.
• Inability to prioritise targets and strategic
  focus
• Inefficient and ineffective service delivery
• lack of a national coordinating mechanism in the
  development of the SMME sector.
• Weak institutional relations and synergies
  resulting in silo effect.
• Narrow policy framework

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A comprehensive integrated approach is required
Training
Finance
Product Devt/ Technology
BOTA/UB/LEA
Marketing
CEDA/NDB/LEA
Advocacy
RIPCO/BOTEC/LEA
BTB/BEDIA/LEA
BOCCIM/BEMA/LEA
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Chile SMME Participatory Map
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Chile Experience

• In Chile the SMME Agenda is coordinated by the
  Chile Economic Development Agency (CORFO.)
• It is responsible for policy advice, coordination
  and implementation.
• CORFO develops and implements SMME development
  strategies and coordinates activities of
  institutions who play a role in SMME development
  in Chile.
• CORFO also serves as a good source of important
  information and the main data point for SMMEs.
• This well coordinated and focused delivery
  framework and strategy has resulted in Chile
  achieving a high rating in terms of
  entrepreneurship and SMME development.

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Thailand SME Participatory Map
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Thailand and other Countries experience

• In Thailand the Office of Small and Medium
  Enterprises Promotion (OSMEP) is responsible
  policy development, coordination and the
  development of strategies for SMME promotion and
  development.
• While not an implementing agency it coordinates
  all the SMME implementing agencies.
• The Small Business Administration in the US plays
  an implementing, coordinating and advocacy role.

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LEA suggested SMME Participatory map for Botswana
Ministry of Trade and Industry Ministry of
Finance and Development training Ministry of
Agriculture Ministry of Labour and Home
Affairs Ministry of Communication Science and
technology Ministry of Local Government
Policy Formulation legislation
Implementing policy Finance Credit Accreditations
Standards Training Technology Investment
LEA (Implement, Coordinate and Ensure Delivery
of SMME Development)
Advocacy BOCCIM BMO Associations SEPROT
CEDA, BECI, NDB, BDC, BEDIA,BNYC,BOBS, BNPC,
BOTEC,NFRTC, RIPCO (B), UNIVERSITY, JAB, BOTA
Venture Capital,
The Business Clinic
WFHB
Consul tants
BIDPA
Enterprise Botswana
Support
District and town councils
Infrastructure (space provision)
SMME
Beneficiary
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Way forward

• Our experience on SMME development in Botswana is
  that a lack of well coordinated SMME development
  agenda makes it very difficult to efficiently and
  effectively serve the SMMEs.
• Countries that have a well coordinated SMME
  development Framework like Chile, Thailand,
  Taiwan, Netherlands and South Korea consistently
  achieve higher TEA and FEA in the Global
  Entrepreneurship Monitor (GEM) reports.
• We believe that SMMEs can be assisted more
  effectively through a one-stop-authority, of a
  similar nature to OSMEP in Thailand and CORFO in
  Chile. This Authority should be responsible for
  SMME development strategies, implementation and
  coordination of all SMME development activities
  in the Country. A streamlined and well
  coordinated framework will make it easier to
  Monitor and evaluate performance and
  effectiveness of all institutions and programmes.
• We are currently proposing changes of similar
  nature to our SMME participatory map.
• This will also make it easier to mainstream
  entrepreneurship and SMME issues within the
  government policies.

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• Thank You