Company LOGO AFRICA CONGRESS OF ACCOUNTANTS PAFA event - GHANA – MAY 2013 Promoting the Growth of Small & Medium Enterprises (SME) Tshego Modise, President, BICA

Agenda 1. What is SME 2. Need to Promote SME's 3. Botswana SME's 4. Key Message to Stakeholders

What is SME What exactly an Small to Medium Enterprise is - depends on whos doing the defining Various economies have a different definition which varies Whatever be the definition – SME's play a crucial role in achieving industrial and economic development objectives of an economy

What is SME – continued... IASB defines SME's based on accountability and not on monetary limits (IFRS for SMEs applicability) European Union (EU) defines that there are three broad parameters which define SMEs: –micro-entities are companies with up to 10 employees –Small companies employ up to 50 workers –Medium-sized enterprises have up to 250 employees. "The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro."

Botswana's SME Thresholds Employment Annual Turnover in BWP Annual Turnover in USD MICRO Less than 6 workers Less than P Less than $ SMALL Less than 25 workers Between P to 1.5 Million Between $ to $ MEDIUM Less than 100 workers Between P 1.5 Million to P 5 Million Between $ to $

Need to promote SME's Successful Economy SME Large Corporates Government / NGO / Parastatals

Challenges faced by SME's Lack of Finance Technology Gaps Regulation support Record keeping Inadequate Collaboration Scarce Skills Market access Lack of importance for Branding & Marketing Financial (Cash Flow) Management

Challenges faced by SME's Various Industry Challenges Limited Business Acumen High failure rate of SME's

Getting out of Comfort zone

Synergic effects of SME's Employment Creation Diversification Skills Transfer

Botswana SME …

CEDA LEA Some Botswana Initiatives to promote SME Promoting SME's LEABOTACEDA Entrepreneurial Skill CEDA Low Cost Funding BOTA Supporting Training BOCCIM Private Sector

Botswana initiatives – continued … SMME subcommittee Public Sector committee Involvement with BOCCIM & Stakeholders Micro GAAP For entities not required to comply with IFRS Simple framework for SMME & SME's High Level Consultative Council Forum for constructive dialogue between business and Government Doing Business committee to improve Botswana ratings

Botswana Initiatives - continued Political will Regulatory support Aggressive leadership Continuous learning Delivering Set objectives Good outcome Ongoing review Creative and flowing ideas Conducive Environment

SMEs: key messages to government A thriving SME sector is key to economic growth and job creation An enabling regulatory requirement is critical – particularly SME registration and monitoring Governments can engage (incentives) to address the need for start-up funds Governments play an essential role in capacity building, e.g. –Promoting the need for more entrepreneurs and SMEs –Setting up agencies for advice and training on starting and operating SMEs

SMEs: key messages to business Localizing value creation through SME engagement is a key contribution to economic development wherever big business operates Leadership from the top is key to success - both strategically and operationally Facilitating access to finance is critical Consider partnering across segments to facilitate SME development and access to finance Business planning skills, incl. training in financial management, are crucial Capacity building help is essential

Time is ticking….. SME's need to overcome the hurdles

Acknowledgement Policy on Small Medium and Micro enterprises in Botswana – Government Paper No 1 of 1999 Transforming Africa through embracing good governance principles – by George B Partridge The Role of Government in promoting investments to reduce poverty in Africa – Ben Kaluwa Botswana and sustainable development: Drawing policy strength from experiences – Laurence Clarke 2008 Employment – creating through SME's in Sub Saharan Africa : Emerging insights and challenges from Botswana – Thando D Gwebo LEA Web site ( CEDA Web site ( IFRS for SME's Performance and Competitiveness of Small & Medium sized manufacturing enterprises in Botswana Promoting SME's for development - OECD