Expert Group Meeting (EGM)-CAMI October 2010, (Ethiopia)

(Botswana’s Economic Performance):  Stable democratic system, and market-led economy that promotes private enterprise  Sound macroeconomic policy management with over 50% diamond export revenues from the mineral sector.  High average GDP growth, andsustained growth in social and physical infrastructure.  Govt’s consistent efforts to reduce mineral dependence through industrial economic diversification. 2

(Investment climate):  Political stability  Prudent macroeconomic management, and free repatriation of profits for non-citizen companies  Good labour relations  Relatively low crime; and  Independent and competent institutions to resolve disputes and enforce the rule of law. 3

(Industrial Development Policy of Botswana):  Industrial Dev. Policy of 1998 focuses on export oriented production in view of the changed global environment and international competition.  Promotion of sectors with relative advantage, and locally available resources for domestic and export production.  Setting up of down stream and component industries through value chain processing.  Facilitate creation of service and small scale manufacturing to support the competitive export sector. 4

 SMEs are vital in achieving industrial and economic development objectives.  Development of this sector contributes to poverty alleviation, employment creation and generation of potential entrepreneurs.  It offers linkage development to large industries.  Supports the rural economy in providing income generating activities.  Enable marginalised groups such as the disabled, youth, and female-headed households to meet basic needs in the informal sector. 5

 SMEs require a favourable environment to prosper andexpand to meet challenges of the competitive global economy.  To reach full potential as an ‘engine of growth’, they need forms of support interventions.  There is need to put in place a policy framework in support of the sector’s development.  Ministry of Trade & Industry is the key institution mandated to lead in SME development. 6

( Before Development of the SME policy):  Botswana had in place targeted financial support and advisory programmes to support SMEs.  The programmes were uncordinated, due to lack of policy and institutional framework that time.  Although no comprehensive policy on SMMEs was in place until 1999, most programmes supporting industrial SMEs were initially introduced by Non- Governmental Organizations(NGOs). 7

(Before Development of the SME policy):  Several policies and programmes that assisted SMMEs established over the years were set up more in reaction to specific problems encountered, rather than on the basis of a comprehensive policy framework.  In 1974, NGOs initiated Integrated business support programmes and donor finance.  Skill development through vocational training and education was at a basic level.  There was a prevailing misconception that provision of financial support was the solution to SMME problems as it created a dependency syndrome amongst SMMEs towards government funding. 8

 Establishment of the Small, Medium and Micro Enterprise Policy 1999, proposed a policy framework.  The Small Business Act was promulgated to fastrack the institutional reform process in which;  To achieve efficiency, Government would play a facilitator role of policy formulation and monitoring and allow programme implementation to autonomous agencies.  Policy formulation and programme implementation, all previously performed by Government are separated. 9

ItemSize categoryEmployment levels Annual Turnover in (Botswana Pula) In US$ Dollar (Equivalent) 1.Micro Enterprise Less than 6 workers Less than P60 000US$ Small Enterprise Less than 25 workers Between P and P Between US $ and US$ Medium Enterprise Less than 100 workers Between P and P Between US $ and US $

 The setting up of appropriate institutional framework to monitor the policy implementation process.  Ensure that appropriate regulatory environment which does not stifle SME growth is in place.  Consolidate efforts forentrepreneurship development and training of SMEs.  Relevant policies should incorporate technological support as key component for SME development.  Market development should include provision of information and creation of market opportunities.  Access to finance was found crucial for the sector. 11

(After Development of the SME policy):  Govt reserved some small scale industrial economic activities with low technology for citizen participation.  Recent decentralized licensing of SMEs deregulated and simplified processes to do business by taking services to the people.  Entrepreneurship development was hived-off to an autonomous body.  Botswana Bureau of Standards BOBS launched the SME programme to implement Quality Management System in  12

(After Development of the SME policy):  The Economic Diversification Drive (EDD) will Strengthen implementation of the Local Procurement Programme  New Policy on Science and technology Development will drive SME technological development.  Pilot cluster development initiatives focus on building capacity for the garment sector.  More consultation between private sector and government on the welfare of SMEs. 13

Government provides good support for SMEs with less impact:  This is due to lack of coordination, focus leading to overlaps and duplicated effort with limited finance and manpower resources.  Limited coordination with Government Departments and other stakeholders in SME related issues.  Limited access to productive resources such as serviced land, factory shells, modern management and financial resources.  The high cost of utilities constrains SMEs, given their low profit making capacity, most fail to survive.  Weak SME sector due to lack of business culture and unfriendly environment for its growth. 14

 Need for close collaboration amongst SME business promotion service providers for more impact.  Regional based promotion of entrepreneurs, to tap on differences in resource base and skills across regions.  Collaboration between industry, Academia and Government to train to the needs of the industry.  SME related policies should be harmonized, coordinated and be focused.  The need for strong private sector SME sectoral Associations to assist Government in policy reforms. 15

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