LEA aims to increase SMMEs GDP contribution to 17%

Following the launch of the ambitious government’s Mindset Change initiative by President Dr Mokgweetsi Masisi sometime this year, a number of state-owned enterprises (SOEs) and government departments are looking to change the way they have been going about their business. In this interview, Staff Writer Sharon Mathala speaks to Local Enterprise Authority (LEA) acting CEO, Godfrey Molefe, to understand how the organisation plans to improve outcomes

Business Monitor: How is LEA aligning to the government’s Mindset change initiative? Molefe: To align to government’s Mindset Change initiative, the Authority has taken a stance to first create awareness amongst the LEA personnel with LEA Human Capital Division conducting awareness training for LEA staff. So far, the LEA Executive has been trained on mindset change and the plan is to extend it to all staff. In addition, the Human Capital Division will develop an internal campaign on values driven behavioural change.

BusinessMonitor: What are the projects being undertaken by LEA and how will they impact the economies and communities in villages around the country?

Molefe: There are several community and operational projects that LEA is undertaking. There is a Bokaa Textile Incubator, which LEA decided to build in response to government’s decision to ban import of uniforms. The incubator is intended to capacitate deserving informal and formal textile enterprises through provision of shared advanced machinery and equipment with latest design and production technology intended to improve quality and output.

The Gantsi Small Stock Incubator, which is set to start operations during this financial, aims to leverage on the passion and resilience of livestock farmers in and around Gantsi to create a commercial platform through clustering and creation of a Small Stock Centre of Excellence. The envisaged Small Stock Centre of Excellence is part of the small stock value chain and will feed into the Tsabong Small Stock Abattoir, thereby promoting access to markets. Letsholathebe Horticulture Project: The Central District identified an opportunity to empower the community of Letsholathebe through the establishment of a horticultural business. The project mainly targets the poverty eradication beneficiaries of Letsholathebe. The identified land measures 3.5ha and the portion of one hectar has been debushed already. All the production area has been fenced. The proposed production system will encompass the Open Field, Tunnels and Nethouse system to support the continuous production. The business will eventually improve the economic benefits of the village by creating employment, contribution to reduction of imports, food security and the diversification of the economy.

BusinessMonitor: What is the current status of SMMEs in the country and how do you measure them?

Molefe: The SMME sector contribution to the national GDP stood at 14.3% (P35 billion) as at the end of 2019. LEA, in collaboration with SMME ecosystem, aims to increase SMME contribution to GDP to 17% (P48.1 billion) by year 2026. This will be achieved by promoting entrepreneurship and SMME development through targeted interventions and initiatives offered to entrepreneurs and enterprises to impact several economic indicators. LEA measures SMMEs performance through turnover, number of jobs created and sustained, value of exports, value of substituted imports, value of markets secured and supplied because of LEA targeted interventions. LEA also ensures that LEA registered SMMEs are sustainable and therefore LEA evaluates enterprises’ survival rate. For the last five years, total turnover for LEA mentored SMMEs is P3.2 billion, P151 million import substitution, P671 million value of market linkages and 6,389 total jobs created and sustained. LEA targets to achieve P2.4 billion SMME turnover by March 2024, sustain 8,925 and create 2,200 jobs. As at August 2023; 1,642 enterprises employ 9,385 people which LEA aims to sustain and increase.

BusinessMonitor: Which sectors need attention for growth and why and which subsectors are thriving and please state the reasons?

Molefe: The most promising sector with potential to grow is the manufacturing sector due to government initiatives and policy interventions. The development of value chains, import restrictions, local procurement, and citizen inclusion instruments offer an enabling environment that backs this sector. Though LEA portfolio is currently dominated by the services sector (34%), followed by manufacturing (31%), agriculture (23%) and tourism (12%) manufacturing offers a great opportunity for entrepreneurs to venture into looking at the opportunities that government policies have created. The services sector is currently thriving as it cuts across all sectors. The other sector that offers opportunity for growth is agriculture as it scored lower than tourism in previous years. That rating has since changed, placing agriculture as the third contributor to LEA portfolio following government’s decision to place a ban on import of selected horticulture produce.

BusinessMonitor: What are the major challenges that your clients, SMMEs, face and how is LEA addressing them?

Molefe: SMMEs face a myriad of challenges with market access and limited access and affordability to funding remain prevalent.

Through our Market Access Division, LEA facilitates market access for SMMEs, through fostering linkages between producers and buyers of various products and services. Various platforms created exposure of SMME goods and services, establishing supply opportunities further strengthening their products’ acceptance in the marketplace.

These platforms included buyer-seller fora, trade exhibitions, district shows and listings in buyers’ databases. LEA facilitated an outstanding P419 million worth of market linkages for its registered SMMEs during 2022-2023, further stimulating more production to supply government, the retail sector, and the hospitality industry amongst others.

To access funding, LEA continues to assist enterprises to develop bankable business proposals for funding by CEDA, NDB, YDF, commercial banks and other funding institutions.

BusinessMonitor: Speak to your plans in advocating and advancing the SMME sector.

Molefe: Our advocacy and lobbying for policy reforms and improved business environment will intensify into the new year, with more focus on removal of barriers to trade and introduction of instruments that will enhance business operation; as well as a cohesive SMME ecosystem and coordinated efforts to propel the SMME sector forward through the support of our ministry, the Ministry of Entrepreneurship, and co-creation with our sister SOEs, CEDA, BAMB and BMC.