Smart Paper taps into thermal paper industry
Botswana, a mineral- dependent country, imports virtually everything. Most imports, especially foodstuffs, come from South Africa, Southern Africa’s economic powerhouse.
Over the years, the country has struggled to tame its high import bill despite several initiatives and programmes by government to help locals with capacity to bolster domestic supply. One such product, which, surprisingly still forms part of Botswana’s imports, is thermal paper ( paper rolls).
Thermal paper, is commonly used in retail tills, Automated Teller Machines ( ATMs), swiping machines, electronic airtime, permits in mines, among others. According to available data, the country currently imports 1.5 million products ( paper rolls) on an annual basis! In fact, Botswana Guardian, has unearthed information which states that the sector is valued at P80 million. The figure suggests the sub- sector is quite strong, and for it to be largely dominated by imports is clearly an abnormally. After perusing the country import bill facts ( which include products and value), two enterprising Batswana, Loraine and Odirile Kenny took bold decision to start researching further the sector. The ultimate goal, from the start was to eventually invest in the business. “The idea came about in November 2020,” disclosed Executive Chairman of Smart Paper, Odirile Kenny nostalgically. He was speaking on the sidelines of the recently held Global Expo, where the company was exhibiting at the premier expo for the very first time.
He told Botswana Guardian that, while the country is importing a huge chunk of paper rolls ( including toilet paper) annually, it was worthwhile to choose a specific pater ( thermal paper) that they manufacture. “We wanted a market that is untapped,” said Kenny, adding that, the advantage of thermal paper is that, they are Business 2 Business ( B2B) kind of products. The other fact that they also say influenced them to enter into the thermal paper manufacturing business is that, ‘ every second’, thousands of money transactions take place’ which are subsequently accompanied by receipts or proof of purchase.
“Where there is money involved, there is always proof of purchase and that is where we are playing,” said Kenny as a matter of fact. In addition, any transaction in retail stores is backed by receipts in whatever form. After satisfying themselves with all facts that surround the thermal paper manufacturing business, the couple did not waste time and finalised a business plan which was subsequently submitted to Citizen Entrepreneurial Development Agency ( CEDA) in Selibe Phikwe.
“It took less than a week before we were called back by CEDA officials to come for an interview which eventually led to us being funded,” remembered Kenny. He explained, they targeted Selibe Phikwe since it housed one of the country’s special economic zones- SPEDU. The latter among others offers incentives to companies which establish in the zone. These incentives include reduced tax, government off- take, input costs, among others.
After getting approval for funding, Smart Paper immediately started the long and rigorous process of procuring equipment from China. “It was not an easy task. The process took several months and by the time the equipment arrived, there was no warehouse to rent in Selibe Phikwe. Fortunately, CEDA allowed us to look for a warehouse somewhere in the north, and we found one in Francistown,” he stated. “The company implemented its ground operations on the 22nd of August 2022, where the assembly line was installed and commissioned within 8 working days. The entire month of September was dedicated to operational testing of the production line and employee training, to ensure and evaluate if both production arms can perform optimally. The implementation process was a success in that after
all desired series of product lines were delivered within specification, and a trend of continuous improvement in operations and product recovery was observed,” stated the company profile.
Eventually, production started in October 2022. With production now up and running, the hard work of looking for clients started. The company is at advance stages of concluding deals with some of the country’s major commercial banks. “The fact that we are the only company that manufactures thermal paper in Botswana, and actually the third after South Africa and Egypt in the whole continent, is a plus for us,” said Kenny. The company is also talking to Botswana Power Corporation ( BPC), which also consumes a sizeable amount of thermal paper, mainly for their electricity receipts.
Nonetheless, Smart Paper is also dealing with stiff competition from established players, who buy from outside and resell at ‘ relatively’ cheaper prices. The company also competes with South Africa and Egypt manufacturers, in addition to China and India. “These players enjoy great economies of scale when purchasing raw materials, they are servicing large markets and have buying power. As first movers, they can therefore afford to release large volumes of products at cheaper prices than followers like Smart Paper entering the market,” said a company document.
According to our company’s research, dumping within the sector is also rife. “The dumping is characterized by low quality products, which are out of dimension, designed by manufactures to cut production costs and shortchange the consumer on their product value. In the same vein, there are distributors and independent stores that have monopolized and closed off the supply and value chains; making it difficult to enter the market or compete fairly. These factors have therefore impeded our company’s entry in the market, “said Smart Paper.
The company has not folded its arms as it is dealing with market challenges head on.
It is currently working with Local Enterprise Authority( LEA) which is helping them with market accessibility. Botswana Investment and Trade Centre is assisting with promotion. BITC is expected to play a major role when the company start exporting its products. The company is also hoping to benefit from the Economic Inclusion law which dictates that, preference should be given to citizen companies when procuring. “Smart Paper is not only a citizen company, it is also woman and youth- led,” he disclosed.
The company currently employs ten staff members. If the company clinches one or two major deals in the short term, its staff base is likely to increase to 40.
The world over, economies are going digital, which means less and less paper will be used in transactions in future. Kenny is well aware of this technological advancement. He told Botswana Guardian that, by the time the country becomes 100 percent paperless, they will have designed products which will diversify their revenue streams to deal with innovative times.
The company plans to sell their produce to SADC countries such as Zambia, Namibia, Malawi and Zimbabwe ‘ when the right time comes’.