SMMEs support 33% of jobs, study says
The country’s Small, Medium, and Micro Enterprises (SMMEs) contribute 14% to the Gross Domestic Product (GDP) and are responsible for about 33% of the country’s employment, a new study by the Local Enterprise Authority (LEA) indicates.
The informal sector contributes about six percent to the economy, while the formal contributes eight percent, the study done in collaboration with the Botswana Institute of Development Policy Analysis (BIDPA) says.
The research, unveiled by the two organisations this week, also indicates that informal SMMEs are mostly owned by females, who tend to be less educated and relatively youthful.
Though various countries have their own definitions, SMMEs in Botswana usually refer to businesses that have a turnover ranging below P15 million. Most of them are concentrated in the service and supply industries while a few are in manufacturing, a sector that researchers found is beginning to pick up. According to a profiling of the businesses, the SMME sector is dominated by tuckshops and street vendors, followed by farm products, personal services and products, food catering and events decoration and ICT support services.
The study further found that tuckshops are dominated by those aged between 35 and 44 years and those with Junior Certificate level of education.
Speaking during LEA’s first Entrepreneurship and SMME Development in Botswana symposium, the Authority’s Chief Digital Officer, Onkabetse Moatlhodi, said the contribution of SMMEs to economic indicators in developing countries such as Botswana is contested on account of lack of reliable data on the sector.
“We embarked on the study to get more insight,” he said. “We wanted baseline information for LEA’s next strategic planning and alignment of definitions across government.
“We also want to develop policies that address gaps in financial and market access.”
Moatlhodi said LEA from the past realised that lack of data collection around SMMEs consequently affects planning, programming, interventions, incentives, and lobbying for the sector.
He said LEA’s achievement of its mandate hinges on the organisation having access to the most reliable and current information on the SMME landscape in Botswana for it to be responsive to the needs and challenges that may impact on the achievement of the mandate.
Meanwhile the study shows that SMMEs continue to face challenges including limited access to finance, regulatory hurdles, especially relating to trade licensing, unfavourable government procurement processes, inadequate business skills and experience, limited access to markets, limited networking and advocacy, lack of commercial land, and uncoordinated business development service providers.