As the manufacturing industry sets Botswana on a path towards becoming an export led economy, the mining sector has provided Botswana Exporters and Manufacturers Association(BEMA) with a market to explore and benefit from.
The importance of manufacturing as a uniquely powerful economic force cannot be overlooked considering its ability to create sustainable jobs.
Currently, the manufacturing sector contributes the 5th largest share of jobs at 7.1 percent at local level from areas of leather work, chemicals, pharmaceuticals, beverages, food processing, fashion and fabrics and metal work.
With the mining sector having realised the need to push the agenda for import substitution driven by local manufacturing, the mining industry reviewed its position and chose to focus its procurement internally to assist in the development of the economy and the industry which is still at an infancy stage,
Speaking at the just ended Local Manufacturing summit in Gaborone, Head of Supply Chain at Debswana- Philip Lisindi, said the rough diamond producer projects to spend P15 billion in repair, maintenance and consumable procurement. Debswana is the biggest procurement spender after government, therefore their financial power provides massive opportunities for local manufacturing in the repair & maintenance, consumables and other mining inputs.
“These are hydraulic equipment, mobile and fixed plants equipment, machining and refurbishment amongst others, let’s tap into these opportunities. We have production targets as an entity and we shouldn’t compromise on quality and our targets so we need our suppliers to be up to standards” said Lisindi emphasizing Debswana’s readiness to engage in local procurement and value chain development.
Another mine, in Morupule Coal Mine has been playing a key role in the empowerment of local citizen owned companies through its citizen economic empowerment programme. In 2022, the company’s spend on its economic empowerment stood at P388 million with expectation that it will increase further.
Further, MCM has collaborated with local financing institutions such as Access Bank and Letshego for access to funding for its citizen suppliers with the partnerships amounting to over P3 billion.
According to a report from Statistics Botswana, the manufacturing industry recorded a rise of 2.3 percent during the first quarter of 2023. The growth in the industry is attributed mainly to the favourable growth in the sub industries of dairy products, diamond cutting and polishing and manufacturing of beverages and tobacco. Further, Macro Trends indicate that Botswana’s manufacturing output increased by 11.6 percent from $0.98 billion in 2021 to $1.09 billion in 2022.
While the industry seeks to grow and contribute immensely to the economy, it has emerged that the main challenge for manufacturers is lack of finances to boost operations. Therefore in order to encourage investment, economic diversification, and influence ways that will help local manufacturers reduce dependency on imports, there have been calls for facilitation of access to finances.
For her part BEMA Chief Executive Officer Mmantlha Sankoloba has called for financial support and inclusion for the manufacturing sector especially for small micro and medium enterprises (SMMEs). According to Sankoloba, availability of finances is key as it will unlock opportunities for growth among local manufacturers.
“Local procurement has increased from our side as most of locally manufactured goods are acquired. Statistics show that employment from this sector stood at 10.2 percent in 2010 but it has since gone down to 7 percent in 2023 which shows there is room for improvement as we expand our value chains. As we forge forward we seek that there should be facilitation of easy access to finances more especially for the small players in the industry. We face difficulties of obtaining loans from commercial banks due to high interest rates. We propose for a dedicated fund that will provide flexible financing options for this sector,” said Sankoloba.