Capital investment key for SMMES

Baitshepi Sekgweng
ASMMEB CHAIRPERSON: Sello Motseta

Association of Small, Medium and Micro Enterprise Business in Botswana(ASMMEB) Chairperson, Sello Motseta, has expressed discomfort at the way in which commercial banks are not creating new instruments to enable local smallholder farmers to take advantage of available opportunities in the horticultural value chain.

ASMMEB is an organisation created by small business drivers with the aim to provide advocacy, develop local and international markets for members and providing information services such as regular updates on insights on market trends and available opportunities in the sector to SMMEs.

In 2022, Botswana took a firm decision to halt imports of certain vegetable crops from South Africa including tomatoes, carrots, beetroots, potatoes, cabbage, lettuce, garlic, onions, ginger, turmeric, chilli peppers, butternut, watermelon, sweet peppers, green mealies and fresh herbs.

While the decision was hailed as a giant step towards achieving food self sufficiency and security, it has caused serious supply challenges over the past 17 months with dire shortages prevalent at some points.

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“It is disconcerting to see that the various commercial banks are not creating new instruments to enable local smallholder farmers to take advantage of these opportunities. It is very easy to get an unsecured personal loan to buy a car and other movables but very difficult to get funding to start a business. It encourages a culture of dependency and does very little to create sustainable jobs. Locally, the most common problems which small businesses face are lack of capital, a narrow client base and insufficient marketing strategies,” said Motseta.

With this import ban providing opportunities for local producers, results have been visible with imports of fruits and vegetables declining by 50 percent in March 2022. In August 2022 it was reported that Botswana was now able to meet 70 and 74 percent of its local demand for tomatoes and potatoes respectively.

Overall, the production of vegetables locally increased from 36, 244 tonnes to 45, 221 tonnes as a result of the importation restrictions, with the results also visible in the import bill declining from P375.6 million in 2021 to P176.9 million in 2022.

“It shows enormous room for growth especially if market access issues can be addressed. Among the challenges faced by the SMMEs are lack of finance, the prohibitive costs of acquiring and effectively utilizing appropriate technology and limited managerial skills as well as little business acumen. Market challenges include regulatory constraints in certain sectors that have little or no public protection function, excessive red tape relating to licenses and permits, limited access to finance, expensive and poor performing internet, poor customer services and low worker productivity, “he said.

According to a study by International Trade Centre, SMMEs contribute 35 percent towards the gross domestic product in Botswana, with the significant share of the working population in the private sector coming from this SMMEs.

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