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The SMME Policy Task Force of Botswana
The Task Force was established by the Minister of Commerce and Industry in May 1997 "to comprehensively address SMME issues and steer the overall development of an SMME policy". At the time of presenting this paper, the Task Force has not yet formulated its proposals, but three aspects of the Task Force's work are worthy of comment:
- the terms of reference,
- the membership of the Task Force, and
- the process of consultation which is being undertaken.
The Terms of Reference
A copy of the terms of reference is attached to this paper, from which it will be seen that the terms of reference are very broad and specifically include issues that are sometimes overlooked in shaping SMME policy such as the role of the education system at all levels, and the potential for "privatisation and contracting out of Government support services, including those for SMMEs ...". The Task Force is required to address whether separate policies and support programmes may be necessary for sub-sections of the SMME community such as micro businesses and/or rural based businesses.
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Membership of the Task Force
Although it has been emphasised that persons appointed to the Task Force are appointed in their individual capacity rather than as representatives of any organization or interest group, it is interesting to note that the membership (of 16) breaks down as follows:
- 9 are employed in the private sector, three are employed in parastatals (the Central Bank and the University), and four are employed by Government,
- 4 are women and 12 are men.
The Task Force has set up three sub-committees, to examine and make proposals in the following critical areas:
- access to finance, and business opportunities,
- entrepreneurship development and training, and
- policy and regulatory framework.
Each member of the Task Force has joined one or more of these sub-committees, and representatives of relevant stakeholders have been invited to join these subcommittees. This process has resulted in an additional 15-20 persons being invited to participate in the process of policy development (most of these additional persons are representatives of NG0s).
The Process of Consultation
As indicated by the previous section, some 31-36 persons are involved to a greater or lesser extent in developing the policy. In order to extend further the process of consulting with relevant stakeholders, the Task Force has:
- through newspaper advertisements invited the public to make written submissions on any aspect of the matters being considered by the Task Force;
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- met with Members of Parliament to invite their views;
- embarked on a series of consultative visits to the major villages and urban centres in order to hear the views of entrepreneurs and others concerned with SMME development;
- decided to hold a national consultative conference with relevant stakeholders to consider the draft policy before it is presented to the Minister.
Friedrich Ebert Foundation is supporting the work of the Task Force in three main ways:
- by providing the services of a national consultant to support the work of the Task Force by producing working papers and writing up the draft and final reports;
- by providing the services of an international consultant to comment upon the Task Force's draft report from a regional perspective;
- by facilitating certain consultative processes such as the national conference with stakeholders to consider the draft report of the Task Force, and the holding of a joint seminar between the Task Force and the Botswana Association of Local Authorities (BALA) on local economic development.
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Terms of Reference for a Task Force on Small Medium and Micro Enterprises in Botswana
- Economic: At the current stage of development in Botswana, the SMME sector (which includes the informal sector) has a number of basic characteristics. It has a very low level of accumulated private savings, and consequently a low accumulation of capital on which to base further growth and expansion. Most potential entrepreneurs thus find it difficult to raise the level of contribution that the fiduciary obligations of financial institutions require of them. The provision of loan and equity capital for the SMME sector is thus a basic issue to be addressed. In addition, most SMME entrepreneurs have little exposure to modern technology and the way in which it can improve their operations.
- Social and Educational: The level of skills and education among the SMME community is limited. While a reasonable level of basic literacy is beginning to prevail, the range of basic management skills required to operate even a small business is not possessed by many business owners. In addition many potential small entrepreneurs bring values and motivations to a small business operation that reflect a way of life that does not place priority on the use of time or a rigorously disciplined approach to work habits. Improving the skill levels and changing
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attitudes and values for small entrepreneurs is thus a major requirement for any approach to developing the SMME sector.
- Political: A small business community never has the same geographic distribution through a society as larger business enterprises. The latter have particular requirements for communications and location that do not apply in the same manner to small business. Small business tend to be spread more evenly through rural areas and small villages as well as through the larger urban centres. They thus raise issues concerning the ability and cost of administering and monitoring programmes and support services for them. They affect the migration of labour between rural and urban areas in different ways than urban based large industries, and thus raise different issues for social programmes and political representation. All of these factors are relevant to the development of an SMME policy.
- Objectives of a SMME Programme: By their very nature, SMME programmes and support services impact very closely on social issues related to the distribution of income and poverty levels. As a result, legitimate social objectives of income support and poverty alleviation can become intimately entwined with industrial development and long-term competitiveness objectives of industrial policy in programmes and policies for the SMME sector. Although there is a range over which the objectives of both social and industrial competitiveness can be met simultaneously, it is essential for the effective design and implementation of an SMME policy that the primary objective for each programme be clearly specified. It will be a first charge on the Task Force to clarify this issue.
- The SMME Universe: The SMME universe is extremely diverse and merges quickly into large business at one end and into mere household activities at the other. It will be essential to place some delineations around this universe and to set out the main characteristics of the entities within it, taking into account the sectors in which they operate. Only by defining both the size and
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the character of the SMME problems can estimates be made of the amount and the kind of assistance that will be required, and the way in which it can most effectively be delivered.
Membership of the Task Force
- The membership of the Task Force will be drawn from all sectors of the Botswana economy, including representation from those involved in financing, providing support services and training to the business community, from Non-Government organizations and from the small business community itself.
- The Chairmanship of the Task Force will be drawn from the private sector.
- Sub-Task Groups may be organized as needed, with Chairpersons to be appointed from the membership of the main Task Force.
- The Ministry of Commerce and Industry will provide the Secretariat.
Scope of Work and Terms of Reference
- The Task Force will perform a literature search for all relevant reports on SMME issues, with special emphasis on those relating to the Southern African Region and Botswana, and shall take into consideration the experience and conclusions of those reports.
- The Task Force will address the following issues, inter alia.
- The scope and definition of the SMME sector in Botswana.
- The definition of the primary objective of an SMME programme or each sub programme, that is, whether the
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programme is to produce commercially and financially viable firms or to distribute employment and income to a wider range of Batswana.
- Examine the current provision of support for SMME's to identify gaps in the support structure, and to identify the priorities for filling these gaps.
- Assess whether the SMME universe is such that separate policies and support programmes may be necessary, with differing conditions, for sub-sections of the universe such as micro businesses and/or rural based businesses.
- Address the need for credit based essentially on commercial and financial viability criteria, its administration, terms, delivery, monitoring and the nature of guarantees required to make it available.
- Address the need for support for training and developing entrepreneurial skills and attitudes, the administration and monitoring responsibilities thereof and sources of funding.
- Address the need for a more integrative approach to SMME development and exploit the potential for creating more effective linkages between all those involved in SMME support, including the degree to which the provision of credit should be conditional upon training activities.
- Address and make specific recommendations on the potential role for a national support structure, and the nature of the institutional structure necessary and appropriate to implement an SMME programme, including how a collaborative approach involving local authorities, NGO's and Business Assistance Centres might be implemented to
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ensure the effective delivery of new policies and programmes.
- Separately address issues (e), (f), (g) and (h) as they relate to micro businesses or rural business, and determine whether different approaches to the provision of credit, training, conditionality and implementation are required for those sub-sectors or other subsectors identified as needing separate approaches.
- Assess the need for minimum qualifications to screen candidates for either credit or training, and if needed, identify the nature of those minimum qualifications.
- Address the length of time for which special support to an individual enterprise should be provided through credit or training facilities.
- Address how SMME's could be best assisted to pursue sustainable marketing strategies and how marketing and technology linkages could be encouraged between SMME's and larger firms and distributors so that the base of activities for SMME's can be diversified and broadened.
- Address the ways in which improved technology might be provided to SMME's, and the roles which various institutions such as NGO's, educational and training institutes or parastatals could play in diffusing technology to the sector.
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- Address the ways in which high standards and quality might be imparted to the products and services of SMME's, and the role which the Standards Council or training organizations might play in this process.
- Examine the potential of the role of privatisation and contracting out of Government support services, including those for SMME's as a source of growth in the SMME business base.
- Address the potential for identifying regional centres of economic activity where SMME support services should be focused.
- Address ways in which the educational system at all levels can promote the development of entrepreneurial motivation and skills in students.
- Examine how regulatory requirements and bureaucratic processes might be changed or reduced to facilitate the development of SMME's.
- Address ways in which a more professional and enterprising approach might be developed in those cadres supporting SMME development.
- Address ways in which appropriate sites, premises and industrial shells can best be made available to SMME's on a sustainable basis.
- Make any further recommendations deemed necessary.
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Report and Recommendations
- The Task Force shall prepare a report and recommendations for presentation by 30th October, 1997 to the Minister of Commerce and Industry for consideration by the Government.
7 May, 1997
© Friedrich Ebert Stiftung
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