Signs of hope for SMMEs after COVID-19 knock
Pauline Dikuelo | Friday March 5, 2021 15:20
While its ultimate trajectory is at this point uncertain, it has already caused significant harm on individuals and communities, both in health and economic terms.
For Small, Micro and Medium Enterprises (SMMEs), who have traditionally struggled to survive in a hostile economic environment, COVID-19 was a body blow.
Since the outbreak, most SMMEs have been operating under uncertainty, with some forced to lay off their employees and close down, as they could not afford to pay salaries anymore. Many faced severe losses in revenues and a good number are headed for collapse.
A snap survey by the Local Enterprise Authority (LEA), conducted last year, found that about 63% of the sampled SMMEs had suspended operations due to the COVID-19 crisis.
Though various authorities have their own definitions, SMMEs in Botswana usually refer to a business that has a turnover ranging from P1.00 to P10 million. Most of them are concentrated in the service and supplies industries, while a few are in manufacturing, a sector beginning to pick momentum.
Government was forced to step in with interventions aimed at helping SMMEs and informal businesses ravaged by COVID-19 to stay afloat. The efforts included the P1,000 grant that the LEA is disbursing for registered informal sector players. The funds are part of the P100 million allocated to LEA from the Industry Support Facility (ISF), which was launched by the Ministry of Investment, Trade and Industry as part of the Economic Recovery Transformation Plan.
Through the ISF, about P1.3 billion has been made available to firms and individuals through development finance institutions like LEA, Citizen Entrepreneurial Development Agency (CEDA), National Development Bank and Botswana Development Corporation (BDC).
SMMEs interviewed by Mmegi say government’s efforts can be summarised in the old idiom: half a loaf is better than nothing. The assistance is appreciated, they say, even though it will take some time for them to rebound.
There is hope though, they say.
Bokamoso Keisang, an agripreneur, says the effect on SMMEs has been severe, particularly because of their higher levels of vulnerability and lower resilience due to their size.
For Maitumelo Mafhoko, who owns Mabapi Fire Training School, the pandemic has affected strategy as almost everything is at a standstill. According to Mafhoko, their fire trainings have been affected due to social distancing protocols.
“We are exploring ways of offering our courses online, which we still feel would not be enough as fire fighting is more practical,” he said.
Mafhoko adds that the company is also struggling to get its equipment, which is currently stuck in South Africa, as transportation charges have skyrocketed.
Despite their currently depressed situation, SMMEs are expected to benefit from changing winds in the country’s efforts to become more self-sufficient, a harsh lesson learnt from COVID-19. The pandemic has rocked regional supply chains, forcing all countries to look at their own needs first before exports. South Africa, in fact, introduced export permits for certain products, to protect the country’s own needs.
More Batswana entrepreneurs have taken advantage of government’s stronger goodwill to support local enterprises. Businesses in various sectors have sprouted during COVID-19, many of them marketed and promoted via social media. Quasi-government agencies such as the BDC’s have also lent a hand, introducing a ‘business den’ concept to support citizen entrepreneurship. CEDA’s revised guidelines and increased funding have also boosted local entrepreneurs, with P452 million in loans approved and 5,456 businesses benefitting. According to official figures, the number of jobs maintained through the assistance as at January 2021 stood at 3,438 while the number of new jobs created was at 7,362
“There has been quite a change and it can be seen on social media, around supporting local enterprises,” says Botswana Cement Manufacturers Association executive director, Nkosi Mwaba. “We have been talking for a long time about Batswana not trusting the quality of local products; the view that it’s your cousin making cooking oil and you’ll never buy it.
“But now you can see we have been helped by the situation COVID-19 has put us in.
“There’s a lot of support for local products and we are learning to be self-reliant in a lot of things. That spirit needs to continue.”