Company

LOGOAFRICA CONGRESS OF ACCOUNTANTS PAFA event - GHANA – MAY 2013

Promoting the Growth of Small & Medium Enterprises (SME)

Tshego Modise, President, BICA

Agenda

1. What is SME 1. What is SME

2. Need to Promote SME's 2. Need to Promote SME's

3. Botswana SME's 3. Botswana SME's

4. Key Message to Stakeholders4. Key Message to Stakeholders

What is SME

• What exactly an Small to Medium Enterprise is - depends on who’s doing the defining

• Various economies have a different definition which varies

• Whatever be the definition – SME's play a crucial role in achieving industrial and economic development objectives of an economy

What is SME – continued...

• IASB defines SME's based on accountability and not on monetary limits (IFRS for SMEs applicability)

• European Union (EU) defines that there are three broad parameters which define SMEs:– micro-entities are companies with up to 10 employees– Small companies employ up to 50 workers– Medium-sized enterprises have up to 250 employees.

• "The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro."

Botswana's SME Thresholds

EmploymentAnnual

Turnover in BWP

Annual Turnover in

USD

MICROLess than 6 workers

Less than P 60 000

Less than $ 7 200

SMALLLess than 25 workers

Between P 60001 to 1.5 Million

Between $ 7 200 to $ 180 000

MEDIUMLess than 100 workers

Between P 1.5 Million to P 5 Million

Between $ 180 000 to$ 600 000

Need to promote SME's

Successful Economy

SME

Large Corporates

Government / NGO /

Parastatals

Challenges faced by SME's

Lack of Finance

Technology Gaps

Regulation support

Record keeping

Inadequate Collaboration

Scarce Skills

Market access

Lack of importance for

Branding & Marketing

Financial (Cash Flow) Management

Challenges faced by SME's

Various Industry

Challenges

Limited Business Acumen

High failure rate of SME's

Getting out of Comfort zone

Synergic effects of SME's

Employment

Creation

Diversification

Skills Transfer

Botswana SME …

CEDA

LEA

Some Botswana Initiatives to promote SME

Promoting SME's

LEA BOTACEDA

Entrepreneurial Skill

CEDA

Low Cost Funding

BOTA

Supporting Training

BOCCIM

Private Sector

Botswana initiatives – continued …

SMME subcommittee• Public Sector committee• Involvement with BOCCIM & Stakeholders

Micro GAAP• For entities not required to comply with IFRS• Simple framework for SMME & SME's

High Level Consultative Council• Forum for constructive dialogue between business and

Government• Doing Business committee to improve Botswana ratings

Botswana Initiatives - continued

• Political will• Regulatory

support

Aggressive leadership

• Continuous learning

• Delivering Set objectives

Good outcome • Ongoing

review• Creative and

flowing ideas

Conducive Environment

SMEs: key messages to government

• A thriving SME sector is key to economic growth and job creation

• An enabling regulatory requirement is critical – particularly SME registration and monitoring

• Governments can engage (incentives) to address the need for start-up funds

• Governments play an essential role in capacity building, e.g.– Promoting the need for more entrepreneurs and

SMEs– Setting up agencies for advice and training on

starting and operating SMEs

SMEs: key messages to business

• Localizing value creation through SME engagement is a key contribution to economic development wherever “big business” operates

• Leadership from the top is key to success - both strategically and operationally

• Facilitating access to finance is critical • Consider partnering across segments to facilitate SME

development and access to finance• Business planning skills, incl. training in financial

management, are crucial• Capacity building help is essential

Time is ticking…..SME's need to overcome the hurdles

Acknowledgement

• Policy on Small Medium and Micro enterprises in Botswana – Government Paper No 1 of 1999

• Transforming Africa through embracing good governance principles – by George B Partridge

• The Role of Government in promoting investments to reduce poverty in Africa – Ben Kaluwa

• Botswana and sustainable development: Drawing policy strength from experiences – Laurence Clarke 2008

• Employment – creating through SME's in Sub Saharan Africa : Emerging insights and challenges from Botswana – Thando D Gwebo

• LEA Web site (www.lea.co.bw)• CEDA Web site (www.ceda.co.bw)• IFRS for SME's • Performance and Competitiveness of Small & Medium sized manufacturing

enterprises in Botswana• Promoting SME's for development - OECD