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TECHNICAL ASSISTANCE TO THE EIB MICROFINANCE LENDING

OPERATIONS TO THE SOUTHERN AFRICA MF/MSE FUNDS

MSME MARKET ASSESSMENT IN BOTSWANA

TABLE OF CONTENTS

Study Background & Botswana Environment

The MSME Sector

The Financial Sector

Business Development Services

Gap Analysis

The Way Forward

Room for Discussions

1

2

3

4

5

6

7

2

1 STUDY OBJECTIVES & METHODOLOGY

Supply analysis

Provide overview of the financial sector in Botswana and its performance regarding MSME lending

Assess existing and relevant financial products and services for MSMEs offered by relevant stakeholders

Assess supply of non-financial and support products and services for MSMEs

Supply Assessment

14 interviews with Government and donor organisations, as well as FIs

Secondary literature from Government, donor organisations, banks, etc.

Demand analysis Provide overview of the characteristics of MSMEs

in Botswana

Analyze current patterns of MSMEs’ access to finance & banking services in Botswana

Assess financing needs of MSMEs for financial products and services

Assess demand among MSMEs for non-financial products and services

MSMEs Study Sample:

100 face-to-face interviews with MSMEs and 5focus group discussions in April 2016

Locations: Gaborone, Molepolole, Kanye Size: Micro, Small & Medium Business sector: Trade, Services, Industry &

Agriculture

3

STUDY DESIGN –THE SAMPLE

Region

Gaborone

87

Molepolole

6

Kanye

7

SizeMedium

0% (employees)3% (turnover)

Micro89% (employees)39% (turnover)

Small11% (employees)58% (turnover)

Economic sector

Trade

24%

Services

55%

Industry

4%

Agriculture

15%

OwnershipMale

64%

Female

36%

Randomly selected sample of 100 MSMEs

Total MSMEs in Botswana =

140,367

4

ENABLING ENVIRONMENT –ECONOMIC OVERVIEW

Real GDP growth rate: Botswana, Southern Africa and Africa

Composition of Economic GDP by Sector (%), 2014

GDP USD 35.7 Billion

GDP per capita USD16,099

Population 2.22 Million GDP Growth

5.2% InflationRate4.4%

Unemployment rate 20%

Source: Botswana, African Economic Outlook 2016.

* repair of vehicles, household goodsSource: African Economic Outlook, Botswana 2015

Botswana is an upper middle-income country

Over the past 30 years, Botswana was the fastest growing economy in the world, with average annual growth rates of over 10%. Faster, than the better known ‘tiger’ economies.

Botswana’s biggest commodity by far is its diamonds, being the most dominant natural resource that boosts the economic sector and currently accounts for 24.5% of GDP, 70% - 80% of export earnings and about 1/3 of government revenues. .

Main growth drivers are the hotel and restaurants, as well as the transport and communication sectors. The agriculture sector, manufacturing and construction performed rather slow. Tourism is also a growing sector because of the country’s conservation practices and extensive nature.

Source: MAP, Botswana Diagnostic Report, 2015 (cenfri, FinMark Trust, Econsult) Database. 2014

26,0%

24,5%

5,7%

-0,2%

6,9%16,3%

6,0%

15,2%

16,3%

6,6%

Agriculture

Mining & Quarrying

Manufacturing

Electricity, gas and water

Construction

Wholesale & retail trade, restaurant &hotels*Transport, storage and communication

Finance, real estate and businessservicesPublic administration and defense

Other Services

-1%

1%

3%

5%

7%

9%

11%

13%

2010 2011 2012 2013 2014 2015 ( e) 2016 (p) 2017 (p)

Botswana Real GDP Growth (%) Southern Africa (%) Africa (%)

5

6

ENABLING ENVIRONMENT -DOING BUSINESS IN BOTSWANA

Topics 2015 RankEase of Doing Business 72Starting a Business 143Dealing with Construction Permits

97

Getting Electricity 122Registering Property 70Getting Credit 70Protecting Minority Investors 81Paying Taxes 71Trading Across Borders 51Enforcing Contracts 128Resolving Insolvency 56Global competitiveness index

71

Sources: The World Bank, Doing Business Report 2015.

Current status

The report stated that among the most problematic factors of doing business in Botswana:

o Starting a business o Getting electricity (as well as other resources (water, land, infrastructure, Government permits, etc.)o Enforcing contracts

Botswana ranked 70 out of 189 countries regarding the indicator “Getting Credit” , but decreased from 61 due to a number of reasons including: depth of credit information available, credit registry / credit coverage (653,062 adults, 3,500 firms – 51.1% of adult population).

7

ENABLING ENVIRONMENT –LEGAL FRAMEWORK

SMEDefinition

& Laws

Start-ups

Access to Finance

Botswana Vision 2016 provides definitions for SMEs in Botswana (established in 1996)

Small Business Promotion Act (2003)

Public-Private-Partnerships (PPPs) framework in 2009

The Government of Botswana created CEDA, LEA, YDF* and the Botswana College of Agriculture to strengthen start-ups with access to finance and support services

50% of adult Botswana are banked, 18% use other non-bank services, 8% use informal services and 24% are excluded

Borrowing is very low in Botswana (26%) –16% is formal bank credit.

Transactional banking and savings is very strong

3 credit bureaus, but only share negative information and not on sector-level

10.1% of adults derive main income from business activities (~135,000)

50% urban – rural distribution

73% of businesses are female-owned (FinScope 2014)

Reduced lack of access to finance for start-ups

Provide technical skills and business knowledge to SMEs

74% of formal credit is absorbed by formally employed adults

36% of bank lending goes to the private sector

90% of SMEs are excluded from formal credit

60% of SMEs use their own capital to fund their business

* CEDA: Citizen Entrepreneurial Development Agency established by the Government to provide financial and technical support for business development* LEA: Local Enterprise Authority was created by the Government to advance entrepreneurship and enterprise development* YDF: Youth Development Fund to support youth beneficiaries with 50% grant and 50% interest-free loans to enable them form enterprises

2 MSME SECTOR IN BOTSWANA

There is need to apply multiple criteria to define SMEs

Many of the small enterprises are classified as Micro Enterprises

Informal MSMEs*: due to various licenses (exemption licenses, vendor licenses, import licenses, etc.) there are few unregistered businesses in Botswana

SMEDefinition

Size of MSME sector

Micro Small Medium

Turnover# of

EmployeesTurnover

# of Employees

Turnover# of

EmployeesBotswana

Vision 2016< BWP 60,000

1-6< BWP

1,500,0006-25

< BWP 8 million

>100

Source: : Botswana, Demand, Supply, Policy and Regulation, Diagnostic Report, 2015 (MAP, cenfri, FinMark Trust, econsult Botswana)

Economic Sector

Source: Small Business Promotion Act, 2003 Source: Respondent survey

Government 36%

Large Firms 32%

MSMEs 32%

Employees(Formal 373,922

Informal 271,743)

20% of GPD is contributed by SMEs

Many start-up SMEs business operations are geared towards the priority sectors defined by the Government (agriculture, tourism, transport, light manufacturing)

EUR/BWP= 12

Small 90%

Medium 7%

Large 3%

Enterprises(Formal 53,488

Informal 86,879)

8

Trade 24%

Services 55%

Manufacturing 4%

Agriculture 15%

Other 2%

Wholesale & retail,33.0%

Hotel & restaurant

13.1%

Real Estate 10.7%

Renting & business

7.9%

Education & manufacturing

7.8%

Other 27.5%

* Informal SMEs refer to self-employed and off-farm trading entities. (FinScope).

9

BUSINESS GROWTH

In the next 2 years Business will be:

Worse

Stay the same

Better

3%

20%

77%

Majority of businesses are start-upenterprises (38%), but many are also established enterprises operating for 4 – 10 years (36%)

Start-ups are often created by young graduates due to lack of absorption by the labour market, or civil servants retirees

Almost half (48%) of all enterprises are registered limited companies

Most enterprises (65%) employ 2 to 6 persons that are not family members

75% of enterprises made investments of BWP 150,000 for fixed assets and WC

Source: Sample enterprises

How do you see the business in the next years?

Plans

Most important plans in the next 2 years

There will be an increase

It will stay stable

There will be a decrease

0% 5% 10% 15% 20% 25% 30% 35% 40%

Other

Modernisation/ Upgrade

Agricultural Input

No investment is planned

Expansion of activities/ diversification

Real Estate and refurbishment

Equipment/ fixed assets

10

BUSINESS CHALLENGES

The majority of MSMEs (56%) state lack of finance as the biggest challenge in setting up a business

Other constraints are mainly struggling with competition, availability of skills & competencies, as well as access to markets

During business operations and growth, competition is the biggest challenge

Competition is strongly linked to access to markets, as Botswana has a small domestic market and many products and services are supplied by South Africa

Capacity and quality of products and services are a challenge to compete in these market conditions (quality certifications are expensive)

What are the main challenges for growth?*

* Respondents could indicate up to 3 answers

0 10 20 30 40 50 60 70 80

Access to market information

Theft

Inflation

Rent

Agriculture risks

Qualified Personnel

Taxes

Decreasing customer base

Infrastructure

Licenses

Access to Finance

Competition

3 FINANCIAL SECTOR

Total Credit by Institution (BWP mio, 2014)

Source: Banking Supervision Report 2014, Bank of Botswana

List of Commercial BanksOverview of Financial Institutions in Botswana

Source: Botswana, Demand, Supply, Policy and Regulation, Diagnostic Report, 2015 (MAP, cenfri, FinMark Trust, econsult Botswana)

Type # of Institutions

Lending Model

Services Credit (BWP mio)

Commercial Banks

10 Commercial Savings & Credit

42,760

Statutory Banks


860

DFIs 3 Commercial Credit 4,340

Building Society


2,900

Large NBFIs 1 Commercial Credit (payroll)

3,000

Micro Lenders (formal)

4 Commercial Credit 54

MFIs 243 NGO Savings & Credit

4

SACCOs 50 Member-based

Savings & Credit

305

Informal Micro Lenders

unknown Commercial Credit n/a

Metshelo ~12,000 Member-based

Savings & Credit

n/a

Government 1 Youth Develop-ment Fund (YDF)

SubsidisedCredit (interest free)

523

Name Established Assets (BWP mio)

Loans (BWP mio)

FNBB 1991 17,639 12,131

Barclays Bank 1950 12,248 8,132

Standard Chartered 1897 12,800 8,128

Stanbic Bank 1992 10,918 6,461

BancABC 2009 6,194 3,978

Bank Gaborone 2006 3,671 2,521

Bank of Baroda 2001 1,543 713

Capital Bank 2008 1,162 631

Bank of India 2012 91 28

State Bank of India 2012 72 0.3

- 2.000 4.000 6.000 8.000 10.000 12.000 14.000

FNBB

StanChart

BancABC

Bank Gaborone

Letshego

BSB

CEDA

BOI

SBI

BANKING SECTOR

Distribution of total assets of Banks

All Sources: Banking Supervision Report, 2014, Bank of Botswana

Distribution of credit facilities of Banks

There are 10 commercial banks, 1 statutory bank, 1 buildingsociety, and 3 non-deposit taking DFIs (Botswana DevelopmentCorporation, CEDA, National Development Bank).

Total assets value of BWP 68 billion (36% of GDP) in 2014.

Private sector lending accounted for 36% of total creditfacilities, which equals to BWP 16.2 billion.

Private sector deposits accounted for 62% of total deposits

There are 119 bank branches and 369 ATMs

Branchless banking on the rise to increase outreach: mobilebanking, internet banking, POS, ATMs

NPL ratios at Banks with increasing trend, due to stagnating economy, tightened liquidity and increasing competition in the sector

6,0%4,0%

20,0%

6,0%

24,0%

1,0%1,0%

1,0%4,0%

33,0%

Agriculture, Forestry & Fishing

Mining & Quarrying

Manufacturing

Construction

Commercial Real Estate

Electricity

Telecommunication

Tourism & Hotels

Transport

Trade, Restaurants & Bars

0%

1%

2%

3%

4%

5%

6%

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2010 2011 2012 2013 2014

NPL (volume) NPL (% to total advances)

0

10

20

30

40

50

60

70

Total Assets Loans and Advances Deposits2010 2011 2012 2013 2014

13

MICROFINANCE SECTOR IN BOTSWANA

Gross Loan Portfolio(in BWP million)

Number of active borrowers

Average Loan Size (BWP)

3,361.1 67,900 P 750 – 300,000

MFI sector financial details (consolidated)


At end-2013, there were 243 micro-lenders

The large micro-lenders (6) had a loan book of BWP 3billion

Microlenders Association of Botswana (MLAB) has 180members with Ø PWB 300,000 loan books andtotal PWB 54 million loan book, 50,000borrowers

There is 1 MFI (Women’s Finance House Botswana –WFHB) with a loan book of BWP 1.4 million, Q1-2015

~ 50 SACCOs with a loan book of BWP 305.7million and total savings of BWP 253.4 million

The Non-bank Financial Institutions RegulatoryAuthority (NBFIRA) was established in 2006 as anindependent regulator and has a Departmentfor Micro-lending

MFI nameGross Loan Portfolio

(in BWP million)

Number of active borrowers

Microlenders 1,000 N/A

Letshego 2,000 N/A

MLAB 54 50,000

WFHB 1.4 900

SACCOs 305.7 17,000

Total 3,361.1 67,900

MFI sector financial details (breakdown)


61%

13% 9%17% 13% 12% 8%

3%

6%5%

6% 11%2%

3%

36%

81% 85%77% 76%

87% 89%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FormallyEmployed

InformalSMEs

InformallyEmployed

Farming StateDependents

FamilyDependents

Other

Formal Informal Excluded

14

INSURANCE SECTOR IN BOTSWANA

Gross Premiums written

(BWP million)

Net Premiums Earned income (BWP million)

Net Claims Paid (BWP million)

Number of users

2,761 1,938.8 1,391.3 538,062

Insurance sector financial details (consolidated)

Source: NBFIRA, Annual Statistical Bulletin 2015, Volume 1.

In 2014, there were 30 insurance companies

26% formal insurance market penetration

43% of adults experienced a loss event over the past 12months

Product range: Life insurance, credit life insurance,medical aid/ health insurance, motor vehicle insurance,crop insurance

Loss events over past 12 months

Source: Botswana FinScope,, 2014

Insurance Uptake per Target Segment

Source: Botswana FinScope,, 2014

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

Death of a household/ family member/ funeral

Theft of household property

Serious illness of a household member

Member of a household loses job

Bankruptcy

Theft of agricultural crop/ livestock

Failure of business

Poort economic situation in the country

Destruction of agricultural crop/ livestock

Destruction of household property

Fire disaster for household property

15

MOBILE MONEY IN BOTSWANA

Mobile money providers: beMOBILE (Smega), Mascom(MyZaka), Orange Botswana (Orange Money)

94% of the population have cell phones, but only 22%use mobile money

404,758 mobile money accounts from 70,000 (2011up to February 2015)

287 mobile money outlets and about 700 agents (morewidespread than banks)

Retailers as distribution channels

Maximum account balance BWP 4,000


Number of Customers

Total Savings(BWP million)

Average Value of Savings (BWP)

405,000 50 123

Mobile Money details (consolidated)


0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Remittances/ Money transfers

Buy airtime

Store/ save money

Check bank statements

Pay bill/ other non-cash payments

Not using mobile money

Usage of Mobile Money In SADC

FINANCIAL ACCESS IN BOTSWANA

Source: FinScope 2014, Botswana, Demand, Supply, Policy and Regulation, Diagnostic Report, 2015 (MAP, cenfri, FinMark Trust, econsult Botswana)

Financial Access by Target Group Depth of Financial Access

16

0

1

2

3

4

5

6

7

8

Bank NGO Government MFI Family &friends

0 - 5,000 BWP

5,001 - 50,000 BWP

50,001 - 150,000 BWP

150,001 - 500,000 BWP

500,001 - 1,000,000 BWP

ACCESS TO FINANCE –

EXISTING FINANCING SOURCES

Use of bank loans is low, but only 6.7% of adults were rejected: primary reason being too low income (~50%). The survey results indicate lack of guarantees as primary reason for rejection.

The likelihood to take out a loan from a bank increases with the age of the business.

Micro companies make relatively more use of alternative funding sources such as loans from family and friends, Government and MFIs/ NGOs.

In general, dependence on bank loans is low (banks focus on business opportunities with higher profit)

Business owners state there is a risk to underfund the project which leads to default

Finance during start-up phase

What are the other sources ?

Main financing sources (besides own funds)

Reasons for never taking a loan

17

Own money 79%

Others 21%

0 2 4 6 8 10 12 14 16

No confidence in banks

Long and complicated processes

Lack of guarantees

No need

High interest rates

Afraid of reposession

Others

ACCESS TO CREDIT

Loans received and loans outstanding

Loan Amounts received

59% of surveyed MSMEs do not borrow money, whereby out of those who do, most borrow from family and friends

1/3 of MSMEs think that obtaining credit from a bank is difficult or very difficult – too long and complicated processes, fear of not being able to pay, and high interest rates are mentioned as difficulties to obtain loans lack of knowledge to structure loan applications

82% of MSMEs that obtained a loan, got the loan from commercial banks

Loan purpose: Loans were mainly used for fixed asset acquisition, followed by working capital.

Loan amount: The loan amounts tend to be above BWP 50,000.

Loan term: The average loan term is medium term (i.e. more than 18 months).

No 74% Yes; 26%

Yes 26%

0 2 4 6 8 10

0 - 5000 Pula

5001 - 50000 Pula

50001 - 150000 Pula

0

1

2

3

4

5

6

7

8

1- 3 months 7- 12 months 13- 18 months 18- 36 months More than 36months

Loan Maturities

18

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Overdraft

Insurance

Input finance

National Transfers

International Transfers

Motshelo

Checques

Mobile Money

Credit/ Debit cards

Savings account

Current account

19

ACCESS TO FINANCE –

USAGE OF FINANCIAL PRODUCTS & SERVICES

Use of Banking Products and Services*

Preferences on the Products and Services

83% of the sample use banking services; out of which 61% use them on a regular basis.

Current and Savings accounts experience high uptake (84% and 68% respectively).

Mobile Money is used by 20% of the surveyed entrepreneurs

Accessibility is a key feature from consumer perspective

Insurance experiences one of the lowest uptakes.

FNB is the major financial provider to MSMEs

0

10

20

30

40

50

60

70

FIs where Products and Services were accessed from

* Respondents could indicate all that apply

0 10 20 30 40 50 60 70

High interests rates

High flexibility in access (frequency)

High accessibility (location, ATM, etc)

Others

20

DEMAND FOR FINANCIAL PRODUCTS AND SERVICES –

DEMAND FOR CREDIT

Areas of Investments planned

Although 44% of MSMEs are interested in obtaining a loan in the future for investments

Only 26% of total MSMEs have or had a loan in the past two years

Not interested in a loan

interested in a loan

Have a current

loan

No current

loan

a “go” Zone

Repeated borrowers

5

Observation Zone

Currently not interested

15

a “go” Zone

Potential new borrowers

69*

A „Hold“ Zone

Not interested

11

Demand for loans vs. outstanding loans

* 69 entrepreneurs indicated they plan investments to be funded with credit or both,own funds and credit

30

2114

10

10

84 21

Equipment

Real Estate and refurbishment

Expansion of activities/diversification

Agricultural input (seeds, fertilizer, etc.)

No investment is planned

Modernisation/Upgrade

Productivity equipment

Fixed assets

Other

21

INFORMAL LOAN FEATURES

Total

Source Family & Friends

Amounts up to BWP 5,000

Maturity < 12 months

Repayment Monthly

What are the loan conditions of informal loans?

Reasons to take informal loans?

Informal loans are easy to obtain and convenient

Though, Family and friends have limited capacity themselves and thus, the lending capacity is quite low.

The expansion and equipment investments indicated before, will not be viable to be financed through informal loans (average investment amount BWP 150,000 vs. BWP 5,000 informal loan amount)

0 2 4 6 8 10 12 14 16

Easy

Less paperwork

Flexibility

Good terms

22

INDICATIVE LOAN FEATURE

Total

Average loan amount (BWP) BWP 150,000

Average loan term (Year) > 1.5 years

Prime rate 9%

What are the loan conditions MSMEs are looking for ?

What was the loan purpose ?

Total

Equipment 30%

Real Estate 21%

Diversification 14%

Insights gained from Group Discussions:

Initial loan amount provided isnot enough – business isunderfunded and can’t performas well as planned.

External funds are used to buyequipment/ machinery in orderto scale up the business.

Arrears happen, because theloan structure does not matchthe nature of the business.

Need to improve WC & cash-flow management (delayedpayments from Government andcorporates)

Source: Survey Respondents

Source: Survey Respondents

23

DEMAND FOR SAVINGS PRODUCTS AND SERVICES

What savings mechanisms are you currently using? Frequency?

Discussions revealed, that access points, such as POS, mobile banking, and internet banking are key to

increase accessibility!

55

24

10

6 2111

Bank/ financial institution

Metshelo

Cash at home

I don't save

Inventory (working capital)

Other

In kind (animals land)

In order to get a loan 0 10 20 30 40 50 60

Daily

Weekly

Monthly

Other

0 10 20 30 40 50 60

Cash at home

I don't save

Metshelo

Bank/ financial institution

In order to get a loan

Inventory (working capital)

Daily Weekly Monthly

Distribution of Savings Mechanism and Frequency

* Respondents could indicate several answers

Business Support Services needed in order to Grow*

0% 10% 20% 30% 40% 50% 60% 70%

Technical Training

Coaching/ Mentoring

Fundraising

Financial Planning

Accounting/ Bookkeeping

Networking

Training for Employees

Access to Markets

Management Training

24

4 DEMAND FOR BUSINESS DEVELOPMENT SERVICES

Feedback on BDS received:

Many support services during initial business start-up phase and/ or after loan payout. Afterwards, the entrepreneur feels left alone.

Largest need for Management Training expressed, but also for technical expertise (e.g. in agriculture)

Business linkages to create access to markets and strengthen the MSMEs’ negotiation power

Initiatives to increase advocacy and lobbying are yet to show their impact

25

SUPPLY OF BUSINESS DEVELOPMENT SERVICES

Overview of BDS Providers & Services

Institution Funder Activities Target Group

CEDA Government of Botswana

Training & Mentoring

MSEs & start-ups (~4,000)

LEA Government of Botswana

Business planning, Training, Incubation (agriculture, leather, multi-purpose/ food processing, and light industrial)

MSEs & start-ups (~4,000; ~300 high potentials)

Business Botswana/ PSDP

European Union, Government of Botswana

Due Diligence, SME Diagnostic Tool, Training & TA

Growth-oriented SMEs (100 SMEs); Pipeline development

Tokafala Government of Botswana, AngloAmerican, DeBeers, Debswana

Identify entrepreneurs, provide technical and business support

Growth-oriented SMEs (185 SMEs), Pipeline development

Business Clinic & Global Business Labs

University of Botswana

Entrepreneurship Training, Business Planning, Incubation

Students & start-up enterprises (80 members, 5 companies)

BDS Providers in Botswana:

There are a number of business support institutions & initiatives on-going in Botswana

Some of the high-potential SMEs are registered with several programs

SMEs need to show commitment

A better coordination between BDS providers and financial service providers is needed

Other sector players & initiatives include: Management without Borders (PSDP), Botswana Investment & Trade Centre, Botswana National Productivity Centre, Botswana Exporters & Manufacturers Association, Botswana Innovation Hub

The Ministry of Investment & Trade has an aggregate SME database

Market gap

Private sector portfolio of Botswana commercial banks and MFIs in 2014 of BWP 19.2 billion

5 GAP ANALYSIS – QUANTIFICATION

Indicative future credit demand

CategoryNumber of enterprises % loan demand

Average demanded loan volume (BWP)

Indicative future credit demand

(BWP)Formal 53,488

74% 150,000 15.6 billionInformal 86,879Total MSME

VS.

How to meet credit demand by SMEs?

26Source: Own computation based on the facts and figures established from the primary and secondary data collection

Micro Business INFORMAL

Small BusinessINFORMAL

Small Business FORMAL

Medium EnterpriseFORMAL

BDS Provided GapRequirements

Collateral

Financials/ Reliable Records, Collateral

Track Record 1-3 years, Collateral

Business Plan to display Growth,

Collateral

Formality,Collateral

N/A

GRO

WTH

Small BusinessGROWING CEDA,

LEA, Gvt, PSDP,

TokafalaBanks

CEDA, LEA,

UB, Gvt

Gvt, Micro-lenders

Banks,PSDP,

Tokafala

Quality Standards

(certification),Marketing,

Exports

Technical Expertise,

Productivity Enhancement,

Inventory Management,

Reporting, Marketing

Business Management,

Business Planning, Finance &

Accounting, Development of

Financial Proposals

Acceleration Services to

sustain Growth

Acceleration Services,

Growth Finance, Business

Linkages & Clusters

Incubation & Acceleration,

Seed & Growth Finance, Business

Linkages & Clusters

Incubation,Seed Finance,

Special Economic Zones

N/A

Acceleration Services to sustain Growth

SME Finance Trainings for FIs, Structure adequate financial

products, Leverage on pipelines (PSPD,

Tokafala), Leverage on Education Institutions (UB, Botho Uni), Benchmarking, Business Plan Competition

Structure adequate financial products,

Utilize SME Diagnostic Tool,Export Development, Business

Plan Competition

Proper Segmentation Analysis & Database, Scale-up BDS

provision

Coaching & Mentoring

Proposed Solution

SUMMARY OF SECTOR PLAYERS

27

CARTOGRAPHY OF MSME ACTIVITIES

LEA

CEDA

BanksBusiness Botswana

Number of Interventions

Number of Players

few some many

few

some

many

28

Seed Financiers

Growth Financiers

BDS (Incubation)

BDS (Acceleration)

UB/ GBL

CEDA

Toka-fala

CEDA

PE FundsBotho

Government (MTI, BITC)

YDF/ Women

Fund

PSDP

6 THE WAY FORWARD

Develop in-depth understanding of the MSME sector

Establish SME-specific lending strategies and operations, with adjusted policies, procedures and risk profiles designated SME Bank?

Capacity building of FIs and staff to be able to lend to the target segment

Leverage the established small-scale SME pipelines of PSDP, TOKAFALA and others

Financial Services

Sub-segment the target group according to needs , e.g.

o Start-up vs. established enterprises

o Micro vs. small and medium enterprises

Support market linkages, access to markets and production capacity

Financial literacy: How to structure loan applications, fund raising

Provide continuous business and technical support during growth phase

Support Services

29

7 ROOM FOR DISCUSSIONS

30

EIB Global Loans• Support to FIs?• Support to BDS providers & other stakeholders?• Synthesize fragmented activities

Financial Institutions• New SME Bank?• Revised strategy & operations to upscale SME lending• Pipeline collaborations?

BDS Providers• Upscale services to broader SME target group• Partner with FIs

Stakeholders• Increased coordination • Advocacy• Synthesize fragmented activities

Thank You!

Diana Kollanyi

[email protected]

SME Expert

Frankfurt School ofFinance & Management gGmbHSonnemannstraße 9-1160314 Frankfurt am Main

Rainer Fitz

r,[email protected]

Team Leader

Technical Assistance to the EIB Microfinance Lending Operations to the Southern Africa MF/MSE Funds

technical assistance to the eib microfinance lending ... · bancabc 2009 6,194 3,978 bank gaborone...

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