CEDA:Fostering Growth for SMMEs

2009-06-22

 In a highly competitive global economy, improved access to financingby SMMEs is essential for enhancing competitiveness and meeting the objectives of growth and job creation, Citizen Entrepreneurial Development Agency (CEDA) Chief Executive Officer, Dr. Thapelo. C. Matsheka has said.

Presenting a paper entitled financing for Growth-SMME Context at the just ended Local Enterprise Authority (LEA) SMME fair, Dr. Matsheka said raising capital is one precondition for successfully setting up of a business and ensuring growth and expansion but SMMEs in Botswana face significant problems in accessing such finance which is necessary to start, grow and compete in global markets. He said Government policies to create incentives and encourage investments in SMMEs assists to reduce the transaction costs of SMME business lending; the risk banks take in lending to SMMEs (guarantees, loan loss reserves); improves access to financing in cases where entrepreneurs are unable to attract traditional financing (risk share with entrepreneurs); and increases the flow of equity capital and reduces the asymmetry of information for SMMEs.

 CEDA was established to redirect efforts to deal with the real constraint affecting the development of citizen businesses and citizen participation in the economy with its main roles being; to foster citizen entrepreneurship and empowerment; Achieve economic diversification; Encourage the development of competitive and sustainable citizen enterprises; Create sustainable employment opportunities; Promote the development of vertical integration and horizontal linkages between citizen enterprises and primary industries in agriculture, mining and tourism; and to improve efficiency in the delivery of services to business. He also outlined the recent review that was introduced as follows; Funds under management are now offered as products following the review of CEDA in 2008 and the adoption of the “One Stop Shop” model. “This arrangement has resulted in improved performance of funded YFF projects,” said Dr Matsheka.

Dr Matsheka said collectively the four windows of assistance under CEDA have assisted 2,998 projects valued at P1, 701 million which are projected to employ 22,056 when fully operational. “Employment created is 80 percent of projected employment and by sector stands as follows; Retailing – 19%; Manufacturing – 19%; Agriculture – 17%; Service– 42%; Property – 3%,” adding that reasons for underemployment said under implementation; lack of market and foreclosures.

He added that CEDA has set it self a long term target to achieve 80 percent survival rates for start up businesses, whose current survival rate is 74 percent for those with 3 years and above and 69 percent for start-ups. “This compares favorably with other countries especially when we look at the 3 years and over survival rates in USA 54%; UK 51%; Canada 42%; Australia 77%; Netherlands 69%; Sweden 69%; Kenya 10%; South Africa 30%,” emphasized Dr. Matsheka.

Matsheka mentioned some of the challenges being faced by SMMEs as the non existence of a clearly defined centre of support in Government where CEDA could link with other stakeholders in SMME development; Lack of entrepreneurial culture; Balance between entrepreneurial development and sustainability of the fund; Need for subsidized rates and low security requirement against sustaining the fund; and Lack of Mentoring capacity. Others he said include non availability of adequately experienced mentors in the economy; Market challenges for SMMEs and lack of procurement opportunities for SMMEs both in government and private sector.

He said CEDA is currently working with other stakeholders to ensure that there is improved capacity and quality of service to SMMEs. He said schemes to support SMMEs will not be successful in the absence of a vibrant entrepreneurial economy. “We will require changes in the legislative, regulatory and tax environments to promote the entry of new businesses and active ones; Review of the PPADB Act to allow for improved access to Government Tenders and the Introduction of an entrepreneurship policy,” advised Dr. Matsheka. He called on SMME’s to make use of CEDA and benefit from its programmes such as Monitoring and Training.

CEDA also sponsored ten of its entrepreneurs from different sectors of the economy to display their products and services. Moreover, more than thirty CEDA funded businesses were invited by LEA to also display at the Fair.

Fidelity Print Mark representative Fidelis Ncube thanked CEDA for affording him the opportunity saying fairs create product awareness and advertise companies. “We have had people who have learnt for the first time that there is a company in Botswana that does engraving and etching of any size,” said Ncube.

Duraclean representative Franco Kehemetswe said he was impressed by the individual enquiries he received at the store and will make follow up.

Sophie Itiseng of Kelosika Products, the manufactures of Bonntrix said the opportunity has afforded her company a chance to mingle with the public. “The public gets to know about our highly nutrient dense spreads which can be used as a mix or to dip in a snack,” said Itiseng, adding that her fortified product isnutritious and healthy