The Centre for the Development of Enterprise (CDE), the EU funded agency said it will help Botswana small businesses with capacity building after the recently signed deal with the country’s leading developmental house.
Mike Dube, the acting Chief Executive Officer of CEDA, said both his organisation and CDE recognise that SMEs represent the engine of growth in Botswana and that SMEs face challenges, which are both financial and non-financial support.
“The major benefit that will accrue to the entrepreneurs in Botswana that will derive directly from this cooperation speaks to the importance of non financial support in the form of technical support to funded businesses through CDE,” Dube said.
The two SMME supportive agencies recently signed a Memorandum of Understanding (MoU) that is meant to strengthen the capacity of small businesses in order to better access finance and increase their competitiveness and viability.
CDE is an European Union (EU) funded initiative that is tasked with creating and strengthening SMEs in ACP countries while CEDA funds start ups and expanding business up to P30 million.┬á
Over the years, sponsored projects have failed to live up to expectations as they lacked the capacity to execute bigger tenders and had challenges in meeting market demands.
Recently, with the coming of Economic Diversification Drive (EDD), where government will purchase from local companies, quality and capacity have been raised as major challenges going forward.
CDE’s financial support of Ôé¼267,000.00 (about P2.7 million) for this financial year, which will be matched by funding from CEDA, will be made available for pre- and post ÔÇô investment technical assistance via a dedicated assistance facility managed by CEDA.
The facility from CDE comes at a time when the agency is looking at partnerships for both funding and technical support more so as the Government purse is getting tighter.
“We believe that access to finance, though a challenge for SMEs, is easier to address as compared to entrepreneurial skills development and other business training, which has to be dynamic to match the environment in which an enterprise operates in,” said Dube.
“Where there is lack of certain skills the technical assistance programme will provide for the necessary human capital required,” he added.
CDE has already developed a business model for facilitating finance for SMEs in the ACP region, which will be expanded to Botswana through this partnership with CEDA.
A pilot project to select a number of SMEs, which will benefit from the CEDA/CDE funding and technical assistance programs, will be put in place.
The cooperation between CDE and CEDA at a high level will have two tiers of assistance.
These are first invention, which will be a Pre-investment Technical Assistance package that will be mainly geared towards start-up companies and Post-investment Technical Assistance packages, which will be for existing businesses that need assistance to grow and expand their operations.
The Pre-investment Technical Assistance package includes availing cash to promoters to pay for professional consultants that will assist in developing comprehensive business plan.
It is hoped that the move will improve the chances of promoters getting funding from CEDA, although it does not guarantee funding.
It will also include availing cash to fund much needed feasibility studies (either technical, marketing, financial or commercial).
Equally, the intervention will provide the cash to finance technical due diligence studies to confirm the technical viability of businesses requiring funding prior to submission of business plans for funding.
Under the Post-investment Technical Assistance package, the promoters will be helped in improving the financial systems and internal control environment.
It will assist the business with developing markets for their products and services.
Simultaneously, also going to the extent of developing marketing strategies and the overriding goal will be to develop human resource capacity within these businesses to ensure effective and efficient general management of the business operations and the adherence to the tenets of good corporate governance.