Wednesday, September 23, 2020

Informal sector businesses are Botswana’s future!

The hardships brought about by the failing global economy have once again brought to the fore the need for us as a country to come up with alternative sources of both employment and income.

While efforts to diversify the economy are ongoing, our suggestion is that, as a country, we should now turn towards giving the informal sector a chance.

This is one area that remains unexplored in Botswana, despite the huge potential and opportunities it provides.

The informal sector does not require a lot of expertise and capital as does those businesses we have been courting over the years with very little to show for it.

Also, the turnaround time for the informal sector is comparably shorter.
Much more importantly, the sector employs a large number of people compared to the formal sector.

And, as we know, the twin evil of Botswana’s slowing economy has over the past few months proved to be the country’s steadily rising levels of unemployment.

It’s now a given that, with government’s announcement that they will reduce the number of students benefiting from government sponsorships, there will be a groundswell of young people joining the unemployed ranks.

That can only spell disaster and security risks for the country.
Worse, it will be foolhardy to even start suggesting that the worst is about to be over or behind us.

Given the structure of the Botswana economy, there is an over-reliance on government procurement system for the survival of almost every other business.
The government, in turn, relies too heavily on just one commodity (diamond) for its finances.

And diamonds being a luxury item, when economic times are rough as they are today, it is only natural that they fall off the shopping lists of many people.

That said, it is reassuring though to note that Botswana Government is taking initiatives to assist informal sector businesses.

A lot of effort has been invested on such institutions like LEA (Local Enterprise Authority) to ensure that small, micro and medium enterprises get all the necessary support so that they can thrive as viable and well run businesses.

Research has shown that, if properly nurtured, the informal sector easily becomes the biggest employer in every economy.

Even in well developed economies of the West, the informal sector plays a very crucial role when it comes to employment volumes that are sustainable over a long time.

We are happy to note that Botswana Government is following this route.
What is important, going forward, is to also engage such organisations like the Central Statistics Office to help verify that, with figures that are reliable, just how much the informal sector is currently contributing to the economy of Botswana.

In trying to link up the informal sector with the larger economy so that this sector plays its role, there are certain things that need to be done, which we hope LEA will efficiently discharge.

First, and perhaps most important, is training.

We cannot overemphasise the importance of managerial skills.

Like any other business, the informal sector can only survive and thrive if it is properly managed.

Such skills are all the more crucial under the prevailing economic difficulties, where nothing is guaranteed, and business managers are forever demanded and required to be on the lookout for trends and targets that are constantly and frequently on the move.

LEA has to equip business managers from the informal sector with such skills that will allow them to be able to read and interpret the changes in their business environment and take advantage as well as institute whatever organic changes are necessary to allow their businesses an opportunity to withstand the hardships.

Second to training is the importance of access to the markets.
No matter how well run a business may be, it is impossible for it to survive if it is not supported by a reliable market.

On that score, it remains our hope that, as part of their mandate, LEA will assist the SMMEs with accessing the market, including by way of providing directions towards establishing linkages with the bigger and more established multinationals.
LEA has to strive to ensure that Botswana-based multinationals that get a sizeable amount of their business from government in turn provide a market for the SMMEs.

Such a cycle of interdependence has proved crucial in many developed countries.

Having said that, we note with reassurance that, in sectors like agriculture, a process is already underway to ensure that Botswana-based chain stores source a sizeable amount of their perishable supply from small farmers across the country.

Such a relationship, while not allowed to drop standards and quality, should be encouraged and, where possible, be made mandatory.

On a final note, we call on LEA to work with such institutions like councils and other local level authorities to ensure harmonization of both vision and policy so that we do not have the left hand literally throttling that which the right hand is busy trying to nurture.

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.