Start-ups in Botswana normally face difficulty in finding early-stage financing. That is because the country has few venture-capital firms, so says Elliot Moshoke – Chief Executive Officer of Acute Capital, which owns Ellis Retail Group T/A Payless Supermarkets.
Moshoke highlighted the financing needs at a recent Tshipidi mentorship program organised by the Botswana Stock Exchange which aims to provide practical training to potential issuers like Payless.
At this year’s event, budget retailer – Choppies Enterprise’s Chief Executive – Ramachandran Ottapathu led speakers within the listing ecosystem to share his experience on trading at the Botswana Stock Exchange. In not so many words, Ram shared the success of Choppies which by extension are his through a presentation titled, ‘The journey, from private to public’. He reminded the mentees, which included executives of local companies that aspire to ultimately join the stock exchange, that with a 9000 headcount, Choppies is the biggest retailer outside South Africa.
While Ram gave many lessons on the possible benefits of turning a private company into a public enterprise’, Moshoke used the Question and Answer session to get the Choppies CEO’s views on private equity and business funding.
His challenge to Ram and other prospective funders was that beyond employment creation, they should consider venture capitalism.
“We have many startups in dire need of capital, so would you consider emulating what we see happening in South Africa where your counterparts that side are supporting startups through private equity?” Moshoke asked from the BSE floor. He further suggested that Ram could consider seeding such a venture with P1 billion given that he understands business.
In a post event chit-chat with this author, Moshoke said that he believes that businesses would be foolish to ignore funding needs of start-ups.
“If leading enterprises fail to recognise that the success of our economic system is dependent on inclusive long-term growth, many will at some point raise legitimate questions about the role of large employers in our society. That is why at Payless part of our strategy is to grow with local producers,” says Moshoke.
Moshoke spoke the language of economist Adam Smith – the patron saint of the shareholder model of capitalism who emphasised the need for businesses to push for not just for self-interest but also to have values of empathy, trust and high morals in commercial interactions.
He explained that his company jumped at an opportunity to take over Payless Supermarkets because it gave Ellis Retail Group a chance to prove to Batswana that the retail business is open and lucrative.
“The objective is to create a proudly Botswana retail chain that fully supports our national Vision, economic development and citizen economic empowerment ambitions but we need any form of support that we can get, more especially from funders,” said Moshoke.
In line with government’s commitment to citizen economic empowerment and value chain development, Moshoke says Payless has reserved percent of its shelf space for local products.
“We have also partnered with Botswana Investment & Trade Center (BITC) on the #PushaBW campaign with a view to initiating earnest engagement with local producers to iron out bottlenecks and ensure seamless trading”, said Moshoke.
The need to fund start-ups..
But Moshoke’s commitment and by extension that of Payless could only be fruitful if the startups ecosystem in Botswana is efficient and functional. To this end, Payless and many other startups in the country are possibly looking to the new Citizen Economic Empowerment Act for possible shield. The new law prescribes for state owned Finance Development Institutions (FDIs) like Botswana Development Corporation (BDC), Citizen Entrepreneurial Development Agency (CEDA) and the National Development Bank (NDB) to forge business partnerships with the likes of Payless.
A local entrepreneur – Zandile Rammekwa who is into production of wet wipes recently told Sunday Standard that the initial startup cost is proving to be a major impediment to entering the market.
“In order to gain a market share and eventually be able to receive economies of scale in the long run, the product also has a higher selling cost”, said Rammekwa.
Rammekwa, who founded a local wet wipes brand dubbed AloeHug highlighted that the new Ministry of Entrepreneurship is a great first step in trying to centralize and manage Entrepreneurial activities. She however believes structures and policies need to be streamlined in a way that allows for work to actually be done.
“We are great at setting up and launching initiatives but very rarely do we see top to bottom management that allows for sustainable success, profit growth and job creation. Structures that have monitoring and evaluation processes that are truthful and can assess what isn’t working instead of wasting resources and money on trends are needed,” she noted.
Rammekwa, just like Moshoke believes the government needs to focus on home grown solutions that are created by Batswana to help Botswana.
A Maun based Business consultant Gaobolae Phuthego of Transit Media agrees that it is important for state owned FDIs to support startups financially.
“This will in turn facilitate employment creation and economic growth which is badly needed right now. Infact what we have seen happening in other countries is that state owned agencies like CEDA can go as far as acquiring an equity stake on a targeted firm, in our case Payless or any startup. This basically means that such startups would not be subjected to pay security fees which are usually a requirement in debt financing” said Phuthego.
For his part, on funding, Moshoke said that as Payless they stand ready to walk hand in hand with FDIs like BDC, NDB and CEDA to, “empower fellow Batswana economically”.
“We have potential to grow our human resource headcount to as much as 4000 country wide. As part of our expansion strategy we continue to knock at some of these FDIs in search of potential funders. The moment we are funded we will be creating the much needed jobs”.
Moshoke said that the takeover of Payless from the previous owners by the Ellis Retail Group in 2021 saved more than 200 jobs and gave a new lease of life to the previously fledging brand. The Payless brand is one of the oldest in Botswana. It started off as Corner Supermarket in January 1976, and to date boasts of nine stores in, among others, Gaborone, Mochudi, Molepolole and Tlokweng.