Small Medium Enterprises (SMEs) sector – a key opportunity for achieving economic diversification and sustained economic growth - BIHL Group

Mr. Kudzani Pickup, Head of Structured Solutions at Botswana’s leading insurance operation, BIHL Group, has said that Small Medium Enterprises (SMEs) represent a key sector for driving Botswana’s economic diversification and sustainable growth plan. These remarks come in further support of the Botswana Stock Exchange (BSE) Listings Conference recently convened in Gaborone which hosted over 400 delegates from local and regional markets.

Said Mr. Pickup, “According to studies by the World Bank and the OECD, SMEs make up a significant part of emerging market economies. Outside the agricultural sector, they account for 95% of all firms - in Botswana, specifically they make up 35% of our GDP and contribute 75% to formal sector employment. In developing countries alone, SMEs have a credit gap of $1 trillion, while having the potential to contribute billions to GDP and creating millions of jobs. These are staggering figures and they indicate where we should be directing our financial, educational and capital resources, especially for a country like Botswana where we are in high need of economic diversification.”

Access to financing remains a commonly discussed issue facing SMEs: a credit gap is the biggest constraint to growth in middle-income countries like Botswana.  Better access to capital markets could help bridge that gap. Hence there remains an opportunity for SMEs to finance their growth strategies through listing on the BSE.

Listing on the stock market has several benefits:

·         It provides access to capital at a lower cost compared to taking a bank loan

·         It increases the credit worthiness of a company

·         It diversifies the investor base of the company, making the company less vulnerable to external risks

Concluded Mr. Pickup, “We evidently still have much potential to release from the SME sector in order to drive our economic growth and we commend Rre Thapelo Tsheole and his team who are in the process of launching Tshipidi – a new board on which SMMEs will be able to list. SMEs should really be at the center of our national economic growth strategy. Providing more financial advisory, and management development support, as well as incentivising creativity and innovation for SMEs should be our main priority if we want to enjoy continued financial and economic prosperity.”