Problems Preventing Growth of Small Entrepreneurs: A Case Study of a Few Small Entrepreneurs in Botswana Sub-Urban Areas

Problems Preventing Growth of Small Entrepreneurs: A Case Study of a Few Small Entrepreneurs in Botswana Sub-Urban Areas

Bonu Swami (University of Botswana, Botswana) and G. T. J. Mphele (University of Botswana, Botswana)
DOI: 10.4018/978-1-4666-8798-1.ch020
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Lack of growth of small entrepreneurs can be attributed to insufficient support by the Government through its support programs as well as to their own internal weaknesses in terms of applying the right business strategies. An inductive, quantitative approach was used for carrying out the research. The data was collected through questionnaire method from three localities selected at random from sub-urban areas of Botswana, a landlocked country in Southern Africa. Most of the problems preventing growth of small entrepreneurs were lack of funds and difficulty in accessing Government support programs. The study recommends that the Government should provide training about viable small entrepreneurs which are highly recommended for funding and owners should change their approach to running business and engage in efficient business strategies that can give them growth. These recommendations, if applied properly will create small entrepreneurs growth not only in sub-urban areas of Botswana but also elsewhere.
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An entrepreneur who manages a small business is termed as a small entrepreneur. Small business is defined differently in different countries. The main yardsticks that are employed in the identification of a small business are number of employees and or annual turnover. Number of employees as a measure to locate the small business different in different countries such as in Australia less than 15, in European Union less than 50 employees, in USA less than 500 and in Botswana 5 or less employees and annual turnover up to P100, 000 (Ministry of Trade and Industry, 2011) (Botswana currency one Pula is equal to Indian Rupees 6.50). In Botswana the small enterprises are originated either from Sole Proprietorship, Societies, Co-operative Societies, Joint Ventures and Private Limited Companies.

Small entrepreneurs are the backbone of the economic development of any country more so for developing nations such as Botswana. They are the feeders for the development of big businesses and industries. They work like intermediaries between the rural and urban areas. They collect raw material from rural areas and supply them to urban (industries) and at the same time secure finished goods and deliver them to the needy in the rural areas. Though the small entrepreneurs are the life blood of economic development of any country, they face many problems including those associated with starting the enterprise and keeping the enterprise running. Beatlie; (2014) aptly stated that the small business units (small entrepreneurs) face the problems of securing enough clients to break even, money management to secure appropriate funds at appropriate time, fatigue due to running business as a sole trader, depending on others, balancing the quality and bottom line. In addition to the above stated problems, the small entrepreneur is not successful due to the following other variables such as lack of accounting knowledge, non-embracement of new technology, non adoption of marketing strategies, lack of venture capital, difficulty to secure government help at proper time. In order to alleviate these problems many governments, non-government organizations and charitable institutions across the world are coming forward to render a helping hand to these small entrepreneurs more so in the developing nations. Despite these interventions, the development and growth of small enterprises in developing countries still appears to be slow and difficult. This paper thus seeks to generate an in-depth understanding of problems or challenges that hamper the development and growth of small enterprises, using Botswana as a case study.

Problem Statement

The Government of Botswana on recognizing the role played by small entrepreneurs in the economy provided support programs designed to develop and promote them. The programs provided by the Government include, Citizen Entrepreneurial Development Agency (CEDA), which provides financial assistance in the form of loans at subsidized interest rates. It also provides business coaching, mentoring and technical assistance to CEDA funded businesses. Local Enterprise Authority (LEA) does not provide finance but provides business development services such as screening, business planning facilitation, training and mentoring services to small entrepreneurs. The Youth development fund (YDF) under the Ministry of Youth, Sports and Culture provides financial assistance in the form of grants and loans. However, many small entrepreneurs in Botswana are continuing to close down their businesses despite the fact that the Government has provided these business development programs. These businesses are not succeeding and many of them have failed to get off the ground. This infers one to wonder what causes small entrepreneurs to fail even though there are programs and schemes put in place by the Government to assist them.

Key Terms in this Chapter

Social Capital: Social capital is the sum of quality and quantity of society’s social connections. Social capital is a prerequisite for developing the society economically and the development to be sustainable. It is the factor that binds society to work together for the development of the society as a whole ( AU94: URL Validation failed because the page does not exist (HTTP error 404). ).

Livestock Management and Infrastructure Development (LIMID): Government of Botswana merged the two programmes such as Services to Livestock Owners for Communal areas (SLOCA) and Livestock Water Development Programme (LWDP) in 2002 and then called it as LIMID with the objectives of promoting food security through improved productivity of livestock. Batswana of 18 years old are assisted in maintaining the facilities and rests to project owners ( AU93: URL Validation failed: does not exist (connection error "HOST_NOT_FOUND"). ).

Mmalhubudukwne: Mmalhubudukwne is a medium sized village in sub-urban area of Botswana. It is stated that it is a city, town, village or other agglomeration of buildings where people live and work in the country of Botswana.

Affirmative Tender Procurements: It is a policy document that was developed in South Africa by the Ministry of Finance and Public Works. This document is used as an instrument for procurement with an aim of eradicating the legacy of apartheid as apartheid influenced in growth inequities, inefficiencies and under-developed resources and markets (Small Enterprise Development Agency: AU92: URL Validation failed: returns a connection failure (connection error "ECONNREFUSED"). ).

Social Return on Investment: ( SROI): Social return on investment is a measure applied to judge the return from non financial sources such as environments and social values. It is used to evaluate the impact on stakeholder, improving performance, and improving the performance of investments.

Citizen Entrepreneurial Development Agency (CIDA): CIDA is government of Botswana agency established in 2001 to provide financial and technical assistance for business development of citizen owned enterprises.

Mochudi: Mochudi is a big village in sub-urban area in Botswana having population of 44, 815 in 2011 and situated in Kgatleng district of Botswana. It is 37 KM away from Gaborone, the capital city of Botswana.

Small Business Administration (SBA): Small Business Administration in US introduced certain size standards for identification of a small business. The size of a small business varies as per the industry difference.

Bottom of the Pyramid (BOP): BOP is a concept used in US to group the world poorest citizens who are facing the challenges that prevent them from securing their human potential for their own benefit and families. The poor live with less than $2.50 per day and excluded from the global civilized society. It is aimed at inspiring the leaders for the unleashing of their creative and productive potential as part of an inclusive capitalist system, free of paternalism toward the poor.

Malotwane: It is a medium sized village is about 77 km north of Gaborone, the capital city of Botswana.

Youth Development Fund: Youth Development Fund is an empowerment programme aimed at encouraging the youth in the socio-economic development of Botswana and to assist the citizen owned youth enterprises.

Local Enterprise Authority (LEA): Local Enterprise Authority was established by the Small Business Act of 2004 in Botswana under the Ministry of Trade and Industry with the main purpose of developing entrepreneurship and enterprises in Botswana.

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