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      Home Columns Unimaginably Rustic Conversations

      Mmatla kgwana ga a robale

      Credit facilitation and endorsement in SMMEs will not attain economic sustainability alone while in fact our apparent framework has not been able to grapple with and fully explain the sophistication of our local content but rather in contradiction, has been lauded by world indices about our economic make-up.

      mm by Bame Boitshoko
      May 30, 2022
      in Unimaginably Rustic Conversations
      Reading Time: 3 mins read
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      Mmatla kgwana ga a robale
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      “Mmatla kgwana ga a robale.” The Setswana proverb directly translates as “One who seeks a red cow with white spots does not sleep.” Inessentially, brought to introspect, the proverb speaks about searching diligently for something difficult to obtain.

      Over the last couple of years, major scrutiny has been around the governments’ efforts at economic resuscitation. With build up kernel to policy restructuring, the cutting of red tape as well as financial and portfolio interest reformation. However, the major find for any economical regime has never been resuscitation but sustainability, particularly sustainable economic growth. The pandemic just drove us away from that particular narrative.

      As an abstract conceptual framework, in the last two years we have seen multiple channels of transmission of financing and funding by both the government and the private sector as a way of taking on the attitudes and distributional concerns posed by the pandemic, particularly toward the SMME sector.  This came after the pandemic exposed the vitality of SMMEs to economic resuscitation. Rustically, SMMEs hold the front in terms of being a direct form of circulation in the real sector interaction. In this regard, we conclude that they aid the production of goods, the exchange of goods and services and the distribution of value derived between employment, direct investment and consumption. So, it is justifiable why the government and the private sector invest in SMMEs. However, does this investment endorse sustainability or sustainable economic growth?

      Historically, credit has served the role of resolving discontinuity and disturbances in consumption that naturally emerge in the context of stagnant real wage growth, social value influences that would encourage aspirational and conspicuous consumption that would enable macroeconomic policies that would arise out of macroeconomic imbalances in times of crisis. Credit emerges because of interruptions in the cycle of capital and in the discontinuous process of production. Therefore, expansion of credit for SMMEs as a phenomenon in response to challenges of under-consumption is justifiable for economic resuscitation as the conditions for credit emergence have never been more applicable for our economic climate. But how come we are unable to explain the paradox of a disequilibrium that results in stagnant wages, high level of household indebtedness and weak fixed investment that have led to revised economic decline by rating agencies?

      Too much and unstructured credit can turn into a barrier which circumvents economic growth, hence transcends any attempt to sustainability. A sneak peek into the current financing and funding structure, in my opinion, our financing and funding is structured in a way that endorses financial and/or portfolio interest through bonds and equity investment in SMMEs. How many banks currently offer purchase order financing and forward exchange contracts? Basically, most of our financing is structured around endorsing growth, and the perception of the average entrepreneur or SMME owner is that financing and funding is just meant for growth. This then makes credit less potent during times of economic stagnation and hence would lead to the ‘underbanking’ phenomenon.

      How do we then restructure credit financing and funding to fit SMME characters within our current economic climate? Maybe we need to leverage a local content framework that would enhance flexible economic transformation and allow ‘us’ to ask, “What is it that the SMME is trying to do and what is it they need funding for to achieve that objective?”

      Maybe our narrative to subordinate Fixed Capital Formation to Financial and Portfolio Interests deludes sustainable growth, hence it has reversed any advance towards reduction of unemployment, poverty eradication and societal disequilibrium. And in this regard, the very medium of exchange moves beyond consumption or the satisfaction of economic growth to being a mere facilitator of economic exchange, a commodity in a barter economy.

      In conclusion, Mmatla kgwana ga a robale, One who seeks a red cow with white spots does not sleep. Credit facilitation and endorsement in SMMEs will not attain economic sustainability alone while in fact our apparent framework has not been able to grapple with and fully explain the sophistication of our local content but rather in contradiction, has been lauded by world indices about our economic make-up. Changing the local consumption psyche and leveraging local content as a framework for economic transformation could drive us towards our the red cow with white spot. And in conjunction, Motswana a re, “Mmatla kgomo kotlomela o etse mhata sediba.” (If you are looking for the best you must work hard for it).


      blboitshoko@gmail.com

      Tags: SMME

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