MOU’s were signed between UNDP and six financial institutions which include: Stanbic Bank, Absa Bank Botswana, Bank Gaborone, Standard Chartered Bank, Citizen Entrepreneurial Development Agency (CEDA) and the National Development Bank (NDB).
The UNDP-SDP works to create demand-based, market-driven opportunities for SMEs to increase their competitiveness through the innovative Suppliers Development Methodology (SDM), while connecting essential small-scale producers/suppliers to larger markets locally as well as abroad.
The programme is in its second year of implementation and ‘access to finance’ is one of the key business challenges listed by SMEs on the programme thus far. Lack of collateral or security, poor business plans, low financial literacy and the lack of financial records are some of the key factors which hinder an SMEs ability to raise capital. UNDP recognizes the difficulties faced by small businesses in their attempts to apply for loans, lines of credit and expansion capital through traditional banking. As such, the UNDP-SDP approached the commercial banks and national financial institutions to provide access to holistic finance packages, tailored towards the needs of SMEs, that will provide investment and credit facilities to at discounted rates.
In her welcome remarks, the UNDP Resident Representative, Jacinta Barrins presented that the partnerships with the banks were a pivotal piece to the puzzle UNDP was looking to solve in its efforts to support SMEs in Botswana. The UNDP-SDP, she noted, works to provide SMEs with access to markets, access to knowledge and access to finance – which will be advanced through the just signed MOU’s.
Project Manager for the UNDP-SDP, Boitumelo Mbaakanyi lauded the banks present for supporting the UNDP’s efforts to grow the SME economy in Botswana. She highlighted that the Banks were bringing much to the table in the form of: preferential lending rates; innovative funding mechanisms; projections-based cashflow funding vs. historical financials; SME-friendly credit facilities; credit guarantees. Finally, she encouraged the banks to “develop robust relationships with their clients even the ones who deposit P50 today”.
The event further served to launch a new partnership between UNDP-SDP and FinMark Trust, an organization that seeks to further financial and economic inclusion for all of the SADC region. The Country Coordinator for FinMark Trust in Botswana, Masedi Letsididi presented that Micro, Small and Medium Enterprises (MSMEs) are essential for economic development and are expected to be key drivers of sustainable growth in Africa. As such, FinMark Trust has done significant work on MSME scoping in Botswana, Eswatini and Lesotho in an effort to get to understand their form and character. This she said will produce data that will be critical in designing the suitable form of funding for MSMEs.
The UNDP-SDP provides training and support that cultivates growth within SMEs to a level where they can be considered bankable, meeting the requirements of commercial banks and national financial institutions. The partnerships with financial institutions will go further to guarantee that the Suppliers will always have an audience with the banks and financial institutions, as the limiting barriers to entry are lifted. The partnerships will extend beyond the provision of loans and credit, as the financial institutions have also extended the additional offerings of savings accounts, SME employee accounts, financial literacy trainings/workshops, as well as bank-led mentorship and business development programmes to the SDP Suppliers, providing for a holistic package for the SMEs.
The advancement of partnerships which focus on access to finance will support the Supplier SMEs to grow and expand their businesses, building their resilience and in turn, increasing their ability to create jobs and contribute to Botswana’s economic development.