Promoting local enterprise development in Botswana

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Over 800 million people still live in extreme poverty and almost a third of the world's population still lives on the equivalent of about US$3 a day. A lack of decent work opportunities erodes the social contract underlying democratic societies: that everyone must share in progress. Sustainable economic growth depends on creating the conditions that allow people to have decent jobs that stimulate the economy while not harming the environment.  All ICMM members implement the 10 principles that underpin our Sustainable Development Framework. Principle 9 requires companies to continually improve their social performance, and contribute to the social, economic and institutional development of host countries and communities.

When the UN’s Sustainable Development Goals (SDGs) officially came into force in January 2016, the nations of the world committed to mobilise efforts to end poverty, fight inequalities and tackle climate change. Business has a significant part to play, alongside governments and civil society, in creating pathways for a greener, safer and sustainable future for us all. Metals and minerals are essential to almost all aspects of everyday life; they enable farming, healthcare, communications, construction, transport and energy and water supply. And they will arguably become more important as they help to deliver the infrastructure required for a low-carbon future. This is one of a series of case studies gathered from our members to highlight how companies are working to enhance their contribution to society and help industry to manage potential adverse impacts their activities may have on the realisation of some of the SDGs.

With diamonds currently comprising 83 per cent of Botswana’s export revenues, the Government of Botswana is determined to make their economy less ‘diamond dependent’.

In 2014, a partnership between Anglo American, De Beers Group, Debswana and the Government of Botswana launched an enterprise development initiative. As part of this scheme, the mentorship programme Tokafala (which means ‘to improve’ in the local Tswana language) has bolstered the growth of small, medium and micro-sized enterprises (SMMEs) and helped diversify the economy.

Economic diversification is the top development priority for Botswana, as the country seeks to sustain its remarkable growth since attaining independence in 1965.

Job creation across a wide range of sectors is needed to reduce income inequality and promote social cohesion in the long-term, especially as diamond revenues will eventually decline as the resources deplete. These jobs must be sustainable and inclusive, in line with SDG8. Globally, Anglo American has supported 116,298 jobs through its enterprise development initiatives since 2008. Botswana’s Strategy for Economic Diversification (2008) emphasises an increasingly important role for SMMEs to play in the transition to a less diamond-dependent economy. Yet SMMEs in Botswana face substantial challenges that threaten their growth. These include limited access to markets, informality, financial inadequacies, and a lack of vital business skills in planning, financial management, marketing and operations.

Enterprise Development Programme – Tokafala

In response to these challenges, the partnership launched the 3-year enterprise development programme, ‘Tokafala’.

The programme aims to promote economic development and employment creation in Botswana by helping local entrepreneurs develop the skills they need to build successful and sustainable businesses and providing long-term support to individual SMMEs. The programme is closely aligned with Anglo American’s socio-economic development approach that focuses on leveraging core business activities in order to create value for communities in the areas where Anglo American operates.

Business mentors offer advice tailored to the specific needs of each business, and facilitate Access to Finance (A2F) support. A2F support includes assumption testing, investment need evaluation, financial modelling, identifying sources of finance and application preparation support.

The well-established Anglo American Zimele small business development programme, which has been running since 1989 in neighbouring South Africa, provided a model for Tokafala. The programme has been implemented by TechnoServe, which manages other enterprise development projects in Africa and Latin America for Anglo American and other partner organisations.

Creating jobs and supporting enterprises

In the first  three years of operation, the Tokafala programme has supported over 2,000 jobs (the number of full time employees in the enterprises that successfully complete the programme). From 2014 to 2016 322 new jobs were created, measured as the difference between the number of jobs supported at the beginning of the programme and then 12 months later. The programme has supported 267 enterprises, of which six per cent are medium-, 71 per cent are small-, and 23 per cent are micro-enterprises. 

While the focus of Tokafala has been on training and mentoring, the programme has also helped mobilise BWP11.8m (over US$ 1 million) in commercial and development finance in its first two years through targeted access to finance support.

Tokafala helps with loan applications and links entrepreneurs with financial institutions. Providing support to access finance has been key to the success of businesses mentored by the project. Once businesses understand this, they are then able to grow significantly through self-financing or only minimal financing, which can more easily be secured from existing lenders.

In the first two years of Tokafala’s operation, participating SMME’s net revenue grew 39 per cent. Of the enterprises receiving support throughout the programme, 38 per cent have been owned or co-owned by women (45 per cent in 2016), and 32 per cent have been owned by young entrepreneurs.

Through the Tokafala partnership programme, the diamond industry is providing entrepreneurs with a pathway to realise their potential and contribute to a strong and diversified future for Botswana. 

Lessons learned

1. Advisory first

Before Tokafala started, Anglo American examined the lessons learnt from other programmes in different parts of the world, including South Africa and Latin America. These showed that providing funds alone is not always the best route to improving the performance and sustainable growth of a business. Therefore, Tokafala adopted a model of mentoring and advisory first, followed by access to funding. 

2. Access to finance easier than first thought

Commercial and development finance for SMMEs was more readily available than anticipated during programme design. The focus became dedicated to providing A2F support. Tokafala has managed to connect SMMEs with banks and mobilise finance for their growth.

3. Tendering

Botswana's economy is largely tender-driven from public and mining procurement. Tokafala has developed best practices in tender preparation and follow-up in this context, which has been well-received by beneficiaries.

4. Collaboration with Government

The benefits of the programme are set to continue with Botswana’s Ministry of Investment, Trade and Industry signing a Memorandum of Understanding (MoU) on the 7 August 2017 with Anglo American, Debswana and De Beers Group for the continued expansion of the Tokafala programme. The involvement of the Ministry’s Economic Diversification Drive Unit helps to give the programme reach and underscores the collaborative approach of the partnership. Bringing together business, government and NGOs has proven to be critical for ensuring success and sustainability of enterprise development programmes.

5. Continuous improvement and best practice sharing

Using a rigorous monitoring and evaluation approach allows the programme to regularly assess its effectiveness and to adjust the programme design flexibly if necessary. In addition, to ensure continuous improvement, the Tokafala team meets monthly with other TechnoServe Enterprise Development teams across Africa and Latin America (all operating in extractives contexts) sharing best practices in entrepreneur selection, support, measurement and other technical areas.

ICMM members supporting the SDGs