Who Will Drive Our Economic Recovery, SME’s?

Author, Thabiso Ntlole, Consultant @ Innolead Consulting

“As February drew to a close, few could have imagined such an emergency. Many companies were having the best years they’ve ever had these last few years, and then a little bit of days ago, they went into a position that they haven’t seen because of the hidden enemy, the virus. … It’s not their fault. It’s not their fault.” A statement by the President of the United States of America, a rare statement equally believed by a people and their President. It has to be in there for the American economy to make it out of the economic crisis induced by COVID – 19 crisis. It’s true, the world economy needs the more than $21 trillion ailing giant to function in some way. Of course as the planet stands frozen, what matters most right now is the recovery of those infected by the virus and protection for all humanity.

The world economy, and our local economy will never be the same after the COVID – 19 crisis is over, it will end at some point. Health professionals around the world are pushing their passion and lives to the last inch, they all went in head first. Their job is very difficult to complete because they were not prepared for this, nobody expected things to get this bad. However once their race is finished somebody has to fight a fresh unprecedented battle: to get the economy back to its feet again. Analysts across the far and wide world have already called it the worst financial crisis of our lifetime. To start the recovery, the US Government has already passed a bill for a $2.2 Trillion stimulus package, not really much for such an enormous economy, a very welcome relief under the current circumstances though.

In the context of Botswana, our economy has already taken a huge punishment even before a single confirmed case was recorded. A good number of SME’s in events management, travel & tourism, entertainment, catering, beauty & cosmetics etc. have already closed shop. They couldn’t take it anymore. The very ‘abdomen’ of industry is being decimated to pieces as the world’s economic machinery stands frozen, they simply don’t have the cash reserves found in corporations. In what we had come to accept as the “normal” economic climate, SME’s operated on what I call a life support business model, now and in the future that very model needs life-support itself. Corporations will survive this, many of them will.

We do not have significant Government reserves anymore, we are not in 2008 anymore, and we should not expect the Government to pump a luxurious stimulus package into the economy. Only one limitless resource can save the day, better yet the year: Profound belief in the SME. Our Government has agreed on many stages that a bulk of our economy is not in the hands of Batswana or Batswana owned companies. If Government could put all its faith, trust and last thebes on SMEs then our next largest export contributor is our SMEs, not even tourism, not coal, not uranium, not ash, not industrial hemp, just resilient SMEs. The Government need not understand the technicalities of recovery from this global awfully terrifying nightmare, we have plenty of well-educated women and men who live and breathe the technical expertise.

A very sad situation evidencing the blemish of starving SMEs is in the tourism industry. The core of Botswana’s tourism industry is on shutdown, only keeping skeletal structures in place to gaze at the horizon for the absolute doom’s day or recovery day, hopefully recovery. Notice that this was in effect before we even had a single confirmed case of COVID – 19 in Botswana, or a complete lock down, a good bit of time before restrictions were in place the tourism sector had suffered a ruthless punishment. Why? Because the money circulates in-large in corporations and ultimately to the outside of our boarders as declared dividends, low money flow pressure in SMEs. Otherwise SMEs would have one way or another, pushed money into the tourism part of the ecosystem, even without foreign visitors.

I was told a few years ago by a friend of mine, he said “African countries chase declaration of import duties, large economies chase declaration of dividends”. Declaration of import duty just shows how much money we ship out, while declaration of dividends shows how much money we keep within our boarders plus money we brought in. It’s a very simple formula, SMEs must be kept busy doing more high value business with Government, subsequently they will make money here and keep it here, exactly where it’s supposed to be.

The duty of the Government is to believe that SMEs will carry the country forward. The proof of that profound belief is in Government reserving all procurement, whether big or small, for Batswana owned SMEs. Government must believe that we can be contract owners while foreign companies subcontract to us. If Government could believe that we can do great things for our beloved republic, that we can impact people’s lives positively, that we love this country beyond any reasonable measure; then the road to recovery will be the same half way road to economic diversification. A product is not the export, fried chicken is not their export, KFC the company is their export, Microsoft Corporation is their export, Tiger Brands is their export, our next big export is our SMEs, the next cadre of soldiers on the frontline in what will be a war against the COVID – 19 aftermath.

Thabiso Ntlole is a Consultant at InnoLead Consulting offering Management Consultancy and Corporate Training Solutions. He can be contacted on +267 3909102 and innolead@innolead.co.bw