The Role of Small, Micro and Medium Enterprises in Employment Creation

In 2015, Wilbert R. Mutoko of the North-West University (South Africa), presented a paper titled ‘The role of small, micro- and medium enterprises in employment creation: The case of the manufacturing sector in Botswana’ at the 2015 7th International Conference on Business and Finance (ICBF). This is a paper provides insights into the developments of human capital in Botswana.

The researcher wrote;

Small, medium and micro-enterprises (SMMEs) are globally reputed for employment creation, which reduces poverty, empowers citizens economically and increases the gross domestic product (GDP).

Most studies concentrate on SMMEs in general, but currently there is no study specifically concentrating on the role played by the manufacturing SMMEs in employment creation in Botswana, hence the need for this study. This paper explores Botswana manufacturing SMMEs’ contribution to employment creation in the past decade by comparing the proportion of micro-, small and medium enterprises plus establishing the employment figures of each SMME category. Sampling was done using geographical clustering and snow-balling technique.

A hundred participants returned the filled-in structured questionnaire. It has been concluded that the manufacturing SMMEs currently employ only a small percentage of the population of Botswana.

It is recommended that the Government of Botswana should provide incentives to foreign manufacturing firms and also adopt flexible labour laws.

Manufacturing SMMEs should hire enough employees, so that they can delegate, take advantage of and explore export opportunities for SMME growth. Entrepreneurship lessons should be infused into primary and secondary school curricula to train children from an early age to own businesses, thereby increasing employment creation. Colleges and universities should produce graduates who are industry-ready.

Botswana’s underdeveloped manufacturing sector contributed only 3.8% of the gross domestic product (GDP) in 2010.

Manufacturing small, medium and micro-enterprises (SMMEs) are unlikely to be a major driver of economic growth through year 2021, unless some measures are taken to grow manufacturing SMMEs (The Business Monitor International 2014:20).

Growth and sustenance of manufacturing SMMEs is imperative to economic development of economies, Botswana in particular.

Manufacturing SMMEs can immensely contribute towards employment creation, poverty eradication and economic diversification (Nkwe 2012). Furthermore, if run well, manufacturing SMMEs can increase the GDP of Botswana.

Botswana’s unemployment rate stands at 20% (Central Statistics Office [CSO] 2013), which discourages graduates and their parents alike.

However, in Botswana, manufacturing SMMEs face challenges that intimidate their survival, hence the failure to hire people or pay them (Jefferis 2014). Owners of manufacturing SMMEs, therefore, end up doing most tasks themselves, resulting in low productivity.

This paper’s main objectives are therefore to compare the proportion of micro-, small and medium enterprises in Botswana using the case of Botswana manufacturing SMMEs and to establish the employment figures of each SMME category.

This study complements the Botswana government’s concern with developing entrepreneurship, especially among the youth, to reduce unemployment, curb crime and bring about economic diversification (Mutoko 2014; Republic of Botswana 2012).

The Findings revealed the following;

The study explored the contribution to employment creation in Botswana by manufacturing SMMEs.

Findings reveal that the number of employees in accordance to the 100 respondents is a total of 1055. It has been concluded that manufacturing SMMEs currently employ only a small percentage of the Botswana population.

However, SMMEs have the potential to grow and hire more people. Therefore, government and other stakeholders should boost the businesses.

Indications are that the SMMEs in manufacturing are performing below expectation, in spite of vast global opportunities.

If the SMMEs can improve on quality, delivery time and be innovative, they can hire more people.

Recommendations made in the paper included;

Manufacturing SMMEs are encouraged to hire enough employees, so that they can delegate and take advantage of opportunities and explore export opportunities to develop their businesses.

The Government of Botswana should give incentives to experienced foreign direct investment manufacturing firms and be flexible with labour laws, as manufacturing industry needs highly skilled labour, which is not readily available in the country.

Therefore, manufacturing SMMEs should be allowed to import labour with less hassles on work permit applications.

Failure by the government to formulate flexible labour laws results in manufacturers migrating to South Africa where there are better incentives; this can result in many people in Batswana losing their jobs.

Entrepreneurship subjects should be infused into primary and secondary school curricula so as to train children from an early age to own businesses, thereby increasing employment creation.

Colleges and universities are encouraged to develop courses in conjunction with manufacturing industry to make sure their courses are relevant and can produce graduates that are industry-ready. This will help SMMEs to have a hassle-free recruitment of skilled labour.

The full paper is available from http://dx.doi.org/10.4102/ jbmd.v5i1.15

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