Mofomobe takes stock of work with SMEs
Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. They account for the majority of businesses worldwide and are important contributors to job creation and global economic development. SMEs represent about 90 percent of businesses and more than 50 percent of employment worldwide. Public Eye reporter, IRENE SEME (PE), this week spoke to the Minister of Small Business Development MACHESETSA MOFOMOBE (MM) on how best his ministry can grow local SMEs and Basotho in general, and how formal SMEs can contribute to national income.
PE: It has been some time now since you were appointed the Minister of Small Business Development, how has the ride been?
MM: It has not been an easy and comfortable ride taking into consideration that the ministry has three components, which are; small business development, cooperatives and marketing.
PE: What have you achieved during this time in terms of developing small business traders, are there any milestones you can point at?
MM: There are a few things that I can point out as achievements. First, I have built a Small Medium Micro Enterprise policy (SMME) through districts consultations working together with the stakeholders. It was adopted and will be approved as an act of law.
Secondly, through BEDCO under this ministry we launched the Business Plan Competitions programme with the aim of financially assisting young people’s businesses.
On both the first and second selections, 50 youth on each selection qualified for M100 000 business funding, which makes it a total of 100 youth having qualified for business funding of M100 000 each. My wish was that there should be at least two more business plan competitions for informal businesses so that they too may benefit from this programme.
I also want to do it for people with disability.
But other than that, we also have a capacitation programme for informal businesses where we want to improve their workplaces. We have started going around the country after the Ministry of Development Planning approved the Ministry of Small Businesses proposal to improve the working places of informal businesses to be more accommodative for them and their customers and we are planning to start in the rural areas.
PE: Any special focus on women and the youth as vulnerable and mostly disadvantaged sections of our society?
MM: Most definitely, as I have just mentioned the ministry is planning to do the business plan competition for people with disabilities.
On women and youth, the government has since bought the sewing machines for bedding covers, egg trays and the likes. We have met with an association of tailors in Lesotho where we discussed that they should be investors into this project and we agreed on working terms.
PE: Generally, how do you view the way in which previous governments have facilitated the incorporation of small business traders into the mainstream national economy?
MM: SMMEs contribute a lot to our GDP but the previous government, including this current one I am serving under, do not seem to be aiming to empower its State Owned Enterprises (SOEs) such as BEDCO so they would be able to include Basotho into the mainstream economy and empower them, which is the mandate of BEDCO.
So the government does not seem to be prioritising SMMEs. Sometimes BEDCO runs out of funding to fully carry out its mandate and has to rely on the government subvention.
So it is important to limit the government’s interference with SMME but rather support them create more business even though the main challenge of our country is capital finance.
PE: Would you say the same governments paid enough attention to players in small business? Are these people protected from encroaching bigger businessmen – especially foreigners?
MM: No, we have never protected small businesses against the established ones. For example, when I was growing up most established businesses were owned by Basotho, from when you walk in from the border gate all the shops were owned by Basotho. So I would say we as Basotho failed ourselves at some point or rather the previous governments who allowed foreigners to play a part in businesses that are traditionally owned by Basotho and compete with them. That is when the fall of Basotho’s established businesses began.
PE: What does the law say about foreigners trading or selling in the space reserved for indigenous Basotho?
MM: Foreigners were allowed to do businesses such as supermarkets which by right most countries do not allow foreigners to participate in because they are supposed to be operated by indigenous citizens.
The risk and danger of allowing foreigners to operate in retail is because they will send all their money back to home, which erodes our economy to their home countries. But if we had not lost the plot, we would still be in control of our economy.
However, I still believe we have to take some tough decisions to protect our economy and they might threaten our development partners and if we do not, we will never have control of our economy.
Nonetheless, we have good working relations with the current minister of trade and we spoke about changing some legislation to give the Ministry of Small Business control on small business and indeed the amendment bill concerning this issue has been passed in parliament.
PE: As Minister of Small Business, are you doing enough to protect this space for Basotho. Actually, what have you done since being minister in this sector?
MM: Recently there is a new law that has been passed by trade about the business regulations. But the problem with our country is that we do not work together. For example, small businesses are regulated by Ministry of Trade and both small businesses and foreign businesses are licensed by Ministry of Trade. So, as Minister of Small Businesses I cannot interfere.
PE: What plans does the ministry have, or steps taken to address the national outcry over foreigners taking the space reserved for Basotho in small business, we already have vendors and other players up in arms in Mafeteng and Maputsoe?
MM: I am quite aware of the brewing issue across the country where Basotho are fighting to have control of those businesses that are occupied by the foreigners. This is an indication that Basotho cannot take it anymore and it might lead to the situation like in Sri Lanka where people have revolted. So, even with us this is more like a ticking time bomb.
PE: Should we expect to see your ministry forcing these foreigners out of the said business space, if not why?
MM: There is law that states which businesses are reserved for Basotho, but like I mentioned before, as of now I as minister of small business I do not have control over it yet.
PE: How do you plan to involve these disgruntled Basotho business owners in ridding their business section of challenges that they complain of?
MM: Basotho do come to me to complain and I have passed their grievances to the ministry of trade and we both agreed to form a task team built by both ministries because his ministry has power while mine does not. With the task team, we are able to address the issues. Nevertheless, with the new amendment bill we will be able to take the necessary action.
PE: Is there money to support such efforts?
MM: Finances or funding remains the main problem. If there is any ministry that is poor in this country, it is this one. Unfortunately, it is key for business growth and economy but it is mostly sidelined since its establishment around 2015.
PE: It’s only a matter of time before a new administration comes into office after elections, what have you done, or can do in the little time remaining, through which your time in ministry will be remembered in terms of developing or improving small businesses?
MM: I would have loved to have completed the SMMEs capacitation in districts and to have finished improving the workplaces of informal business owners. Hopefully the next minister will complete them. I would really like to be remembered for a lot of things.
For instance, I was supposed to have presented to the cabinet the new law that administers corporations like banks and financial services to accommodate the needs of Basotho. I would really like to be remembered with the achievements I have accomplished during my term. God willing, I hope I will be able to achieve all before elections.
PE: And how would you advise our people in this sector to conduct themselves and their businesses in order to reap maximum benefits?
MM: Business needs patience, my advice would be that one should be patient while doing business despite the challenges we are faced with which is mainly to compete with the foreigners in businesses that are meant for indigenous Basotho. And if I were to become Prime Minister I would pay attention to developing this ministry because it’s a key ministry.