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Article

Open Access

Streamlining Government Financing Programs for SMEs in the Sub-Saharan Africa: The Case of Botswana

Author(s)

Mengsteab Tesfayohannes

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DOI:10.17265/1537-1514/2012.02.004

Affiliation(s)

Mengsteab Tesfayohannes, Ph.D., Associate Professor of Management, Sigmund Weis School of Business, Susquehanna University.

ABSTRACT

The issue of SMEs financing is complex and we should address it on a priority basis. Although SMEs should be motivated to initiate their own means of solving their financing problems, their capacity is limited and the role of other stakeholders in the financial sector is vital. In this scenario, governments have a major role to play. Strengthening the government’s role is very important since it acts as a catalyst, investor and regulator to strengthen the supply-side of the economy. This paper discusses what role the Government of Botswana (GoB) can effectively play in facilitating SMEs financing. The author proposes four financing packages containing schemes for possible use by the GoB—direct financial assistance schemes; loan guarantee schemes; direct credit grant schemes; and financing of technical and managerial advisory services. Stakeholders need to evaluate these schemes from the economic rationality point of view before they are opted for implementation.

KEYWORDS

small, medium and micro enterprises, financing, government financing schemes, financing institutions

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