CONVENCIÓN DE VIENA DE 1980 SOBRE COMPRAVENTA INTERNACIONAL DE MERCADERIAS

In this section we look at the production processes of the firms, particularly the costs of operation, related to material inputs and machinery, as well as the accessibility of such inputs. This should help us assess whether the cost of production in Botswana impedes SME competitiveness both domestically and internationally.

Sourcing materials from outside the country is a very crucial production factor for Botswana firms. A substantial proportion of inputs are obtained from outside the country, either through direct procurement or from local wholesalers, which would have obtained the materials from outside and added a mark-up. Most of these inputs are from South Africa. Some firms travel to South Africa to physically obtain their inputs, some hire transporters, while others have arrangements with their suppliers to deliver to their businesses. Tables 7.9 and 7.10 show the length of time in days that these companies take to place orders and receive their inputs from outside the country.

Table 7.9 shows the length of time it takes firms to obtain inputs from outside the country. It is evident that most of the firms seem not to be experiencing delays in obtaining their input goods - 80% of the firms need at the most 14 days to receive goods ordered from outside the country. This length of time is reasonable, and if firms make proper arrangements concerning orders for their inputs, there should be no unnecessary disruptions in their production processes.

Table 7.10 undertakes to compare delivery times for firms located in Gaborone vis- a-vis those located elsewhere in the country. More or less the same proportions of firms in Gaborone (74%) and firms located elsewhere (70%) procure some of their inputs from outside the country.

PERFORMANCE ANDCOMPETITIVENESS OFSMES INBOTSWANA

Table 7.9. Length of time taken by firms to order and receive inputs from outside the country.

Number of Days Number of Firms Per cent Cumulative Per cent

1-7 57 57 57 8-14 23 23 80 15-21 4 4 84 22-28 1 1 85 29-35 7 7 92 36+ 8 8 100 Total 100 100

Table 7.10. Length of time taken by firms to order and receive inputs from outside the country.

It is interesting to note that the firms located elsewhere generally obtain their inputs from outside the country relatively faster than those located in Gaborone, contrary to what one would expect. At least 83% of the firms located elsewhere obtain their inputs procured from outside within 14 days as opposed to 78% for those located in Gaborone. While 52% of the firms located in Gaborone obtain their procurements from outside the country within 7 days, 63% of the firms located elsewhere obtain their procurements within the same space of one week.

A possible explanation for this scenario is that perhaps a higher proportion of the Gaborone-based firms obtain their inputs from further afield, that is beyond South Africa and the southern African region. Another possible explanation would be that the procurement and delivery arrangements of Gaborone firms contribute to delays. For instance, if Gaborone-based firms mostly rely on their suppliers to deliver their orders, it may take more time for them to receive their goods as opposed to when they obtain supplies directly from their suppliers.

A second possible explanation may be deduced from the information regarding how firms deliver raw materials to their production sites. A slightly higher proportion of firms located outside of Gaborone prefer to transport their raw materials themselves as opposed to hiring transport companies or having their suppliers transport the goods for them. Of the 29 firms located elsewhere that are able to order their raw materials from outside the country and receive them within one week, 16 firms transport their raw materials themselves. On the other hand, only 8 out of 28 Gaborone-based firms that order and receive their raw materials within one week transport them themselves.

Firms were asked to identify problems that they deemed to be very constraining to the operation of their businesses. Figure 7.1 shows those problems that a sizeable 7. FIRM-LEVELSURVEYRESULTS

Number Gaborone Cumulative Firms Cumulative

of Days Firms Per cent Per cent Elsewhere Per cent Per cent

1-7 28 52 52 29 63 63 8-14 14 26 78 9 20 83 15-21 1 2 80 3 7 89 22-28 1 2 81 0 - 89 29-35 4 7 89 3 7 96 36- 6 11 100 2 4 100 Total 54 100 46 100

number of firms claim to be severe in terms of constraining the operations of their businesses.

Competition from imports is the most important problem that the firms say they face. Overall, 40% of all the firms (57 out of 141) identified competition from imports as a problem that affects their operations. Sizeable proportions of firms producing metals, paper and chemicals view competition from imports as a problem, as 50% or more of these firms claim that this is a problem.

The lack of demand, credit and business support services (BSS) show similar patterns in terms of the firms’ views that these inhibit the operations of their business. Between 26% and 27% of the firms claim that these are the main problems that constrain their businesses. Other problems identified by the firms are a lack of skilled labour and lack of infrastructure. Lack of infrastructure, in particular, is identified by a smaller number of firms, which is perhaps an acknowledgement that the basic physical infrastructure is generally in a good state. However, other infrastructure (especially factory shells) are generally unavailable, although this usually affects medium- and large-scale firms, rather than the small and micro firms.

It is noted that, overall, the proportion of firms that identify these problems seems to be relatively small, with the possible exception of those noting competition from PERFORMANCE ANDCOMPETITIVENESS OFSMES INBOTSWANA

the firms responding were either micro and small, accounting for more than 75% of the total sample, which could have had a bearing on the way the business owner managers would view the issues that were being put before them and the extent to which the problem would apply to their firms. For instance, except in the case of highly specialised products, one would not expect a micro or small firm to identify the lack of skilled labour as a problem; the expectation is for such firms to produce using locally available labour that is minimally trained. The question may have limited the usefulness of the responses, as it asked the firms to identify only three main problems from a list of 22 possible ones. However, this factor can be viewed as a reason for the scattering of the responses among the problems in the list, and that a problem that is identified by a sizeable number of firms should be taken seriously, even though in percentage the firms response would seem to be less significant.