Business Linkages Facilitation

The establishment of business linkages between Small, Medium and Micro Enterprises (SMMEs) and large corporations (LCs) is one of the best ways for local firms to access markets as well as enhance their competitiveness as they can obtain critical missing assets, such as access to international markets, finance, technology, management skills and specialized knowledge. The Local Enterprise Authority (LEA) is responsible for the promotion of the development of vertical integration and horizontal linkages between SMMEs and primary industries in agriculture, manufacturing, mining, tourism and services as well as promotion of business linkages between small and large enterprises leading to the development of a competitive SMME community.

Components of the Business Linkages Programme

LEA views business linkages are in two folds: horizontal linkages and vertical linkages. Vertical linkages refer to co-operation and partnerships between firms (SMMEs) and large corporations along the value chain perspective. The underlying economic rationale is that through this strategic partnership, success in the target markets can be enhanced. This arises through economies of scale and the reduction of costs in the value chain and/or quality improvement. Horizontal linkages, on the other hand, are co-operative-type of activities between firms (SMMEs) on the same step in the value chain.

The underlying economic imperative is that the individual firms are too small to realise economies of scale in purchasing, hence the need to link them either to supply one another or jointly supply large corporations. There is a vast number of supply opportunities for SMMEs to large corporations and/or to other SMMEs, which have barely been tapped into. LEA, through implementing the business linkages strategy, seeks to enhance access to local market access, which in the long term, will create sustainable businesses and employment opportunities for Batswana.. Business linkages have the potential to facilitate skills and skills and technology transfer among the SMMEs.

Mining Sector: A Booming Business Linkage Opportunity

LEA sees the boom in mining as a good opportunity for the relatively infant SMME sector. Recent discoveries of minerals in Botswana have given rise to renewed hope and expectations for exponential growth to other sectors whose success depend, to a large extent on the mining sector. As a country which has been proved beyond doubt that it is well endowed with a wealth of minerals such as diamond, copper and nickel, coal, natural gas and soda ash, to name but a few, Botswana's economic and industrial growth is poised for new horizons and renewed potentials.

The country's growth potentials in the future have never looked so bright they are today. These new developments further present opportunities for SMME growth prospects. In particular, SMMEs stand to benefit a great deal in the supply of mining inputs, utilization of waste products from the mines as well as the beneficiation of the minerals. LEA has already developed its Business Linkages Programme which is geared towards bring together the SMMEs and the mining community. In order for SMMEs to be able to harness this multitude of benefits and opportunities, they must have a strong technology and skill base. In recognition of the need for efficient and effective business processes in the various SMME sectors, LEA has put in place a programme that seeks to assist SMMEs in the area of technology adoption and diffusion.

LEA encourages linkages between local SMMEs and their international counterparts as one of the ways of improving their competencies and efficiencies. These linkages may take the form of joint ventures and partnerships.  In this way, LEA plays an important role in the promotion of foreign direct investment and trade development. Those foreign investors who wish to access LEA services can only do so through partnership with local SMMEs which have already enrolled for LEA entrepreneurship development interventions. Teaming up with these local SMMEs is advantageous to foreign investors as the former are very familiar with local conditions and therefore will provide the necessary logistical support.