ICE Service

Consultancy and Strategic Support / Baseline Studies

Customer

ICR (Investment Climate Reform Facility) Technical Assistance to CEDA (Citizen Entrepreneurial Development Agency)

Background

The informal sector is both important and growing in Botswana, with an estimated 116,571 informal businesses employing just over 191,000 people, translating into an average number of 1.6 employees per company. The informal sector is thought to contribute 26.7% to GDP. In July 2020, it was estimated that 75% of the informal sector businesses in Botswana were owned or led by women. Of these women, 58% were over 35 years old and 66% had been in operation for four years or less. Incomes were very low, with 92% earning less than 5.000 Pula per month, and 28% earning less than 1.000 Pula per month. 86% of the women did not pay monthly salaries to their employees and 86% did not have a bank account. Furthermore, many informal businesses suffered significant reductions in income during the Pandemic.

From a policy perspective, Botswana is keen to encourage the gradual formalisation of businesses, so that MSME can achieve their potential and benefit from the advantages of formalisation. There is a general view that women running formal businesses would be better able to access legal rights and social benefits, improve their ability to access finance as well as participate more easily in trade fairs, e-commerce platforms, public procurement and export markets. At the same time, experience has shown that appropriate policies and regulations need to be in place in order to ensure that the business environment does not harbour gender-based constraints, such as unequal access to property rights, skills training, technology and finance. From the point of view of the business owner, the decision to formalise is a complex and contextualised one, and formalisation constitutes a process that generally takes place over a period of time. Furthermore, not all businesses are in a position to formalise in the short to medium term, making it is important to find ways to support the informal sector while they are as yet unable to formalise.

New Insights into Enterprise and Entrepreneurship

This technical study was undertaken by ICE with expert input from ICE Principal Consultant Yolanda Gibb and Associate Consultant Rumbi Madzudzo.

Research Focus:
To gather evidence about the business environment for women entrepreneurs in Botswana
To identify challenges and needs of women owned businesses
To identify opportunities to support business in the informal sector towards formalisation and decent work

The study took into consideration the need to improve the business environment for and resilience of the informal sector, and to create a business environment that facilitates voluntary formalisation.

Impact

The technical study led to the preparation of a comprehensive report illustrating findings and recommendations highlighted priorities for action, including the need to make improvements to (physical and digital) infrastructure; the need to foster the consistent collection and analysis of sex disaggregated data collection for better monitoring and target setting; and the need for a set of clear definitions to support data collection efforts, including the definition of women-owned or women-led businesses.

Request a copy of the full findings and recommendations from the technical study here