Financing SMEs in Botswana: Factors Influencing Access to Credit
This paper examined factors that influence access to credit by SMEs in Botswana. The results show that access to credit is influenced by gender, citizenship and experience of the manager, as well as firm-size, sector of business, sales and land ownership. The paper concludes that female entrepreneurs are less likely to access credit than their male counterparts. Therefore, there is need for amplified targeting of female entrepreneurs in credit programmes. Further, it is important to determine factors that impede women from accessing credit and to raise awareness on those issues so as to harness opportunities for increased financial inclusion of women. SMEs owned by citizens are more likely to access credit than those owned by non citizens. A plausible reason for this might be that in case of default, citizens would be easier to locate than non-citizens. Therefore, public policy should target those SMEs headed by citizens as part of the strategy to ensure credit accessibility amongst them. The paper also concludes that firms in the manufacturing sector are more likely to access credit than those in the retail sector. Given that the growth of the manufacturing sector is of paramount importance to the economy of Botswana, it is therefore critical for public policy to ensure that it targets SMEs in the manufacturing sector when designing credit programmes.