REPUBLIC OF BOTSWANA

GUIDELINES FOR REGISTRATION OF MICRO & SMALL BUSINESSES EXEMPT FROM LICENSING REQUIREMENTS MARCH 2011

MINISTRY OF TRADE AND INDUSTRY

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TABLE OF CONTENTS

TOPIC
INTRODUCTION
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PAGE
03 03 03

DEFINITION OF MICRO AND SMALL SCALE ENTERPRISES .....................

BACKGROUND

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GENERAL GUIDELINES UNDER WHICH MICRO AND SMALL SCALE BUSINESSES SHOULD BE REGISTERED ............................................... RECOMMENDED CONDITIONS UNDER WHICH MICRO ENTERPRISES MAYBE REGISTERED WHILE OPERATING AT RESIDENTIAL PREMISES ...... BUSINESSES WHICH CAN BE REGISTERED TO OPERATE AT RESIDENTIAL PREMISES ................................................................. BUSINESSES WHICH CANNOT BE REGISTERED TO OPERATE AT RESIDENTIAL PREMISES .......................................................................... IMPLEMENTATION CHALLENGES ...................................................... CHECKLIST/APPLICATION PROCEDURE............................................ ANNEXURE A: APPLICATION FOR REGISTRATION .......................... ACKNOWLEDGEMENTS ........................................................................... MTI CONSULTING TEAM: ........................................................................

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1.0. INTRODUCTION
Recent years have seen increasing awareness and recognition of the role played by Micro and Small scale Enterprises and their contribution to the economy. The major advantages of the Micro and Small scale Enterprises lie in their potential for innovation, flexibility, low start-up costs, rapid development, and the distribution of risk. These enterprises provide a solution not only to the general unemployment situation, but also to employment problems of special population groups such as women and the youth. 2.0. DEFINITION OF MICRO AND SMALL SCALE ENTERPRISES There are no standard definitions of micro and small enterprises; rather, they vary from country to country. These variations depend largely on the size of the economy and the levels of development. The only common considerations are the annual turnover (Sales), and numbers of workers. Accordingly, in Botswana, the Micro and Small scale Enterprises are defined as follows: Those employing less than six (6) employees including the owner and with an annual turnover of up to P 100, 000.00.

2.1. Micro Enterprises:

2.2.Smail Scale Enterprises P 100, 001.00- P Those employing less 25 employees and with an annual turnover of 2006, (Act No. 3 of Development Act 500,000.00, Statutory Instrument No. 44 of 2008, Industrial 2007) (Size of Enterprises)
2.3. Micro and Small scale Enterprises, however, suffer from obstacles encountered in financing, management, marketing, access to land, procurement processes, bureaucracy and impact of excessive Government laws and regulations as well as lack of operational space. All these, make it difficult for Micro and Small scale Enterprises to be well established and compete in the free market. The entire sector therefore requires promotion and support for its growth and sustainability.

3.0. BACKGROUND
3.1. There are various Laws which govern business registration in Botswana, namely, Business Names Act (CAP 4.2:05); Company's Act (CAP 42:05); and the Co-operative Society's Act (CAP 42:04), Act No. 19 of 1972, Although there is no legal framework that specifically addresses the registration of Micro and Small scale Enterprises in Botswana, generally, businesses are registered under five (5) main categories, in which Micro and Small scale Enterprises may also fall in. These are: 1. Sole Proprietorship; 2. Societies; 3. Co-operative Societies; 4. Joint ventures; and 5, Limited liabilities.

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3.2. The decentralized licensing of small and medium scale manufacturing activities to Local Authorities in accordance with Industrial Development Act of 2006 and its Regulations of 2008, commenced in 1 April 2008. Unlike the licensing of small and medium scale manufacturing enterprises, Local Authorities began experiencing difficulties in the registration of micro and small scale enterprises exempt from licensing requirements. However, the Trade Act of 2003 does not provide for registration of such businesses. Currently, the Trade Act is being amended amongst other things to provide for registration of Micro and Small scale Enterprises. 3.3. These problems emanated from the fact that the majority of such enterprises operate from residential premises or adjacent to premises, or in temporary shelters, or along the road sides, which is largely in conflict with legislation that deals with Bye-Law enforcement, health, environment and zoning matters. 3.4. Micro and small scale businesses that operate from designated places, e.g. industrial/commercial workshops, factory shells or any building permitted for such operations, should automatically be registered in accordance with the Industrial Development Act 2006, and its Regulations 2008, as well as with the Trade Act 2003, once amended to provide for registration; 3.5. Challenges in the registration of micro and small scale enterprises disadvantage them to participate in the procurement processes of Government, Local Authorities and Parastatal Institutions. 3.6. Given the difficulty encountered in the registration of micro and small scale enterprises that impede the implementation process of the Industrial Development Act of 2006 and Regulations 2008, the Ministry of Trade & Industry commissioned a Task Force to develop guidelines that would assist this i mplementation. The Task Force consisted of the following: Dr. D Okullo (Ministry of Trade & Industry), Mrs. A Setlhogile (Department of Industrial Affairs), Mr. 0 L Mabee (Gaborone City Council), Mrs. M Motsewabathata (Dept of Town & Regional Planning), Mrs. M. Mokgethe (Local Enterprise Authority) and Ms. 0 Lejowa (Local Enterprise Authority). The Task Force developed the following objectives of the guidelines: a) To provide general guidelines under which micro enterprises should be registered; b) To provide a set of recommended conditions under which micro enterprises should be registered; c) To provide a guidance list of operations which can be registered or not registered to operate at residential premises or in temporary shelters; d) To develop a sample registration form and associated conditions; and e) To outline possible implementation challenges.

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AND SMALL SCALE ENTERPRISES 4.0. GENERAL GUIDELINES UNDER WHICH MICRO SHOULD BE RE ISTERED
4.1. All applications for registration to operat from residential plots shall be required

to consult neighbors. 4.2. The operator should ensure that the bus ness complies with various laws, policies and guidelines. However, there will be need for those businesses to be exempted from certain pieces of legislation as deemed necessary by the Licencing Authorities; Each micro and small scale enterprise should complete an application form annually for registration and monitoring Qf its operational status; All employment in the business should cqmply with the relevant Acts; i.e.; existing labour laws in force at the time; Formal agreement should be made with he relevant authorities for collection and disposal of waste at a designated place. All micro and small businesses operating from the residential plots should undergo clearance checks to ensure compliance with different laws and regulations falling under relevant Authorities Where applicable, the operator should ensure that workers are provided with appropriate protective apparel and equi ment, including first aid kit & firefighting equipment. The operator should take all necessary measures to prevent pollution of soil, air and water as may be caused by the project. The operator should provide appropriate environmental awareness for the staff for the protection of the environment. are educated on public health.

4.3. 4.4. 4.5. 4.6.

4.7,

4.8. 4.9.

4.10. The operator should ensure that worker

4.11. Businesses graduating from residential plots should compete in the open market for suitable plots. 4.12. Business operators should be encouraged to form Associations through which they can access government assistance e.g. training information packages. 4.13. Business operators are not to engage non citizens as domestic workers as this is contrary to the Employment Act for Non Citizens. They are also encouraged to adhere to Minimum Wages provisions as prescribed annually by the Minimum Wages Advisory Board. 4.14. Micro and Small scale enterprises with employment of up to 5 should be registered to operate at the residential plots. Those with employment of 6-9 should be registered, but to operate at designated areas i.e. in areas zoned for commercial and industrial uses. 5

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5.0. RECOMMENDED CONDITIONS UNDER WHICH MICRO AND SMALL BUSINESESS MAY BE REGISTERED TO OPERATE IN RESIDENTIAL PREMISES OR TEMPORARY SHELTERS
5.1. 5.2. The operation must be compatible with the principal use of the plot (residential); At all material times, the residential use of the plot must be in place;

5.3. The business activity or operation must not occupy more than one room of the available floor area, i.e. guest wing, servant's quarter, and in the absence of a guest wing or servant's quarter, it should be a room that does not open into the main house and with its own ablution; 5.4. The residential plot shall not be rented out, and the business must be operated by the owner or member of the nuclear family residing in that residential plot; There shall be no signage allowed to be placed anywhere in the residential plots;

5.5.

5.6. Waste from the operation must be stored in separate, prescribed and labeled receptacles; 5.7. The production of traditional crafts should only be registered to operate from residential plots as per Table VI if in the production process harmful or hazardous chemicals are not used to improve or decorate such crafts; All businesses involved in the commercial production of pre-packaged food such as those listed under TableVI: i.e. businesses which can be registered to operate in residential premises and in temporary shelters; Small & Microindustrial food processers, are required to register to enhance consumer confidence that food is indeed safe, wholesome and being monitored by the relevant authorities. This will also facilitate supervisory visits as per the Food Control Act of 1993; Registration of food producers should be comprehensive i.e. company name and its location shown, company contacts, products labeled, and expiry date of products clearly shown;

5.8.

5.9.

5.10. Registered micro and small enterprises should be encouraged to form Associations through which Government Assistance could be accessed e.g. training information for respective sectors;
5.11. Councils may levy additional charges for collection of waste from the premises where a portion of the premises is used for business; 5.12. Neighbors would have the right to complain to the Registering Authority should the operation become a nuisance or unbearable in the neighborhood;

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5.13. If the assessment of the Council reveals that the operation has grown beyond a level which can be comfortably accommodated within residential premises, the Licensing
Authority shall be empowered to withdraw the registration certificate;

5.14. Each micro and small enterprise operating from residential plots should complete an application form annually for registration, in line with the Industrial Development Act 2006 and its Regulations 2008 and Trade Act 2003, for registration and monitoring of their operational status; 5.15. All micro and small businesses operating from the residential plots should undergo clearance checks to ensure compliance with different laws and regulations falling under relevant Authorities; 5.16. Relevant Local Authorities shall be guided by the local plans where possible; 5.17.
Central Government, Local Authorities and Parastatals registration certificate as authority to do business;

should recognize the

5.18. There will be a penalty of P100.00 for a business found operating without a Registration Certificate; and 5.19. Tables 6.0. and 7.0. provide guidance only, the lists of operations to be registered to

operate at residential premises are not exhaustive,

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Business type

6.0: BUSINESSES WHICH CAN BE REGISTERED TO OPERATE IN RESIDENTIAL PREMISES AND IN TEMPORARY SHELTERS
Restrictions/Conditions To be carried out in a room separate from domestic To be carried out in a room separate from domestic fo be carried out in a room separate from domestic To be carried out in a room separate from domestic

Sewing & knitting (exclusive of fabric dying) Small scale packaging (excluding hazardous/toxic products) Traditional crafts ( exclusive of harmful or hazardous chemicals) leather products Production of traditional excluding the use of modern leather processing methods; Small & Micro industrial food processing e.g. baking of bread & confectionery; manufacture of peanut butter; production of traditional sour milk; (biltong processing meat making); and jam making Signage, including electronic signage (exclusive of harmful or hazardous chemicals) Carpentry Milling related activities at small scale Business Consultancy (Application for: work and residence permits, licences, company formation, tax returns, preparation of business plans etc). Secretarial Services typing, laminating, faxing, (Photocopying, funerals, programmes for of preparation weddings, meetings and binding) Laundromat and dry clean depot Agents operators (Tupperware, perfumes e.t.c) Hairdressing- (plaiting and cutting hair only) Hiring Services: Tents, Tables and chairs, pots crockery/cutlery, jumping castles, table cloths etc Out sourced cleaning Services

To be carried out in a room separate from domestic

To be carried out in a room separate from domestIc To be carried out in a room separate from domestic To be carried out in a room separate from domestic Be carried out in a room dedicated for the business

To be carried out in a room separate from domestic

Be carried out in a room dedicated for the business. Be carried out in a room dedicated for the business Provision for refuse disposal separate to that of the residence. To be carried out in a room separate from domestic Be stored in a room dedicated for the business Equipment, material and detergents be stored in a room dedicated for the business. No cleaning should be done on site. There should be a separate kitchen, dedicated to the business Be carried out in a room dedicated for the business. Be carried out In a room dedicated for the business.

Food Catering Services Internet Services Professional Services, e.g. architectural drawings, i event management e.t.c.

Note:
I.

If there is adequate space within the plot, temporary structures could be allowed subject to planning permission being granted; and

Trading activities shall be considered only after provision has been made In the Trade Act.

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7.0. OPERATIONS WHICH CANNOT BE REGISTERED TO OPERATE IN RESIDENTIAL PREMISES OR IN TEMPORARY SHELTERS
Remarks Noise pollution & hazardous to health & environment, bad neighbor development Inadequate space within residences; Capacity of the sewerage line will be affected; Pollution(oils); and Traffic. Hazardous to health and environment

Business type Welding & Fabrication Car wash

Chemical related industries

Cement products

Hazardous to health and environment

Large scale packaging

Bad neighbor development

Panel beating & spray painting Garage/workshops

Noise pollution & hazardous to health & environment, bad neighbor development Noise pollution & hazardous to health & environment, bad neighbor development

Note:
1. The Ministry of Trade & Industry is aware that the above operations are taking place within residential premises, or adjacent to such residential premises, or along the road sides or in temporary shelters. However, the registration should be based on the plot of origin; and 2. As a long term measure, appropriate Ministries / Authorities should provide affordable factory shells for rental since quite a number of micro and small scale entrepreneurs have identified plots, but they are incapacitated financially to develop them by themselves.

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8.0. IMPLEMENTATION CHALLENGES In registering micro and small enterprises to operate from residential premises or temporary shelters, it must be borne in mind that there are a number of factors which may be compromised. Therefore, Local Authorities must at all times ensure that these factors are given due consideration. Some of these factors are: 8.1. Property values:

Due to their nature, some operations tend to affect the value of properties when allowed within residential neighborhoods. 8.2. Environmental Impact:

Some operations are by their nature bad neighbors. They produce emissions, fumes and waste which have negative environmental impact. Noise that arises from operations is also of paramount importance in considering what operations to allow in residential premises. Some operations produce waste oil which contaminates soil and water. At worst, the oils may find their way into the sewerage system, thus interfering with the decomposition of waste material at the treatment plant; and Business operations by their nature attract vehicular and pedestrian traffic which exceeds that of a house normally used for residential purposes. The generation of traffic has negative i mpact in that vehicles park on the road reserves, entrances to people's homes and there is reduction in the security and serenity of the neighborhood. The visual impact of the neighborhood may also be affected by the type of activities taking place. 8.3. Decline in neighborhood community atmosphere:

The character of the neighborhood may also be affected where plots are completely turned into business operations. The premises will become deserted after working hours and during the weekend. This is the time that is crucial for building neighborhood bonds. 8.4. I mpact on supply and demand of Industrial floor space:

In most of our settlements owners develop small industrial units but turn them into commercial units. The reasons advanced by the property owners are that there is no effective demand for industrial floor space. This arrangement contravenes the provisions of the Town and Country Planning/Zoning Act. 8.5. Access to land:

It is difficult for micro and small scale enterprises to have access to industrial land. Therefore, where possible, available and affordable industrial floor space should be provided. 8.6. Provision of Utilities: There is always a likelihood that where industrial activities take place that BPC is likely to hike electricity tariffs due to rise in the demand for electricity which is not compatible with residential areas. Affordable and available appropriate operational floor space and premises for SMMES: There is still need for Government to provide affordable floor space and premises for micro and small businesses to enable them grow and graduate into viable enterprises.

8.7.

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9.0. APPLICATION PROCEDURE FOR REGISTRATION/CHECKLIST OF APPLICATION REQUIREMENTS When submitting an application for a Registration Certificate at the Local Authorities by

citizen owned micro and small scale businesses, the following documents should be attached: 9.1. Duly completed form AIL 6 (A); 9.2. 9,3. Certification of Registration (Business Name ) or Certificate of Incorporation; (a) Proof of ownership of the residential plot/Title Deed; (b) The consent letter from the owner and proof of relationship. 9.4. Certified true copy of valid Omang (ID);

9.5. Clearance from the Physical Planning Department; 9.6. 9.7. Health clearance report; Simple illustration of the production process: a) List of raw materials to be used in the production of products or line of trade; b) Production process end to end; c) List of by-products or waste; and d) Method of handling and disposal of waste 9.8. 9.9. Proof of payment of Levy for collection of waste; P10.00 registration fee; and

9.10 Letters from immediate neighbours consulted.

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REPUBLIC OF BOTSWANA ANNEXURE A

Ministry of Trade & Industry

Form AIL 6 (A)

APPLICATION FOR THE REGISTRATION OF CITIZEN OWNED MICRO & SMALL BUSINESSES AT LOCAL AUTHORITIES IN ACCORDANCE WITH INDUSTRIAL DEVELOPMENT ACT 2006 AND REGULATIONS 2008 AND TRADE ACT 2003
and the relevant documents should be attached as per Note: This form is to be completed in BLOCK LETTERS, application procedure/check list. a) Name of Applicant (Citizen only): b) Postal Address: c) Business Location: Plot: Ward: Contact Number/s: -Town/City/Village: :I D No.

manufactured/services provided/line of trade: d) List of products to be

e)

Name the raw materials to be used to manufacture the above products/services:

f) Number of employees: (Citizens only)

g) Annual turnover: P h) Declaration I

(Total sales for the whole year)

solemnly declare that the information given in the application is correct to the best of my knowledge. Date:

Signature: --- -

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10.0. ACKNOWLEDGEMENTS:
acknowledge the The Permanent Secretary of the Ministry of Trade and Industry would like to Activity
Consultative Workshop Monitoring & Evaluation Workshop Business Community Workshop Business Community Workshop Business Community Workshop Business Community Workshop Business Community Workshop Business Community Workshop Business Community Workshop Consultative meeting Business Community Workshop Business Community Workshop Consultative meeting Business Community Workshop Consultative meeting Business Community Workshop Consultative meeting Consultative meeting Business Community Workshop Business Community Workshop Business Community Workshop Business Community Workshop Consultative meeting Business Community WorkshoP Business Community Workshop Briefing meeting

contributions made towards the finalisation of the guidelines by the following Stakeholders: Date consulted
24-25 February 2009 12 March 2009 23-24 April 2009 25-05-2009 27-05-2009 28-05-2009 17-06-2009 18-06-2009 19-06-2009 08-07-2009 23-07-2009 27-07-2009 28-07-2009 28-07-2009 29-07-2009 30-07-2009 30-07-2009 04-08-2009 21-08-2009 08-06-2010 09- 06- 2010 10-06-2010 22 June 2010 06-07-2010 07-07-2010 21-07-2010 19 - 08 - 2010

Stakeholder District Licensing Officers

Council Chief Executive Officers Bobirwa Sub District Chobe District North West District Okavango Sub District Tutume Sub District North East District Sowa Township Department of Town & Regional Planning Selibe Phikwe Town council Letlhakane Sub District Ministry of Environment, Wild Life and Tourism: Dept of Environmental Affairs Central District Headquarters (Serowe) Ministry of Health Dept of Public Health (Chemicals and Food Divisions) Mahalaoye Sub District Ministry of Labour and Home Affairs Dept of Labour & Social Security Ministry of Environment, Wild Life and Tourism: Dept of Waste Management and Pollution Control Mabutsane Sub District Good hope Sub District South East District

Lobatse Township TCPB Advisory Staff Letlhakeng Sub District Kweneng Administrative Authority Southern District Physical Planning
Unit

Physical Planners

1 Joint Meeting

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ILO. MINISTRY OF TRADE AND INDUSTRY CONSULTING TEAM

Department

N El me A Setlhogile E Galetshetse
K Majoo 0 Mosiieman K Lesupi S Maphane G Seitshiro

Industrial Affairs Industrial Affairs Industrial Affairs Industrial Affairs Industrial Affairs Industrial Affairs

f Gaboiphiwe
Ranthokwane T Supang R Kesiilwe 0 Setlhare T Kgarubane FMsheqo
H MoleOfe U M Tapela

Industrial Affairs

Industrial Affairs Trade & Consumer Affairs frade & Consumer Affairs Trade & Consumer Affairs Trade & Consumer Affairs

R Bontsi

0. S. Busang

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