Micro and Small Businesses Exempt From Trade License Requirements

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REPUBLIC OF BOTSWANA

GUIDELINES

FOR REGISTRATION OF MICRO & SMALL

BUSINESSES EXEMPT FROM LICENSING

REQUIREMENTS

MARCH 2011

MINISTRY OF TRADE AND INDUSTRY

IS/03/20I1

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TABLE OF CONTENTS

TOPICPAGE

INTRODUCTION .................................................................. 03

DEFINITION OF MICRO AND SMALL SCALE ENTERPRISES ..................... 03

BACKGROUND ..................................................................... 03

GENERAL GUIDELINES UNDER WHICH MICRO AND SMALL SCALE

BUSINESSES SHOULD BE REGISTERED ............................................... 05

RECOMMENDED CONDITIONS UNDER WHICH MICRO ENTERPRISES06MAYBE REGISTERED WHILE OPERATING AT RESIDENTIAL PREMISES ......

BUSINESSES WHICH CAN BE REGISTERED TO OPERATE

AT RESIDENTIAL PREMISES ................................................................. 08

BUSINESSES WHICH CANNOT BE REGISTERED TO OPERATE08

AT RESIDENTIAL PREMISES ..........................................................................

10IMPLEMENTATION CHALLENGES ......................................................

CHECKLIST/APPLICATION PROCEDURE............................................ 11

ANNEXURE A: APPLICATION FOR REGISTRATION .......................... 12

13ACKNOWLEDGEMENTS ...........................................................................

14MTI 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, lowstart-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 fromcountry 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:

2.1. Micro En terprises:Those employing less than six (6) employees including the owner and with an annual

turnover of up to P 100, 000.00.

2.2.Smail Scale Enterprises

Those employing less 25 employees and with an annual turnover ofP 100, 001.00- P

500,000.00, Statutory Instrument No. 44 of 2008, Industrial Development Act2006, (Act No. 3 of

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 wellestablished 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-operativeSociety'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 of2008, commenced in 1 April 2008. Unlike the licensing of small and medium scalemanufacturing 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 IndustrialDevelopment 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 andRegulations 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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4.0. GENERAL GUIDELINES UNDER WHICH MICRO

SHOULD BE RE

AND SMALL SCALE ENTERPRISES

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, policiesand guidelines. However, there will be need for those businesses to be exempted

from certain pieces of legislation as deemed necessary by the Licencing

Authorities;

4.3.

4.4.

4.5.

4.6.

Each micro and small scale enterprise should complete an application form

ann ually for registration a nd m onitoring Qf its operational status;

All employm ent in the business should cqm ply with the relevant Acts; i.e.; existinglabour 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 un der relevant Authorities

4.7, Where applicable, the operator should

appropriate protective apparel and equi

equipment.

ensure that workers are provided with

ment, including first aid kit & firefighting

4.8. The operator should take all necessary measures to prevent pollution of soil, air

and wa ter as may be caused by the project.

4.9. The operator should provide appropriate environmental awareness for the staff

for the protection of the environm ent.

4.10. The operator should ensure that worker are educated on public health.

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 whichthey 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

Wag es 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 6-9should be registered, but to operate at designated areas i.e. in areas zoned for

commercial and industrial uses.

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5.0. RECOMMENDED CONDITIONS UNDER WHICH MICRO AND SMALL BUSINESESS MAY BE

REGISTERED TO OPERATE IN RESIDENTIAL PREMISES OR TEMPORA RY SHELTERS

5.1. The operation must be compatible with the principal use of the plot (residential);

5.2. 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 theavailable 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;

5.5. There shall be no signage allowed to be placed anywhere in the residentialplots;

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;

5.8. All businesses involved in the commercial production of pre-packaged food

such as those listed under TableVI: i.e. businesses which can be registeredto operate in residential premises and in temporary shelters; Small & Micro-

industrial 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;

5.9. 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;

5.10. 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. Ifthe assessment of the Council reveals that the operation has grown beyond a levelwhich 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 theIndustrial 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 should recognize theregistration certificate as authority to do business;

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 tooperate at residential premises are not exhaustive,

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6.0: BUSINESSES WHICH CAN BE REGISTERED TO OPERATE IN RESIDENTIAL PREMISES AND INTEMPORARY SHELTERS

Business type Restrictions/Conditions

Sewing & knitting (exclusive of fabric dying) To be carried out in a room separate from domestic

Small scale packaging (excluding hazardous/toxic

products)

To be carried out in a room separate from domestic

Traditional crafts ( exclusive of harmful orhazardous chemicals)

fo be carried out in a room separate from domestic

Production of traditional leather products

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; meat processing (biltong

making); and

jam making


Signage, including electronic signage

(exclusive of harmful or hazardous chemicals)

To be carried out in a room separate from domestIc

Carpentry To be carried out in a room separate from domestic

Milling related activities at small scale To be carried out in a room separate from domestic

Business Consultancy (Application for: work and

residence permits, licences, company formation,

tax returns, preparation of business plans etc).

Be carried out in a room dedicated for the business

Secretarial Services

(Photocopying, faxing, laminating, typing,

preparation of programmes forfunerals,

weddings, meetings and binding)


Laundromat and dry clean depot Be carried out in a room dedicated for the business.

Agents operators (Tupperware, perfumes e.t.c) Be carried out in a room dedicated for the business

Hairdressing- (plaiting and cutting hair only) Provision for refuse disposal separate to that of the

residence.To be carried out in a room separate from domestic

Hiring Services: Tents, Tables an d chairs, pots

crockery/cutlery, jumping castles, table cloths etc

Be stored in a room dedicated for the business

Out sourced cleaning Services Equipment, material and detergents be stored in a room

dedicated for the business.

No cleaning should be done on site.

Food Catering Services There should be a separate kitchen, dedicated to the

business

Internet Services Be carried out in a room dedicated for the business.

Professional Services, e.g. architectural drawings,

i event management e.t.c.

Be carried out In a room dedicated for the business.

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.

Note:I.

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7.0.OPERATIONS WHICH CANNOT BE REGISTERED TO OPERATE IN RESIDENTIAL PREMISES OR

IN TEMPORARY SHELTERS

Business type Remarks

Welding & Fabrication Noise pollution & hazardous to health &environment, badneighbor development

Car wash Inadequate space within residences; Capacity of the sewerage line will be affected; Pollution(oils); and Traffic.

Chemical related industries Hazardous to health and environment

Cement products Hazardous to health and environment

Large scale packaging Bad neighbor development

Panel beating &spray painting Noise pollution & hazardous to health & environment, badneighbor development

Garage/workshops Noise pollution & hazardous to health & environment, badneighbor development

Note:

1. The Ministry of Trade & Industry is aware that the above operations are taking place withinresidential premises, or adjacent to such residential premises, or along the road sides or intemporary 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 haveidentified 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 temporaryshelters, 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 allowedwithin residential neighborhoods.

8.2. Environmental Impact:

Some operations are by their nature bad neighbors. They produce emissions, fumes andwaste 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 wastematerial at the treatment plant; an d

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 negativei 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 theneighborhood 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 turnedinto 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 ofthe 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 ofUtilities: There is always a likelihood that where industrial activities takeplace that BPC is likely to hike electricity tariffs due to rise in the demand for

electricity which is not compatible with residential areas.

8.7. Affordable and available appropriate operational floor space and premises forSMMES: There is still need for Government to provide affordable floor space andpremises for micro and small businesses to enable them grow and graduate intoviable enterprises.

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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. Certification of Registration (Business Na me ) or Certificate of

Incorporation;

9,3. (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. Health clearance report;

9.7. Simple il lustration of the production process:

a) List of raw ma terials to be used in the production of produ cts or line of trade;

b) Production process end to end;

c) List ofby-products or waste; an d

d) Method of handling and disposal of waste

9.8. Proof of paymen t of Levy for collection of w aste;

9.9. 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 LOCALAUTHORITIES IN ACCORDAN CE WITH INDUSTRIAL DEVELOPMENT ACT 2006 AND REGULATIONS 2008 AND

TRADE ACT 2003

Note: This form is to be completed in BLOCK LETTERS,and the relevant documents should be attached as per

application procedure/check list.

a) Name of Applicant (Citizen only):: I D No.

b) Postal Address:Contact Number/s:

c) Business Location: Plot: Ward:-Town/City/Village:

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

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

f) Number of employees:(Citizens only)

g)Annual turnover: P (Total sales for the whole year)

h) Declaration

Isolemnly declare that the information given in the application is correct to the best of my knowledge.

Signature: ----Date:

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10.0. ACKNOWLEDGEMENTS:

The Permanent Secretary oft h e Ministry of Trade and Industry would like toacknowledge the

contributions made towards the finalisation of the guidelines by the following Stakeholders:

Stakeholder ActivityDate consulted

District Licensing Officers Consultative Workshop24-25 February 2009

Council Chief Executive OfficersMonitoring & Evaluation Workshop 12 March 2009

Bobirwa Sub District Business Community Workshop23-24 April 2009

Business Community Workshop 25-05-2009Chobe District

North West DistrictBusiness Community Workshop 27-05-2009

Sub District Business CommunityWorkshop 28-05-2009

OkavangoBusiness Community Workshop 17-06-2009

Tutume Sub District Business Community Workshop 18-06-2009North East District

TownshipSowaBusiness Community Workshop 19-06-2009

Consultative meeting 08-07-2009Department of Town & Regional

PlanningPhikwe Town council Business Community Workshop

23-07-2009Selibe

Business Community Workshop 27-07-2009Letlhakane Sub District

Ministry of Environment, Wild Life and

Tourism: Dept of Environmental Affairs Consultative meeting28-07-2009

Business Community Workshop28-07-2009

District Headquarters (Serowe)CentralConsultative meeting 29-07-2009Ministry of Health Dept of Public

Health (Chemicals and Food

Divisions)Mahalaoye Sub District Business Community Workshop 30-07-2009

Ministry of Labour and Home Affairs

Dept of Labour & Social Security Consultative meeting

Consultative meeting

30-07-2009

04-08-2009Ministry of Environment, Wild Life and

Tourism: Dept of Waste Management

Pollution ControlandMabutsane Sub District Business Community Workshop

21-08-2009

08-06-2010Good hope Sub District

Business Community Workshop

South East DistrictBusiness Community Workshop 09- 06- 2010

Business Community Workshop 10-06-2010Lobatse Township

Consultative meeting22 June 2010

TCPB Advisory StaffBusiness Community WorkshoP 06-07-2010

Letlhakeng Sub District

Kweneng Administrative Authority Business Community Workshop 07-07-2010

Southern District Physical Planning

Unit

Briefing meeting21-07-2010

Planners 1 Joint Meeting19 - 08 -2010

Physical

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Department

Industrial Affairs

Industrial Affairs

Industrial Affairs

Industrial Affairs

Industrial Affairs

Industrial Affairs

Industrial Affairs

Industrial AffairsTrade & Consumer Affairs

frade & Consumer Affairs

Trade &ConsumerAffairs

Trade & Consumer Affairs

N

A

E

E l me

Setlhogile

Galetshetse

K Majoo

0 Mosiieman

K Lesupi

S Maphane

G Seitshiro

f Gaboiphiwe

Ranthokwane

T Supang

R Kesiilwe

0 Setlhare

T Kgarubane

FMsheqo

H MoleOfe

U M Tapela

R Bontsi

0. S. Busang

ILO. MINISTRY OF TRADE AND INDUSTRY CONSULTING TEAM

14

Documents

Micro and Small Businesses Exempt From Trade License Requirements