Easing SMMEs’ funding frustrations
The World Bank says SMMEs play a major role in most economies, particularly in developing countries like Botswana. SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90 percent of businesses and more than 50 percent of employment worldwide. According to the World Bank estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world. However, the World Bank notes that SMMEs have challenges accessing funding.
Motswagae is well aware of this fact. He is no stranger to the financial services sector. He has a vast experience in management acquired through various critical roles in mining, construction, project management and the Corporate Banking sector.
Prior to establishing and actively managing Ticano Group (Pty) Ltd, Motswagae was working as a Transaction Banker – Multinational Corporates at Stanbic Bank Botswana until June 2015, driving trade finance structured solutions and cash management strategy.
Previously, he worked as a Transaction Banking Sales Manager: Global Corporates at Standard Chartered Bank and as a Relationship Executive: Mining & Energy Business at First National Bank Botswana. Additionally, he has previously worked as a Project Manager specializing in end to end mining and construction supervision.
Motswagae graduated with a First Class Bachelors (honors) in Civil Engineering and, he also completed a further qualification in Strategic Management (Master in Science) and has since acquired fundamental exposure to the essence of strategy in business. He has an additional certification in Short Term Insurance, from Institute of Insurance South Africa.
In 2015, Motswagae single handedly established Ticano group to address financing challenges by SMMEs.
Ticano provides purchase order financing, a short-term commercial finance option that provides capital to pay suppliers upfront for verified purchase orders (PO).
PO financing is designed for growing businesses that want to fulfill large orders. They have little access to working capital and/or poor cash flow. The types of businesses that usually qualify include manufacturers, distributors, wholesaler/reseller as well as suppliers.
“Whether a startup or an established business, we listen to your story and work our program to meet your needs. Unlike other lenders, we will fund an entrepreneur’s first transaction. As a matter of fact, 50 percent of our new clients receive funding for their first transaction,” Motswagae reveals.
Further, Ticano provides complete supply chain financing to Asset Backed Funding. Supply chain finance is a set of tech-based business and financing processes linking the parties in a transaction for lower costs and improved efficiency. Supply chain finance works especially well when the buyer has a better credit rating than the seller and can thus access capital at a lower cost.
Motswagae says through supply chain finance, companies especially procuring entities get their supplies on time. He adds that their clients, which are suppliers get financing quickly and effectively. The logistics management is well managed according to him. He says they make sure that the entire value chain and all logistics are done on time. “We make sure the invoicing is done right, courier companies are paid on time to ensure that the procuring entity gets their goods on time,” he states.
Credit decisions are based upon the creditworthiness of the SMEs buyer and the strengths of the transactions themselves, rather than strictly relying on a balance sheet of the SME, according to Motswagae. As an off-balance sheet financier, they care less about the client’s financial reserves and collateral, but rather, the feasibility of the contract which needs to be supplied.
He says Ticano’s innovative approach, coupled with their entrepreneurial spirit, makes them unique in the financial services industry.
“We are regulated by Non-Banking Financial Institutions Regulatory Authority (NBFIRA) , and Economic Diversification Drive accreditation from Ministry of Trade and Industry,” he reveals.
Ticano uses a client centric model to ensure that they are key drivers in meeting their financial needs. Motswagae states that Ticano has improved on conventional working capital funding and does not use property as security.
“We want to ease the frustration the SMMEs in Botswana have when dealing with other financiers, time and assessment criteria.
According to Motswagae, Ticano only funds clients with contracts that will help the clients make profit.
In his views, speedy deliveries boost the SMMEs’ reputation with buyers and enable them to have more contracts.
“We want SMMEs to grow and do more. We provide working capital for the SMMEs We normally ask for credit check like ITC not to deter clients from borrowing but to assist them in clearing the debts after executing the works. This enables them to be credit worthy,” he notes.
While the company is based here in Gaborone, it has country sales agents and has embraced technology.
“We have an electronic system to do remote orders. We have clients as far as Gumare, Shakawe, Satau, and Ncojane that we assisted without having come to our offices in Gaborone. We process online applications and take scanned copies of the necessary documentation to avoid having clients travel to access our services,” he reveals.
Ticano has a new product called Supply Chain Partners. It is simply supply chain collaboration, where two or more autonomous firms work jointly to plan and execute supply chain operations.
Motswagae said it is a great solution for farmers, or clients in fresh produce because they need access to the market. Being disjointed, retailers end up importing because in foreign countries they buy from one association which has capacity. By having such a sector collaborate here in Botswana, Motswagae said they get be financed by Ticano to boost their capacity and approach retailers with one voice.
TICANO’S ADVANTAGE OVER BANKS
Most of Ticano clients are those that cannot get funding from the banks. First and foremost, banks check for credit worthiness of the company directors, before scrutinizing the feasibility of the deal on the table. At Ticano, Motswagae says if a client has a contract, which they can profit from, they finance that contract and also take care of all logistics until that contract pays. Further he says while banks want security/collateral, Ticano does not need that. “We finance a feasible deal. We physically go to the ground to inspect the goods and take care of logistics. We have even partnered with Courier Company for ease of logistics,” explains Motswagae further adding that they approve and disburse funds within 48 hours unlike the banks.
THE GROWTH OF TICANO
The company has funded more than 3500 companies since inception. In 2019 alone, the company assisted 1012 clients across all sectors in Botswana. Ticano finances clients from P10 000. Last year, Motswagae says the biggest deal that Ticano did was at around P2.2 million.
In 2015 and 2016, Ticano was at its inception. Growth was realised in 2017, where revenue grew about 20 times as compared to 2016, according to Motswagae. He says, in 2018 the company became a leader in PO financing and invoice discounting. In 2019 revenue, according to Motswagae also grew about 5 times from the 2018 numbers. He notes that the growth came from being client centric. “ We want to develop SMMES. We handhold them and we do not count the money before the client is satisfied. We also make sure that we grow our own staff and capacitate them,” he reveals.
Ticano also aligns itself to the government agenda, like the development of SMMEs as well as youth and women empowerment.