Survival analysis of SMMEs in Botswana

This study investigates the factors influencing survival of micro enterprises funded by the Department of Youth in Botswana. Data drawn from 271 business ventures established between the years 2005 and 2009 was analysed by using the Cox proportional hazards model (CPHM), a survival analysis technique. Results from the analysis suggest that businesses operated by younger owners endure a higher risk of failure in comparison to businesses owned by older entrepreneurs while firm size at start-up was also a significant determinant of survival. As a component of human capital, a personal contribution to the start-up capital and prior employment experience were also found to be significant predictors of business survival. Regarding gender of the business owner, the claim that female operated businesses face a higher probability of failure when compared to businesses run by males was not supported by the study results. The amount of funding from the DOY at start-up was found not to have any influence on the survival or failure outcomes for the business projects. Based on these findings, certain policy implications can be deduced. This study recommends that policy makers focus more on human capital requirements of beneficiaries of government business development initiatives as well as entrepreneur contribution to start-up capital in order to increase the success rate of the business ventures. In addition, the capacity to perform continuous monitoring and mentoring of government funded businesses ventures, particularly SMMEs, should be increased within the relevant departments or alternatively outsourcing of the requisite skills should be considered. Lastly, recommendation to replicate this research, at a larger scale in future is propose