Pumela Msweli , Aman Mdewa Nthangu
Abstract
This study investigates the main obstacles that hinder the performance and growth of small and medium-sized businesses (SMEs) in Botswana, focusing on how these challenges vary by firm size, sector, and region. Using cross-sectional data from the World Bank Enterprise Survey (2023), the research applies an ordered probit regression model to assess the likelihood that different business barriers, such as access to finance, electricity, licensing, tax administration, and workforce quality, are perceived as the biggest obstacle by firms. The findings indicate that access to finance, land, and electricity are the most frequently reported challenges, especially among micro and small firms and those outside urban areas. Medium-sized firms are more likely to identify tax procedures, licensing, and political instability as significant barriers, while service sectors like hotels and retail are more affected by regulatory complexity and crime. The study employs Institutional Theory and the Resource-Based View to explain how external regulations and internal firm resources interact to constrain SME growth. Policy recommendations include simplifying tax and licensing systems, improving infrastructure in underserved areas, increasing access to finance, and aligning workforce training with SME needs. These findings provide a data-driven foundation for developing targeted, inclusive strategies to support Botswana’s SME sector.