Lesotho Times

Lesotho launches M50 million Partial Credit Guarantee Fund

MASERU — Finance Minister Timothy Thahane has urged Basotho youths to apply for loans under the government’s M50 million credit guarantee scheme.

Thahane was speaking at a press conference that was also attended by ministers of trade and tourism.

The credit guarantee scheme was initiated by the government last year to help micro, small and medium enterprises (MSMEs) and other Basotho-owned businesses.

The scheme, called the Partial Credit Guarantee Fund (PCGF), seeks to provide part of the collateral that most banks require before lending money.

“The banks, liquid as they are, have had problems lending money to Basotho because of lack of collateral and other problems and the government deemed it fit to chip in,” Thahane said.

“To address the problem of lack of collateral the government and the banks have agreed to share the risks of advancing loans to MSMEs especially businesses for youths and women.”

The minister said the government and the banks had already signed a memorandum of understanding and the operational modalities are now being finalised.

Tourism Minister ’Mannete Ramaili said she hoped the banks will be start issuing out the loans by the end of this month.

Ramaili urged beneficiaries to work hard so that they will be able to pay back the monies to avoid unnecessary repossession of properties or prosecution in courts of law.

She said banks and the government would have a joint sifting mechanism to ensure that those who have a habit of not paying their debts do not get the loans.

“There are those who have not paid back their education loans to the National Manpower Development Secretariat (NMDS) and they are surely not going to be loaned even if their business plans are perfect,” Ramaili said.

“The establishment of a credit bureau which has already been legislated will be a tool to sift those who do not pay their debts.”

The banks working closely with the government will monitor the performance of the businesses to detect problems early and provide suggestions to stop the collapse of the businesses.

Trade Minister Leketekete Ketso said businesses that were loaned huge sums of money had collapsed in the past because there were no follow-ups.

“In the past guarantee schemes were led by the government and the follow-ups were not sufficient,” Ketso said. “This is not going to be the case with this guarantee fund.”

The scheme is expected to run as a revolving fund to benefit thousands of unemployed Basotho.

Thahane said they expected banks to pump in M150 million into the scheme.

“It is a fund that will be drawn upon when the business fails and the guarantee is called,” he said.

“If all the businesses succeed, due to preparation of good business plans, good training in running and managing business, and sound systems of supervision and monitoring of implementation by the banks and accredited consultants, then PCGF will not be drawn down.”

The final percentage on the proportion of the risk that the banks will take has not yet been finalised, Thahane said.

“It will however range from 30 to 50 percent.”

Enterprises that are expected to benefit should be owned by Basotho youths and women and should employ one to five employees, six to 20 employees and 21 to 50 employees, respectively.

Lesotho Times

Lesotho's widely read newspaper, published every Thursday and distributed throughout the country and in some parts of South Africa.

Contact us today: News: editor@lestimes.co.ls Advertising: marketing@lestimes.co.ls Telephone: +266 2231 5356

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