‘Partial credit guarantee fund no panacea’

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By ’Mathabana Kotelo

MASERU — The Partial Credit Guarantee Fund (PCGF) is not the solution to Lesotho’s job creation problems.

Instead focus should be on boosting Lesotho’s export capacity to create sustainable industries, according to Mokoena Majara, an economic analyst.

He was speaking at a discussion forum hosted by the Lesotho Council of Non-Governmental Organisations (LCN) at the Lehakoe Recreational Centre last week.

The forum was aimed at exploring the challenges Basotho entrepreneurs have encountered in accessing the M50 million fund earmarked by the government to assist micro and medium enterprises owned and started by Basotho.

Majara said the PCGF was misunderstood by many with the general misconception being that entrepreneurs would receive start-up capital from the M50 million. This is not the case.

“The PCGF only offers to guarantee 50 percent of loans raised from banks by Basotho owned enterprises; no funds are disbursed to entrepreneurs or business owners from the PCGF by the government or LNDC,” said Majara.

Majara said slow implementation of the PCGF support programme would result in it having very minimal impact on unemployment reduction.

“The implementation process has been extremely slow, only five projects had been approved by the government for PCGF in February this year, according to the Budget Speech,” Majara said.

“The LNDC’s record is no better, with about only seven projects approved,” he added.

Majara said Lesotho had the capacity to compete with South Africa in labour intensive industries like textiles and agro-industries. But Lesotho had to boost its export capacity to be competitive.

“We need to boost the capacity and quality of our exports to be more competitive. Through increased productivity and competitive prices, we can compete with South Africa.”

One of the attendees, Nati Mpholeng, criticised the stringent requirements imposed by banks for access to funding, adding that small scale business owners and entrepreneurs had to resort to informal savings and lending schemes to finance small business operations.

 

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