Businesses use P250m of COVID-19 credit scheme
Botswana Export Credit Insurance (BECI) has underwritten just P250 million in loans under the P1 billion credit guarantee scheme launched two years ago, as the government-backed arrangement comes to an end this month.
The scheme was launched as part of a range of government’s COVID-19 interventions aimed at helping businesses out of the pandemic.
The scheme aimed to encourage bank lending to qualifying businesses by offering a partial government guarantee of 80% to commercial banks and banks established by legislation. The banks would cover the remainder of 20% of the risk of the financial facility.
BECI, a government-owned credit insurance firm, was tasked with administering the loan guarantee scheme. This week, BECI managing director, Cowell Habana said the parastatal had underwritten loans worth P250 million to 120 companies, which were mostly in tourism and agriculture sectors.
“Unfortunately, the scheme is coming to an end in two weeks and there are no plans of extending it any further,” he told BusinessWeek.
“Many sectors benefited including services, manufacturing and others but we received more applications from agriculture and tourism industries as they were mostly affected by COVID-19.”
Initially, applications were opened from March to November 2020, but government then decided to extend the deadline to March 2022 after establishing that the effects of COVID-19 continued to cripple the economy.
Under the scheme, eligible businesses could approach banks for funding of up to P25 million. BECI would then provide guarantees with tenures of 24 months.
Applications were done through banks, which signed an agreement with BECI when the facility was launched.
BECI mainly deals with businesses to facilitate trade and provides guarantees to some banks when they extend credit facilities to certain businesses.
The low uptake of the BECI credit guarantee scheme follows a pattern of similarly limited disbursements under the P1.3 billion Industry Support Facility launched in November. Recently, Investment, Trade and Industry minister, Mmusi Kgafela told Parliament that just 20% of the P700 million government availed to the Citizen Entrepreneurial Development Agency (CEDA), Local Enterprise Authority (LEA) and Botswana Development Corporation (BDC) to help businesses out of the COVID-19 pandemic had been disbursed.
Authorities involved in administering the facility said the requirements for businesses to access the funds had proven beyond their reach. In addition, the parastatals involved noted technical limitations in their existing regulations to better extend assistance.