CEDA funded project failures blamed on promoters

Projects funded by the Citizen Entrepreneurial Development Agency (CEDA) often fail as a result of a host of challenges faced by promoters, including failure to employ sound business practices such as good record keeping, Parliament has been told.

Responding to a question on impediments in the way for entrepreneurial successes in Botswana, Entrepreneurship minister Karabo Gare, admitted that indeed there were hindrances faced by business owners.

“I am aware of various impediments in the way of entrepreneurial success for Botswana,” he responded to the question posed by the Gaborone North Member of Parliament, Mpho Balopi.

Giving an overview of the failure rate during the period covering June 2019 to June 2023, Gare revealed that CEDA funded 7, 960 projects. He said out of these, 1, 114 projects failed, yielding a failure rate of 14% in the process. The minister blamed the lack of success on failure to comply to loan offer conditions by the promoters, saying at times promoters connive with suppliers to divert business funds to other uses.

Another key problem is breach of deeds of cessions by promoters, whereby government departments do not adhere to the terms of cession agreements. Others are unwillingness to be guided by CEDA or the assigned mentors and failure to penetrate and stay in the market.

Additionally, the minister said the average survival rate for startup projects was at 83% against a target of 81% while the expanding businesses were at 88% against a target of 84%. Both scores are well above the set targets. The overall survival rate is 86%, he said.

However Gare said CEDA has implemented various mechanisms that are aimed at measuring this funding impact on SMMEs. Two distinct approaches have been adopted to gauge the sustainability of these enterprises; Green fields survival rate for start ups and brown field survival rate for expanding businesses. “In this regard, my ministry and parastatals have been duly mandated, and are driving a number of initiatives to address the challenges experienced by entrepreneurs and Batswana, in general,” he added.

Brown fields tool measures the number of expanding businesses in operation for more than three years expressed as a proportion of the total number of assisted businesses older than three years. On the other hand, the Green fields survival rates is aimed at measuring the number of start up businesses in operation for more than three years expressed as a proportion of the total number of assisted businesses older than three years.

Meanwhile, Gare said under the wealth creation programme, funding and capacity building in the form of training is provided to the marginalised groups in order to mitigate the adversity.

In this whole process, the Local Enterprise Authority (LEA) assists Botswana businesses with business development services while CEDA provides funding on a revolving basis.