‘Govt should bridge credit gap’

Lesotho Times - - Business - Bereng Mpaki

THE Pri­vate Sec­tor Foun­da­tion of Le­sotho (PSFL) has called on the govern­ment to in­vest in busi­ness start-ups to ad­dress the chal­lenge of ac­cess to credit.

Ad­dress­ing a press con­fer­ence in Maseru this week, PSFL Pres­i­dent Thabo Qh­esi said while ac­cess to credit was cru­cial to the re­vival of the ail­ing pri­vate sec­tor, it was not be­ing availed to new busi­ness ven­tures that ur­gently needed it.

He also noted that it was the govern­ment’s re­spon­si­bil­ity to pro­vide cap­i­tal to new busi­nesses as com­mer­cial banks tended to fi­nance al­ready ex­ist­ing and proven en­ti­ties to min­imise risk.

“Busi­ness start-ups any­where in the world are a re­spon­si­bil­ity of the govern­ment be­cause their risk of col­laps­ing is very high,” said Mr Qh­esi.

“So, the govern­ment should pro­vide re­sources and give proper guid­ance to en­able them to sur­vive.

“There is no com­mer­cial bank that will nur­ture new busi­nesses be­cause of the high risk of their fail­ure and the need for con­stant fol­low ups. Com­mer­cial banks only come in to sup­port al­ready ex­ist­ing busi­nesses which are look­ing to ex­pand their oper­a­tions.”

He said the 2016 World Bank’s Do­ing Busi­ness Re­port re­vealed that Le­sotho had dropped to 152 on the Ac­cess to Credit Rat­ing in 2015, from 150 dur­ing the pre­vi­ous year.

He added that it was un­ac­cept­able that the country con­tin­ued to lag be­hind other Com­mon Mon­e­tary Area coun­tries namely Botswana, Swazi­land, South Africa and Namibia. This he said had made Le­sotho less at­trac­tive to in­vestors.

South Africa and Namibia both scored 59 in the rank­ings; Swazi­land scored 70, while Botswana scored 79.

The 2015 fi­nan­cial year score­card by the United States’ Mil­len­nium Chal­lenge Cor­po­ra­tion also in­di­cates that Le­sotho scored 24 per­cent on ac­cess to credit. The US uses score­cards to de­ter­mine the el­i­gi­bil­ity of ben­e­fi­ciary coun­tries for its as­sis­tance pro­grammes.

Mr Qh­esi said the PSFL’S in­ves­ti­ga­tions had re­vealed that other coun­tries were do­ing so well on ac­cess to credit be­cause of govern­ment in­ter­ven­tions through poli­cies and fi­nanc­ing pack­ages specif­i­cally tar­get­ing new busi­nesses.

He said Le­sotho’s in­ter­ven­tions were not enough. The country re­cently launched the small, mi­cro and medium en­ter­prises (SMME) pol­icy, Trade Pol­i­cyl­icy and two par­tial credit guar­an­tee schemes es op­er­ated un­der the Min­istry of Fi­nance and Le­sotho Na­tional De­vel­op­ment Cor­po­ra­tion.ion.

He added that by con­trast, ntrast, Botswana’s pol­icy in­ter­ven­tions in­cluded cluded the Ci­ti­zen Eco­nomic Em­power Pol­icy, cy, Lo­cal­iza­tion and the Mi­cro Busi­ness Fi­nance nce Scheme.

Its fi­nanc­ing pack­ages in­clude the Equity Fi­nance, Prop­erty and Man­u­fac­tur­ing Fund, Young Farm­ers’ Fund, Youth Devel­op­mentnt Fund.

Mr Qh­esi also stated d that Namibia’s poli­cies in­cludee the Black Eco­nomic Em­pow­er­w­er­ment Pol­icy and the New ew Eq­ui­table Eco­nomic Em- pow­er­ment Frame­work k while fi­nan­cial pack­ages in­clude pro­grammes fi­nanc­ing mar­ket­ing ser- vices, spe­cialised tech­ni­ical sup­port, pub­lic pri­vateate part­ner­ships, small to medium en­ter­prises, in­stall­ment ll­ment sale fi­nanc­ing.

He said such in­ter­ven­tions ntions could only be in­tro­duced in Le­sotho otho through di­a­logue be­tween the govern­ment and the pri­vate sec­tor.

PSFL Pres­i­dent Thabo Qh­esi.

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