Credit guarantee funds 128 businesses
THE government has assisted 128 businesses to access loans from banks through its Partial Credit Guarantee Fund (PCGF).
This was disclosed by the Ministry of Finance’s Director of Planning Unit Habofanoe Makopela last week during a meeting for government ministries meant to take stock of the progress made in the implementation of the 2012/132017/18 National Strategic Development Plan.
Mr Makopela said of the 128 Basotho-owned businesses that had benefited, 19 had already repaid their loans. The government set aside M50 million as a guarantee for banks in the event beneficiaries fail to settle their loans under the scheme.
“PSGF was established by the government in 2011, and began operations the following year. To date, 128 businesses have benefited from the scheme and 19 have already settled their loans,” he said.
“The due date for payment of the loans is dependent on the agreement between the beneficiaries and banks.
“The date for the 19 who have already paid was due, and there could be others who are already in the process of repaying since their payment dates have not yet lapsed.”
Mr Makopela said the government had increased the risk-sharing ratio from 50 to 70 percent after observing that banks were still reluctant to assist budding entrepreneurs who did not have the required security.
“The government decided to offer 70 percent security after it came to our attention that banks were hesitant to provide credit to start-ups. So, taking a higher-risk sharing ratio was meant to increase the chances of applicants to access credit.”
He said Basotho had many misconceptions about the scheme.
“Many people erroneously think the scheme is a government grant which provides start-ups with capital. It is actually a guarantee fund paid up to banks in the event a beneficiary fails to pay their loan,” said Mr Makopela.
“To assist entrepreneurs access the security, the government has set up a coordinating unit which offers information about the scheme. The office is located in Maseru near Victoria Hotel.”
Ministry of Finance’s Director of Planning unit Habofanoe Makopela.