CEDA, YDF investments underperform – BIDPA study
Citizen enterprise investment programmes have in the last five years performed below par, yielding few jobs and low returns for the government purse, a recent Botswana Institute for Development Policy Analysis (BIDPA) draft report has established.
Government efforts to invest in Small to Medium Enterprises in the country have been mainly for job creation purposes, as the economy has long struggled with rising unemployment rates, particularly amongst youths.
The report, which is a study on the entrepreneurship landscape in Botswana, revealed that between 2017 and 2022, CEDA-youth-funded enterprises totalled 5,600 with all of them yielding a cumulative job return of 7,700.
According to BIDPA senior researcher, David Mmopelwa, the average job creation rate for CEDA-funded youth enterprises is below two jobs per enterprise, a worryingly low figure for government. Mmopelwa further revealed that the main reason for the slow job creation is the heavy funding of the services industry, which has proved to be a low-return industry.
“Of the 5,606 funded projects 3,789 were in the services industry which has over the years
proved to be a low job creation industry unlike mature industries such as manufacturing and agriculture,” he said.
Last year in Parliament, Minister of Youth, Sport and Culture, Tumiso Rakgare, revealed that between 2019 and 2023, the government had invested in 2,768 youth projects through the Youth Development Fund (YDF) programme, with only a meagre 214 beneficiaries repaying the loans.
The figures meant a staggering 2,534 beneficiaries were defaulters, but the minister defended those youths, saying while some beneficiaries were willing to pay, the high cost of places of operation, a congested market, and lack of mentorship were some of the impediments that prevented them from honouring their contractual agreements.
Researchers additionally pointed out that lack of success emanates from failure to comply with loan offer conditions by promoters, saying at times promoters connive with suppliers to divert business funds to other uses.
Another key problem identified was the breach of deeds of cessions by promoters, whereby government departments do not adhere to the terms of cession agreements. Other reasons included a rigid finance market which does not offer funding products from initial business development stages such as the prototype and design phase.