By Billy Ntaote
MASERU — The Basotho Enterprises Development Corporation (BEDCO) could be forced to write-off loans advanced to small businesses affected by the 1998 political riots.
The parastatal — which falls under the Ministry of Trade and Industry, Cooperatives and Marketing and is mandated with helping establish, as well as promoting Basotho-owned businesses — issued M6.8 million to the Small, Medium and Micro-sized Enterprises (SMMEs) as rehabilitation loans, but has only recovered M2.1 million to-date.
Parliament’s Public Accounts Committee (PAC) early this month instructed BEDCO to recover the outstanding M4.7 million, but the corporation’s chief executive officer Robert Likhang told the Lesotho Times this might not be possible due to a number of factors.
Likhang on Tuesday told the Lesotho Times: “After the 1998 political riots which saw property and businesses being destroyed (as people protested the results of the general election), government made a decision that a special project be established to grant loans for the rehabilitation and establishment of new small and medium-sized enterprises.
“BEDCO was the vehicle for the disbursement of the funds, and was ordered to grant the loans to the said SMMEs without even doing any feasibility study or appraisals of each loan issued.
“It was actually a special project, but which is now presenting many challenges as we try to recover the loans.”
According to Likhang, the corporation has realised that in some instances, the cost of recovering the debt is greater than the amount owed while some of the debtors cannot be traced or are now deceased.
“After realising that most of the funds were not recoverable, BEDCO engaged debt-collectors and in some cases, lawyers were involved.
“But collection was poor; I want to believe it was due to the fact that each loan was not properly evaluated to establish whether businesses were feasible or not.
“Then the massive recovery of the money stopped when it was realised the cost of collection far exceeded the debts being collected.
“This was both in litigation and collection costs. Some of the debtors were also untraceable while others were already deceased,” Likhang said.
However, Likhang said collections are still being made wherever possible, while some debts would have to be written off.
“In light of the recovery plan in place, we are going to assess portfolios that still exist so that those that are feasible can be collected”.
Likhang further said BEDCO had now strengthened its finance and legal departments to enhance its operations.
“We will provide the Chief Accounting Officer with the needed recovery plan in order to recover the money where it is possible to do so,” he said.
Likhang, meanwhile, said BEDCO still looks forward to receiving government assistance towards the funding of SMMEs.
“We are hopeful that political influence in the lending process is going to be reduced to zero, so that proper analysis of such debts would be made to safeguard national funds,” he said. “BEDCO is the appropriate vehicle for resolving all the major problems faced by SMMEs, which include accessing markets and finance, as well as capacity-building.”
Likhang also raised concern that SMMEs development activities are currently “scattered all over government ministries”.
He added: “The impact of these 1998 rehabilitation loans is being used as an excuse for not sufficiently capacitating BEDCO and even today, the Partial Credit Guarantee Scheme (PCGS) should be placed under BEDCO.”
The pilot PCGS was launched in June 2011 under another government parastatal, the Lesotho National Development Corporation (LNDC).
The objective of the scheme is to create a “sustainable support structure for the development and growth of Basotho majority-owned businesses in Lesotho by providing local banks with a 50 percent guarantee on behalf of qualifying local enterprises to access funding”.
But Likhang believes since BEDCO’s specific brief is to deal with Basotho-owned small-scale businesses, the PCGS should be placed under his organisation.
