MASERU — The Basotho Enterprise Development Corporation (Bedco) says it plans to introduce economic clusters to provide access to markets for small, micro and medium enterprises (SMMEs).
Bedco is a government parastatal which was set up to promote the development of Lesotho’s indigenous businesses.
Its mandate is to assist local small and medium enterprises to develop their business acumen and promote economic growth.
In an interview with the Lesotho Times on Friday, Bedco’s entrepreneurship trainer Thabiso Sebakiso said economic clusters will ensure that SMMEs will have sustainable markets for their products.
Economic clusters are groups of businesses that profit from their association with one another through purchasing raw materials as one unit.
This helps the businesses slash their production costs and increase their production capacity.
Sebakiso said the setting up of the project will likely commence between the later months of this year and early next year.
“When operated efficiently clusters can benefit small businesses because they share the cost of doing business by taking advantage of economies of scale,” Sebakiso said.
He said smaller producers can share the responsibilities of servicing larger markets where one firm cannot have a significant impact.
“Through such associations smaller businesses can have access to larger markets through combining their produce to increase their productive capacity,” he said.
Sebakiso said a similar model could be adopted by large businesses to reduce the cost of production and help with the problem of access to capital.
Small businesses in Lesotho have in the past complained that they were having serious problems in accessing loans from commercial banks even when banks were highly liquid.
“SMMEs can benefit more through the reduction of production costs and since they have more power to negotiate they will be able to find better deals as opposed to dealing with markets individually,” Sebakiso said.
Bedco said it will help the clusters source markets for their products as well as assist with management and training entrepreneurs.
Economic clusters can also act as financial networks in which small businesses approach banks as a group.
The idea is that the cluster can ensure that members service their debts.
“It could reduce the problem of financing for businesses as groups normally have greater credibility in most cases.
“It becomes easier for small entrepreneurs to have access to credit,” he added.
Sebakiso said the plan was to run a pilot project at first and use past experience to ensure the programme is successful and sustainable.
“We did have a similar project though on a smaller scale in the past. But it failed because we were too involved in the operations of schemes.
“For this to work efficiently such schemes have to be in the hands of entrepreneurs,” Sebakiso said.
Most businesses in Lesotho are SMMEs in nature.
The Bedco proposal could spur increased private sector development.
There are an estimated 100 000 SMMEs in Lesotho the majority of them operator-owned.
The SMMEs employ about 200 000 people.