Chinese bank targets SMEs
SMALL to medium entrepreneurs (SMEs) in Lesotho have received a shot in the arm from the Chinese Development Bank (CDB) which availed a multi-million dollar loan facility to enable them to finance their business operations.
The loan is set to benefit sectors such as agriculture, agro-processing, manufacturing, energy conservation, environmental protection, logistics and trade.
CDB representative Ran Sha yesterday announced the initiative in Maseru during a ceremony that was attended by members of the business community, senior government and Chinese officials.
Ms Sha said the facility, known as the Special Loan for Development of African SMEs, was part of the wider China-Africa bilateral relations aimed at assisting African countries to overcome challenges of enterprise development.
She said the initiative, which was established in 2009 and already operational in many African states, falls under the Forum on China Africa Cooperation (FOCAC).
“The Special Loan for the Development of African SME’s was established as one of the eight new measures announced by the Chinese government, with the intention to ease the financing bottlenecks between China and African countries,” Ms Sha said, adding the loan would be accessible to local companies and Chinese-funded companies or joint ventures between the two.
“The special loan will meet various financing needs of SMEs, which can be either used to support the capital expenditure or working capital,” she said, adding that the interest rate for the loan would take the form of a floating or fixed rate.
Although the finer issues on the operationalisation of the loan in Lesotho are still to be finalised, the standard minimum loan amount in other countries is US$ 2 million over a period not exceeding five years.
Small Business Development Minister Selibe Mochoboroane welcomed the development, saying it would help grow the country’s economy.
“There is an understanding that we are poor because there is nothing that has been done in the SME sector. We should apply our minds and do all we can to ensure that we help our small and medium business enterprises, I want to assure you that there is a potential in that sector,” Mr Mochoboroane said.
He said the sector had suffered from the failure to access credit facilities.
“I do not know why but it becomes very difficult for our commercial banks to extend a helping hand to our small and medium enterprises.
“But with the coming of the CDB facility, we strongly believe that this challenge we have been facing for quite a long time will be addressed and I believe that together we can grow the economy through this sector,” he said.
For his part, the Chinese Ambassador to Lesotho Sun Xianghua said finance was a cornerstone of modern economies without which they could not thrive. He said despite its potential, lack of capital was one of the major constraints holding back Africa’s sustainable development.
He said the Special Loan was crucial to unlocking Lesotho’s enterprise development efforts, which would result in job creation and income generation.
“By now many of SME’s African countries have benefited from the special loan with a huge number of jobs created,” he said, adding that the total funding that China extended towards the Special Loan was increased from US$1 Billion to US$6 billion in 2015.