‘Govt should bridge credit gap’

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Thabo Qhesi
Thabo Qhesi

Bereng Mpaki

THE Private Sector Foundation of Lesotho (PSFL) has called on the government to invest in business start-ups to address the challenge of access to credit.

Addressing a press conference in Maseru this week, PSFL President Thabo Qhesi said while access to credit was crucial to the revival of the ailing private sector, it was not being availed to new business ventures that urgently needed it.

He also noted that it was the government’s responsibility to provide capital to new businesses as commercial banks tended to finance already existing and proven entities to minimise risk.

“Business start-ups anywhere in the world are a responsibility of the government because their risk of collapsing is very high,” said Mr Qhesi.

“So, the government should provide resources and give proper guidance to enable them to survive.

“There is no commercial bank that will nurture new businesses because of the high risk of their failure and the need for constant follow ups. Commercial banks only come in to support already existing businesses which are looking to expand their operations.”

He said the 2016 World Bank’s Doing Business Report revealed that Lesotho had dropped to 152 on the Access to Credit Rating in 2015, from 150 during the previous year.

He added that it was unacceptable that the country continued to lag behind other Common Monetary Area countries namely Botswana, Swaziland, South Africa and Namibia. This he said had made Lesotho less attractive to investors.

South Africa and Namibia both scored 59 in the rankings; Swaziland scored 70, while Botswana scored 79.

The 2015 financial year scorecard by the United States’ Millennium Challenge Corporation also indicates that Lesotho scored 24 percent on access to credit. The US uses scorecards to determine the eligibility of beneficiary countries for its assistance programmes.

Mr Qhesi said the PSFL’s investigations had revealed that other countries were doing so well on access to credit because of government interventions through policies and financing packages specifically targeting new businesses.

He said Lesotho’s interventions were not enough. The country recently launched the small, micro and medium enterprises (SMME) policy, Trade Policy and two partial credit guarantee schemes operated under the Ministry of Finance and Lesotho National Development Corporation.

He added that by contrast, Botswana’s policy interventions included the Citizen Economic Empower Policy, Localization and the Micro Business Finance Scheme. Its financing packages include the Equity Finance, Property and Manufacturing Fund, Young Farmers’ Fund, Youth Development Fund.

Mr Qhesi also stated that Namibia’s policies include the Black Economic Empowerment Policy and the New Equitable Economic Empowerment Framework while financial packages include programmes financing marketing services, specialised technical support, public private partnerships, small to medium enterprises, installment sale financing.

He said such interventions could only be introduced in Lesotho through dialogue between the government and the private sector.

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