The Lesotho National Development Corporation (LNDC) has signed a Memorandum of Understanding (MoU) with the Lesotho Postbank under which the financial institution would offer loans partially secured by the investment utility.
The M2.5 million Partial Credit Guarantee (PCG) facility was signed on Tuesday in Maseru, and followed similar agreements the LNDC entered into with First National Bank Lesotho, Nedbank Lesotho and Standard Lesotho Bank in 2012.
LNDC introduced the PCG in 2011 to support Basotho-owned businesses by providing them with 50 percent guarantee when applying for funding.
Speaking at Tuesday’s signing ceremony, LNDC Chief Executive Officer, Kelebone Leisanyane, said Postbank had joined the scheme at the right time when the corporation had learnt from past challenges with the other banks.
“This is a milestone that we should celebrate as Basotho as it marks another step towards the LNDC’s efforts to strengthen our private sector.
“We admit this partnership has come at a much better time when we have already seen the PCG’s challenges during the pilot phase with the other commercials banks. The challenges have given us an opportunity to strengthen our strategies for a more improved service,” he said.
On his part, LNDC Head of Investment Promotions, Mokhethi Shelile, noted 27 projects had benefitted from the scheme, and generated 600 jobs.
“Progress has been gradual with most of the projects only taking off in 2012. Out of the 27 projects that have benefitted under the PCG, two have since become self-sustainable companies which have paid off their loans with the banks.
“A combined total of 600 jobs have also been created from these projects, providing the much-needed relief to our people,” he said.
In his address, Lesotho Postbank Managing Director, Molefi Leqhaoe expressed gratitude at the opportunity his organisation had been granted to increase its support for local businesses with more focus on unbanked and under-banked Basotho.
“It is a well-documented fact that small businesses drive the economy of any country, so we are proud to be part of this scheme as it is intended for the economic growth of our country.
“We have structures in place to deal with financial-inclusion which continues to foster financial-literacy and customer-education to ensure access to funding becomes a reality for every Mosotho who owns a business,” he said.
Meanwhile, the PCG policy was modified in January 2014 to accommodate a wider spectrum of businesses, including retail and service-providing enterprises. Banks can also lend amounts lower than M200 000 to broaden access to finance by small businesses.