LNDC unveils M410 million finance package


Bereng Mpaki

THE Lesotho National Development Corporation (LNDC) on Thursday unveiled new financial instruments aimed at supporting local businesses to alleviate the effects of the Covid-19 pandemic.

The instruments were launched during a dialogue between the government and the private sector to find ways of collaborating between the two parties in creating jobs. The dialogue was chaired by Prime Minister Moeketsi Majoro.

Lesotho National Development Corporation (LNDC) chief executive officer Mohato Seleke said the financing instruments were offered under the LNDC’s development finance unit.

He said one of the instruments, the Covid-19 Response Partial Credit Guarantee scheme (Covid-19 Response PCG), is a stimulus package tailored to cater for businesses affected by the Covid-19 pandemic.

To access the funding, businesses that have been affected by the Covid-19 pandemic must apply for loans at their respective banks. The government will guarantee 75 percent. The remaining 25 percent loan security is shared equitably between the client and the bank.

“The three products are the restructured Partial Credit Guarantee scheme (Covid-19 Response PCG), the Quasi Equity and the Project Preparation Facility, with a total value of M410 million,” Mr Seleke said.

Of the M410 million, M350 million has been pledged by the government for the Covid-19 PCG, with the balance being financed by the LNDC.

He said the PCG scheme started as a pilot in 2011 and has leveraged M34 million worth of lending to small and medium enterprises since its inception.

“The scheme is now restructured, simplified and scaled up to respond to effects of Covid-19 on the economy and to improve its impact and reach. It expands guarantee cover from the previous 50 percent to 75 percent of the loan; waives all fees; covers all sectors and business activities…”

The maximum amount to be guaranteed by the government is now a maximum of M8 million up from the previous M5 million set in 2011. The minimum loan supported is M200 000.

Theko Bereng, the general manager of the LNDC development finance unit, said the instrument is accessed only through applying for a loan directly to participating commercial banks, namely Lesotho PostBank, Standard Lesotho Bank, First National Bank Lesotho and Nedbank Lesotho, which in turn approach the LNDC on behalf of their clients.

On quasi equity, Mr Seleke said applicants would not need to go via the bank to access it but instead directly approach the LNDC. He said half of the funds under this instrument would go towards agriculture and agro processing projects.

“The Quasi Equity instrument will provide innovative finance to fast growing local companies which promise high development effects, mostly in agriculture and manufacturing. The product will be offered as a standardised profit-sharing arrangement with up to two years of moratorium.

“The Project Preparation Fund is designed following a trust fund model where the government and the LNDC contribute funding along with external partners, and the LNDC acts as the administrator. A broad range of feasibility studies and other related activities will be supported to prepare private sector projects to bankability, mostly those that go through the Lesotho Economic Labs programme. Applications for both the quasi equity and project preparation funding can be done on the LNDC website. No hard copy applications will be accepted.”

Mr Seleke said the development finance unit was established to address the financing part of the LNDC’s mandate, which it has overlooked for many years.

“The LNDC is mandated to raise, lend or borrow money and make credit advances to any company, firm or person engaging in any activity similar to that of the corporation. The corporation can also guarantee any payment of cash for performance of contacts by any such company.

“Essentially, the LNDC is a development finance institution but for the past 50 years, this has not been given enough attention by the corporation. However, after a new strategic plan launched in 2018, we decided to pay more attention towards helping the private sector to raise finance to develop their businesses after we noted that one of the major challenges for private sector development is access to finance,” Mr Seleke said.

For his part, Dr Majoro said the government was committed to removing obstacles inhibiting the private sector from creating jobs.

“Notwithstanding Covid-19, Lesotho still needs to create hundreds of thousands of jobs and although the government does not create jobs, …it intends to facilitate job creation through consultative and regular engagements with investors on how jobs can be created,” Dr Majoro said.



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