The Basotho Enterprises Development Corporation (BEDCO) and Boliba Savings and Credit signed a Memorandum of Understanding (MoU) in Maseru this week for their joint venture which falls under Micro Enterprises Project.
The event saw the two organizations solidify their pact to ensure that Basotho Micro Enterprises have access to funding through the provision of microfinance loans.
The MoU will remain valid for the duration of five years and this monumental event signified the commencement of the project which will be piloted this year in Maseru, Berea, Mafeteng, Mohaleâ€™sHoek, Leribe and Quthing.
Its objectives include to assist Micro Enterprises access funding in the form of debt financing, to mobilize and support Micro Enterprises with bankable and viable business proposals development and to carry out harmonized capacity building programs for Micro Enterprises
The project will be rolled-out to the remaining districts after the pilot phase has been completed.
BEDCO Chief Executive Officer (CEO), Idia Penane said this is one of the plans BEDCO has to improve as well as grow Small Medium Enterprises.
She said that BEDCOâ€™s five-year plan from 2019 to 2025 has identified the importance of partnering with other stakeholders and departments as a way to boost the economy of Lesotho.
Penane said the biggest challenge the businesses face is lack of funds for growing as well as improving the businesses in order to create job opportunities, decrease the unemployment rate and grow the countryâ€™s economy.
She added that, the other cause of lack of funds is not being able to meet the requirements of the banks and institutes of micro-financing and as a result, businesses end up closing down.
She said another reason was lack of knowledge in bookkeeping and not knowing which ways to go in order to get financial assistance from the banks as well as other micro-financing institutes.
She said BEDCO has started training in order to educate and guide the businesses so that they can get the financial assistance hence they decided to partner with Boliba Savings and Credit as a way to reach out to Basotho businesses.
â€œIn this partnership, BEDCO will assist SMEs to draw up proper business proposals or plans in order to get financial assistance,â€ Penane said adding that businesses will also get the guidance in proper business management and these businesses will get financial assistance of between M1 000.00 and M10 000.00.
For his part, Boliba Savings and Credit General Manager, Phethang Mpota explained the purpose of the partnership as a way to pave their way to becoming a registered financial institute with the Central Bank of Lesotho (CBL).
He said that Boliba Savings and Credit is willing to assist SMEs with the help and guidance of BEDCO.
Mpota said they once financed a business competition in Lesotho where they ended up with the top three businesses which they financed with funds worth M300 000.00 and so far only one of the three businesses seems to be performing well.
He said all Basotho-owned Micro Enterprises who have been operating for a minimum of three months are eligible to benefit from the project.
In the implementation of this project, BEDCO will support these Micro Enterprises with business proposal development and compliance requirements, pre and post funding. Both of these activities will take into consideration the specific requirements of Boliba who will then provide Micro Enterprises with micro loans to grow and scale their businesses and financial literacy.