Letshego Holdings Limited, a microfinance holding company with its headquarters in Gaborone, Botswana, has committed a 2.2 pula billion (approximately 170 million U.S. dollars) facility through its unit in Botswana to provide financial support to micro and small entrepreneurs (MSEs) and drive the country’s citizen economic empowerment.
The deal has been triggered by the current economic climate, where MSEs have been hardest hit.
Under the deal signed on Thursday, Letshego Botswana and Morupule Coal Mine have committed to hiving off contracts, empowering and providing ongoing financial support to entrepreneurs, giving the potential for scaling up operations.
“It is always great news when a small business secures a lucrative order, however, most MSEs do not have adequate liquidity to fulfil large orders, especially when there are multiple orders on the table,” said Letshego Botswana Acting Chief Executive Officer Letso Gaborekwe when signing the deal.
MSEs are truly a credible engine of entrepreneurial growth, employment creation and economic development, however, high working capital requirements are an inherent issue that haunts most small business owners, said Gaborekwe.
Meanwhile, Morupule Coal Mine Chief Executive Officer Edwin Elias said the company has collaborated with Letshego in co-creating solutions to enable better access to credit for Botswana entrepreneurs that wish to participate in the mine’s citizen economic empowerment initiative.
Even as Letshego Botswana and Morupule Coal Mine commit to working together, Botswana’s financial challenges facing MSEs are further heightened by the low appetite in the market to fund businesses that are still in their infancy and have a limited ability to match up to the set requirements to access credit.
The country’s economic statistics indicate that most MSEs grapple with weak cash flow positions and a lack of collateral security.
According to the World Bank, SMEs make up 35 percent of the GDP and contribute 75 percent to formal sector employment, and are significant contributors to national economic development in Botswana.