How Thamane prepared for his ‘soft’ landing
Innocent Selatlhwa | Tuesday February 11, 2025 12:01
Thamane and CEDA are currently under the microscope from government and craft investigators. Trade and Entrepreneurship Minister, Tiroeaone Ntsima, has launched a forensic audit to probe the dealings at the Agency whilst on the other hand Directorate on Corruption and Economic Crime (DCEC) is investigating Thamane. While many former employees are languishing in poverty due to failure to service CEDA loans, Thamane allegedly moved swiftly to introduce a policy he had rejected before. This was in November following calls for his suspension and an audit at the Agency by citizenry. A forensic audit was eventually announced in December and Thamane would then be suspended in January. According to sources, in 2021 CEDA commissioned a review of the conditions of service. The project team which was tasked with reviewing the conditions came with several proposals. One of the proposals was to allow employees leaving CEDA to continue servicing their staff loans at prevailing market rates. The proposal revealed that the practice with commercial lenders was to allow people leaving employment to service their loans without demanding full payment. At an executive committee meeting to consider the proposal, Thamane was allegedly furious and shot down the suggestions deeming them unnecessary.
“He went on to engage the union on the matter telling them they had no mandate to make proposals and demands for ex-employees. That their mandate, was purely limited to the collective bargaining agreement. That proposal was therefore buried,” a source said. Perhaps realising his end was near he allegedly raised the issue at the Senior Management Meeting of November 27, 2024. Sources claim that the issue was not on the agenda at the time with none of his executives knowing it was coming. It is alleged that Thamane said there was need to clean the loan book which was in the red and allowing CEDA ex-employees to repay their loans in line with market rates would address that. “That was a complete, sudden and unexpected 360 degrees turn from a firm opposer of this. As expected, his management team endorsed it,” a highly placed source who attended the meeting said, adding that management even clapped for Thamane for bringing this proposal to light. Thamane’s proposal Thamane stated in his report to the board, that the purpose was to provide a detailed assessment of the performance of ex-employee loans to the board and make recommendations as to the further conduct of the said ex-employee loans. He stated that as part of its employee value propositions, the agency extends and offers several facilities to its employees ranging from study loans, personal loans, motor vehicle loans to mortgage loans. The loans aforesaid are afforded to employees at preferential rates and terms softer than the terms which ordinarily obtain on commercial banks. “As an example, in respect of the mortgage loans the Agency provides 100% finance irrespective of the location of the property so purchased or constructed, as the case may be commercial entities on the contrary will provide between 75% funding to 100% funding depending on the location and complexities of the transaction,” he stated. He states that one peculiar term about these loans is that as they are staff loans eligibility is dependent on an employee's continued employment with the Agency. Accordingly, should an employee leave the Agency for whatever reason, be it dismissal resignation or retirement, such a loan will immediately become due and payable.
The consequence of the above position, he states has been that once an employee of the Agency leaves, they almost always invariably fall into default as the expectation is for them to settle their loan in full. He said they have thus far been struggling with collection. “As of November 2024, the Agency’s total exposure on ex-employee loans stood at P42 945 490.06. Over the past five years the Agency has averaged a collection of about P7 million on ex-employee loans.” Thamane stated that currently, the Agency has ex-employees dating as far back as 2007 whom full loan recovery is yet to be made. Despite considerable efforts at collections including sales in execution, he states the Agency has not been able to make significant inroads in recovering against ex-employees. “As noted above staff loans are offered at concessionary rates and terms. Consequently, when employees leave the organisation, including what should be “greener pastures” the terms of lending in commercial entities almost always inhibit them from being granted loans with an inevitable consequence that they fall into default. The situation becomes worse in respect of involuntary departures as such employees ordinarily have no source of living against which to seek finance,” he stated.
Thamane stated that management have constantly been looking at devising strategies to contain such non performing loans. “One such initiative is that the Agency should reevaluate its posture towards the treatment of staff loans on departure. It is thus recommended that instead of requiring full settlement on departure, staff loans be converted into portfolio loans where the said ex-employees continue to service such loans with the only variation being that the interest will change to prime. This will have an effect of cleaning the CEDA debt book,” he stated. This publication has also seen a memo in which Tshegofatso Dichi, director credit wrote to the board with assessment of the average interest rates charged by banks on their ex-employee loans and recommend a suitable rate on such loans for CEDA ex-employees. It is stated in the memo that The Board at its meeting of 3rd December 2024 considered and conditionally approved the proposal by management for the review of ex-employee loans. “However, management was directed to determine the average rate of interests that is charged by the various benchmarked banks, over and above their prime (bank) rates and align the rate that CEDA charges to that of the market. A benchmark was done with commercial banks and other development financial institutions to determine the interest that they charge their ex-employees over and above their Prime Lending Rate (PLR),” Dichi stated.
Since the CEDA prime rate is above the rates for all similar institutions, management recommends that ex- employees loans be charged CEDA Prime Lending Rate plus 2% (8.76%) in line with the NDB rate. “The above will allow us to remain competitive with commercial banks and retain more of the paying ex- employees portfolio and interest on it.” The proposal was presented to the Board and has since been approved is is currently being implemented. The revelations on how the policy came about are contained in a petition by former employees which has been submitted to minister Ntsima recently. The petition is expected to be part of the forensic audit as per Assistant Minister Baratiwa Mathoothe in a recent interview.
As matters stand, Board chairperson Dr Alfred Tsheboeng has since resigned. Thamane would not comment on the matter stating that he prefers to keep quiet until the conclusion of the forensic audit.