Chema Chema to re-launch as grant scheme in July
Pauline Dikuelo | Wednesday May 28, 2025 06:00
The P500 million scheme was previously a revolving fund where small citizen businesses and start-ups were provided with affordable short-term loans. However, the new political leaders have since written off the debt for many entrepreneurs and those who had already repaid the loans are being reimbursed as the Fund is now turning into a grant scheme. The transformation follows the suspension of the original Chema Chema private sector fund, which was established to support the country’s informal and small-scale business sector. Permanent Secretary in the Ministry of Trade and Entrepreneurship, Olesitse Masimega, confirmed last week the Chema Chema Fund will no longer operate as a loan facility. Speaking before the Public Accounts Committee (PAC) on Thursday, he noted that while the scheme had previously provided short-term loans to informal businesses, the new grant-based model will offer non-repayable financial assistance.
The move aligns with the financing framework of National Development Plan 12 (NDP12). Masimega clarified that applicants whose proposals were approved before the suspension of Chema Chema will still receive support, although proposals will be re-evaluated to ensure alignment with current economic conditions. 'Commitment to extend financing to the approved applicants is there. “However, due to inflation and increased prices, it does not necessarily mean they will receive the exact amount initially requested,' he told the Parliamentary committee. The committee was informed that those whose applications were not approved prior to the programme’s halt will be allowed to re-apply under the revised grant structure. Originally launched to address financing gaps in the informal sector, the Chema Chema Fund was funded with an initial P200 million in seed capital, which was later increased to P500 million to meet rising demand. The fund offered loans capped at P50,000 with a low interest rate of 2.4 percent. It covered a wide range of needs including business expansion, infrastructure procurement, capacity building and administrative support.
The initiative was widely praised for its role in bridging the financing gap for informal businesses, many of which struggle during the critical first three to five years due to lack of capital, limited managerial skills, and poor access to infrastructure and mentorship. With its re-launch as a grant, the government aims to enhance the fund’s impact by removing the repayment obligation, thereby reducing the financial burden on startups and micro-enterprises. The new Chema Chema grant scheme is expected to play a crucial role in revitalising the informal sector and supporting entrepreneurship across the country.