CEDA launches new micro-finance product
Isaac Pinielo | Thursday September 1, 2016 16:14
Called Mabogo-Dinku, the product allows micro-entrepreneurs to apply for loans of up to P150, 000 payable in three to 12 months to fund working capital and asset purchases. CEDA chief operations officer, Andrew Madeswi said the product will be issued through a group methodology of a minimum of five and maximum of 15 people, adding that it has easy application procedures, no collateral required, shorter turnaround time, and flexible repayments. “The product is for citizens aged 18 years and above and for one to benefit from the product, they should belong to a group. Those who are employed and earning below P3, 000 also qualify for Mabogo-Dinku,” he said. For ease of managing the affairs of the group, CEDA has developed a standard constitution for the members to adopt as the governing framework.
Madeswi noted that loan processing forms shall be completed by the members in need of the loan and presented to the group for consideration and endorsement before submission to CEDA.
He further pointed out that the agency has developed an orientation and training tool that assists to strengthen the group in engaging on their affairs and further develop members to better manage their individual enterprises.
“This comprehensive orientation takes between three to six weeks before any lending activities could be undertaken,” he said.
In addition, Madeswi said Mabogo-Dinku promotes and encourages a savings culture, including providing or facilitating savings avenues for the micro-entrepreneurs as a basic of enterprise support and sustainable growth.
He said members contribute savings towards a group savings account, which is at least 10% of the total loan amount at any point in time. The funds shall be in the custody of a bank agreed upon by CEDA and the group.
“The agency has entered into an agreement with Barclays Bank of Botswana and Botswana Savings Bank to facilitate the savings component through their suitable savings products,” he said.
Thabo Thamane, CEDA chief executive officer, said they drew lessons from the previous SME financing and sought expert advice from development agencies and countries that are more experienced in micro financing like Kenya.