Mabogo Dinku Creates Over 400 Jobs
Pauline Dikuelo | Monday June 26, 2017 18:00
Mabogo Dinku, which was introduced in August last year, is a loan product with a ceiling of P20 million intended for low micro-businesses that are not able to access the main CEDA development fund.
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. According to the Agency’s chief executive officer (CEO) Thabo Thamane, when establishing the product, their aim was to encourage youth to come in groups and establish businesses that would create employment in return.
He said that the product 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.
“We have seen it with ‘Metshelo’ that people when working together can produce better results, hence the reason why we came up with this concept to encourage that spirit and try to find if it can work well,” he said.
A minimum of five people and maximum of 15 people per business is allowed under the terms of the product. Formally employed people also qualify provided they earn less than P3,000 per month. According to the CEO, the product has proved to be effective as the arrears currently stand at two percent.
He said that out of the businesses they financed, about 70% of them were start-ups and 65% of the businesses are based in the rural areas. “This symbolises a gap in the market that we have not been servicing. I
am happy with its performance as it shows that people work better when they are together rather than individually,” he said. As part of the product, 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 are kept 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 savings products.
According to Thamane, the agency drew lessons from the previous SME financing and sought expert advice from development agencies in other countries that are more experienced in micro financing, such as Kenya.