CEDA loan book grows by P190 million

Staff Writer | Thursday January 21, 2010 00:00

The increased investment in projects left the CEDA loan book standing at P546.4 million at the end of the 2008/09 financial year.

Of the total, applications towards the services sector accounted for 44 percent of the approved projects, while agriculture accounted for 30 percent, retail 14 percent, manufacturing nine percent and property three percent. These applications were towards the CEDA development fund, which has traditionally been the Agency's vanguard product through which it pursues its entrepreneurial development and employment creation mandate. According to CEDA officials, the P190 million lent out last year was a significant increase on the P119 million disbursed in 2007/08. CEDA Chief Executive Officer, Thapelo Matsheka however expressed concern with the proportions different sectors are accounting for in the development fund. 'The applications are highest from those targeting the service sector. This is because the entry criteria for this sector are very easy.

'However, this also means that competition in this sector is quite high and thus arrears among beneficiaries are also high. This is the problem we have with this sector,' he said, during a presentation of the Agency's 2008/09 financial results yesterday. Matsheka said CEDA was in discussions with government on ways in which to tap into the potential of the agricultural sector. He noted that while the sector presented strong opportunities, technicalities needed to be ironed out to enable Batswana to convert the land they hold into agricultural production.

Other CEDA products also performed well during the 2008/09 financial year, notably the Credit Guarantee Scheme which approved 195 applications valued at P56.4 million. The figure represents a 50 percent increase over the 2007/08 figures. The Young Farmers Fund also performed well with 500 applications valued at P201 million being received during the review year. From these, 88 projects worth P51 million were approved.

The CEDA Venture Capital Fund (CVCF), presently managed by Venture Partners Botswana, experienced a measure of growth, in a difficult year characterised by shutdowns and cutbacks due to the recession. Under the CVCF, CEDA, with advice from its fund manager, finances citizen-owned companies or joint-ventures in areas such as greenfield and early stage projects, established companies needing capital to expand, mergers and acquisitions, turnarounds as well as management buyouts and buy-ins.The CVCF invests for a period of three to seven years, then pulls out.

'Government put in P200 million into the CVCF and we have committed P212.9 million; part of this excess is through guarantees. Of this total, P191 million has been disbursed to projects.

'Since its inception, the CVCF has assisted projects which now have a total value of P3.75 billion, which is far more than government could have ever provided us with,' said Matsheka, adding that the outsourcing partnership with Venture Partners was now three years away from its decade-long lifespan.

During the year, CEDA also moved closer to taking over full control of the Citizen Entrepreneur Mortgage Assistance Equity Fund (CEMAEF) from government. The mortgage bail-out product is now undergoing review at CEDA with the intention of repackaging it as a mortgage assistance product, rather than a fund.

Since its inception in 2001, CEDA's various product offerings have assisted 3 318 projects valued at P1.89 million. These projects are expected to employ 27 820 people when fully operational. Thus far, the funded projects have only employed 60 percent of the anticipated numbers due to limited market penetration and procurement opportunities as well as implementation issues among CEDA beneficiaries.