Four parastatals have been selected to roll out government’s P1.3 billion business assistance plan, which will offer mainly interest-free loans and six-month grace periods to COVID-19 troubled sectors such as tourism, agriculture and the informal sector.
Parliamentarians in September approved a supplementary budget containing the Industry Support Facility, as well as separate bailouts for Air Botswana, the Botswana Meat Commission and others. The latest intervention by government follows about P4 billion in COVID-19 Relief Fund interventions, which started in May and included a wage subsidy, tax deferrals and others.
Briefing the media in a televised address on Tuesday, finance and economic development minister, Thapelo Matsheka said the Industry Support Facility was targeted at the hardest hit sectors of the economy and would be restricted to businesses already in operation.
“This facility is designed to meet the working capital of business and make sure they stay in business,” he said.
“The idea is that the economy should not start from ground zero when a vaccine is found. Rather, the businesses should be kept in business.”
According to the facility’s guidelines, all benefiting business, except for the informal sector, will be required to commit to retaining workers over the duration of the repayment. This, Matsheka said, was not only to safeguard jobs, but was also a reflection of lessons learnt from the wage subsidy when some businesses benefited but did not pass on the subsidy to their workers.
Under the facility, the informal sector will be allocated P100 million to be disbursed through individual grants of P1,000 for all those registered with the Local Enterprise Authority.
Agriculture has been allocated P100 million to be administered by the National Development Bank (NDB) while the Citizen Entrepreneurial Development Agency (CEDA) will
The NDB will also manage P300 million for general businesses and P200 million for tourism enterprises, while the Botswana Development Corporation (BDC) will administer P300 million for large enterprises.
Loans under the facility will carry a 30-month tenure with a six-month grace period. Loans for enterprises in agriculture and tourism will be interest-free and open to both citizen and non-citizen businesses, while those for general business will be linked to the bank rate of 3.75 percent.
Those loans managed by the BDC will have an interest rate not exceeding the prime rate, which is currently 5.25 percent, and will be open to citizen and non-citizen enterprises.
Matsheka pledged to ensure the highest governance and accountability standards were followed in the management and disbursement of the funds.
“These are public funds and we are accountable to Parliament for them,” he said.
“All the institutions that have been granted these monies will be subject to audits and will have to report back to Parliament.
“We have signed agreements with them around the guidelines of disbursing the monies and we have to be able to come back and account for these funds.” The minister added beneficiaries also need to demonstrate patriotism by ensuring that the funds they receive will actually support their businesses and employment.
“We must see where the funds go to in terms of output. “We don’t want the experience of the wage subsidy of companies taking money and not passing on the benefit to workers.”