Litšiba unpacks why SMMEs collapse

Litšiba unpacks why SMMEs collapse

Lemohang Rakotsoane

MASERU

SMALL Businesses Minister Thabiso Litšiba has blamed the lack of clear policies for the collapse of SMMEs.

Litšiba told a press conference yesterday that lack of coordination between government ministries had also seen many SMMEs fail.

He said the partial credit guarantee scheme which has been touted as the government’s youth enterprise development flagship over the last six years has also been ineffective because of the same reasons.

Talking about the credit guarantee scheme, Litšiba said “the government has opted for this method to ease access to finance in a way that would avoid a repeat of the block farming” mistakes.

He said the block farming project which was also advertised as one of the successes of the government when it started, was“where only the government had to be liable for the fallout because banks had failed to do their work properly”.

He said the government decided to get into a partnership with the banks to let them take a certain amount of percentage for the business while the government would take the bigger percentage.

However, the banks still opted to be overly strict hence the need to come up with many more methods to ease access to finance, Litšiba said.

He added that lack of skills, information and capacity in terms of collateral are among key factors as to why a lot of SMMEs failed to access money from the banks.

He further stated that many projects that several government ministries have carried out to help SMMEs have failed to realise their potential due to lack of coordination.

“There are different projects by different ministries, the Ministries of Finance, Trade, Gender, Tourism and Agriculture. These programmes were uncoordinated, not properly designed, never implemented, not monitored and evaluated and therefore failed to be sustainable and did not bear the desired results,” Litšiba said.

“Evidence shows that the potential impact of these programmes is unknown due to lack of coordination and it is unfortunate that there is no clear record of these projects that are funded from the nation’s coffers,” he said.

Litšiba said there is need for an SMME policy to address these issues and solve problems the SMMEs are facing.

“Finally we have a policy that is a product of various consultations with all stakeholders to ensure that it addressed their needs,” he said.

The policy is said to be in alignment with the legislative and regulatory framework, the national strategic development plan, Vision 2020 and many other developmental strategies.

He said first on the agenda is the need to address the regulatory framework.

“A lot of SMMEs have failed to reach their full potential due to lack of policies, even BEDCO as an implementing body did not have a policy and this made it hard for them to move forward,” Litšiba said.

He added that there is a lot of regulatory framework on the ground but most of the regulations need to be reformed.

“Tax is among the chief issues that need reform because a lot of SMMEs struggle when it comes to tax. They are not tax compliant hence we need to address issues concerning tax and help them to be tax compliant and join the formal sector,” he said.

He stated that the policy strives to address the issue regarding the lack of entrepreneurial spirit among Basotho.

“It should cut across all courses and taught from as early as high school, not university. We are even planning to have BEDCO subsidiary that will focus solely on entrepreneurship.

“We also strive to help SMMEs meet standards to enable them to have access to markets so that they can also grow, because the fact is all multinational corporations started as SMMEs to get to where they are today.”

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