The Industry Support Facility (ISF), a Covid 19 response credit facility put together by Botswana government to help local companies with working capital has not had a good start.
Through the ISF, the Botswana government prepared a medium to long term Economic Recovery and Transformation Plan (ERTP) for mitigating the effects of the Covid 19 pandemic.
“Since the initiative started, we disbursed just under P30 million out of the P100 million”, CEDA Chief Executive Thabo Thamane told the Parliamentary Committee on Statutory Bodies and State Enterprises this week.
Thamane pinned the low uptake to ‘eligibility’ which is limited to businesses with only a turnover of P10 million. He said that what it means is that the maximum loan CEDA can give is 10 percent of a business’s turnover which is P1 million. He also noted that the tax compliance requirement is low given that targeted businesses’ turnover is naturally low, and they avoid costs associated with tax.
The other reason for the low ISF uptake, Thamane said, is that agriculture and tourism make the most amount of CEDA’s portfolio, collectively contributing around P700 million but, the recent guidelines of the ISF do not allow the agency to assist clients in the agriculture and tourism space.
The ISF was funded through a Supplementary budget approved by Parliament in September 2020. A total of P1.3 billion was set aside in a bid to help jerk up the economy.
“The approach is to make sure that businesses do stay in business. We do not want to start from ground zero when a vaccine has been found, we want to be able to keep those businesses in place so that we sustain them. We have identified institutions that would be disbursing or considering applications under this Industry Facility Fund,” said former Finance Minister – Dr Thapelo Matsheka at the time of introducing ISF.
Apart from the general industry businesses, the funds are expected to be disbursed to atleast three sectors of the economy – Informal sector, Agriculture and Tourism through state agencies – Botswana Development Corporation, Local Enterprise Authority, Citizen Entrepreneurial Development Agency and National Development Bank.