It will be interesting to see how the third strategic plan by CEDA (Citizen Entrepreneurial Development Agency) will be received by such influential institutions as the Bank of Botswana.
The new strategy gives CEDA an expanded mandate and increased power.
In the past, the Bank of Botswana has often complained that CEDA was crowding out commercial banks, arguing that in the end not only was it costly to run an operation like CEDA but also that many small companies started by the organization were not sustainable without continued assistance from CEDA.
CEDA CEO has always disagreed.
Presenting the third Strategy to the media, Dr. Thapelo Matsheka said for as long as commercial banks do not want to lend their money to start-ups then there shall always be room for the existence of an institution like CEDA.
Matsheka said CEDA is both an economic and social formation, which came about after government’s sad realization that citizens were not playing a meaningful role in the economy of their country.
He said it is exactly because the risky averse commercial banks have failed to fill the void by way of supporting the SMME sector that Government came up with CEDA.
As long as such a need exists, CEDA will come in handy, he said.
The Agency lends money to citizen companies at exceedingly generous rates compared to commercial Banks.
Under the new strategy, CEDA has relaxed the terms of lending and loan repayment even further, while also increasing the ceilings of amounts that can be borrowed.
Matsheka has dismissed claims that CEDA is crowding out the commercial sector.
He said immediately the banks come to the party by way of lending money to citizen startups at competitive rates, then CEDA will close down its operations.
CEDA came up with The Second Strategy (2006 – March 2009) that addressed the refinement of the processes and structures as well as the development of capabilities to further effect efficiencies in the provision of finance to SMMEs.
“We have made good progress in terms of the second strategy,” the former University of Botswana lecturer told journalists.
“Collections have improved tremendously over the last three years at 95 percent compared to 67 percent at the beginning of the strategy. The target for the year was 73 percent,” he added.
The second CEDA Strategic plan came to an end in March 2009.
He stated that, in terms of survival, the agency is engaging partners in the SMME development arena to assist projects to access markets and provide other business development services.
“We are increasingly being asked to sit in development structures of government and we hope with time they will alter perspectives on citizen empowerment,” he added.
The second strategy will pave the way for the vigorous third one (3rd Strategic Plan 2009-2012) that will focus on the need to respond to and reflect on the revised mandate.
The third strategy was adopted by the board in July 2009.
The strategy is expected to focus on the expanded mandate, which led to the introduction of the revised CEDA Guidelines of September 2008.
It will also look at new products like equity under direct CEDA management and avenues for raising internal funding including co-finance and funding from private sources.
All the Agency’s products, which in the past were contracted out to third parties for administration, have been put under Matsheka’s direct administration.
Matsheka has admitted that CEDA recognises that there are factors affecting business in the country, including market access, access to technology, weak entrepreneurial skills that represent major constraints for development of citizen businesses.
“CEDA will continue to work towards addressing these constraints. Other stakeholders whose support is critical to the success of the development of citizen businesses and to the achievement of the CEDA mandate include the central government ministries and local authorities, parastatal organisations and other public entities through their procurement budgets”.
Matsheka also stated that the process of revising guidelines is ongoing and consolidation of windows will save clients their time.