07 Apr 2024

Chema Chema Fund is designed to enable financial inclusion and promote growth for the informal SMME by providing them with short term loans.

Launching Chema Chema fund in Maun on Friday Vice President Slumber Tsogwane said the fund would be implemented with an initial capital of P500 million administered by LEA and (Citizen Entrepreneurial Development Agency) CEDA commencing today.

He said government recognised the key role of the informal sector within Botswana’s economy despite faced with funding challenges. The VP said all existing informal SMMEs were eligible to be funded and treated equally including food vendors, hair salons, dressmaking and tailoring, tech whiz, garages, arts and crafts, creative arts.

Mr Tsogwane said information from Statistics Botswana, showed that the contribution of the informal sector in the economy averaged around five per cent for the past 10 years with recent statistics placing its contribution to GDP at 3.2 per cent in 2023. Furthermore he said the sector was estimated to employ about 200 000 people majority of whom were women at 70 per cent.

“As the economy struggles with low levels of diversification, and limited formal job opportunities, the informal SMME sector has been a real alternative for employment and improved livelihoods for many Batswana.’’

Mr Tsogwane said the sector served an important developmental role in that it functioned as a business laboratory where many innovative ideas were tested and refined before feeding into the formal sector enterprises for growth and expansion.

Notwithstanding its importance, he said, the SMME had been found to be vulnerable primarily because of being financially excluded by the mainstream sources, commercial business and start-up funding products and services offerings. He said the funding were not grants but loans which payable under favourable terms with a once off interest rate of 2.4 per cent and repayment periods of up to 12 months. 

The VP said the fund offered an opportunity for SMMEs to pursue value chain development in different sectors citing as an example, the recently launched citrus products of Selebi Phikwe and meat and beef value chains.

“Kindly use the fund responsibly and repay the loans so that others could borrow too and ultimately ensure the results are positive and support continuation and continued budget support for the SMME sector.”

Unpacking the fund guidelines, CEDA CEO Mr Thabo Thamane said eligibile candidates were those earning below the taxable income bracket which was P48 000 per annum.

He said the loan amount an informal business or individual could apply for was dependent on the sector and nature of the business project with minimum funding being P500 and P50 000 as maximum.

He stated that it was imperative for businesses to register with LEA who would interview individuals or group enterprises to determine their eligibility and ensure all documents like hawkers permit, tribal authority letter or letters from any informal business association to testify of one’s business existence and operation.

Moreover Mr Thamane said small business already registered with LEA could apply online as the forms were short and easy, adding that the processing of an application would take two days at most.

He indicated that once a loan had been approved, the recipient would undergo capacitation on business management and growth strategies offered for free. The approved funds, he noted, would be credited to applicant’s preferred financial services facilities which included banks, Orange Money, SMEGA, POSO MONEY and MyZAKA.

He said the fund would be administered autonomously for all districts instead of splitting funds according to district.

Kgosi Tawana Moremi II of Batawana thanked government for choosing Maun to host the launch noting that this was fitting as Maun was a pinnacle of SMME who were distributed through the entire town.

“Informal sector is the backbone of Maun as most of our people sell products and services by the roadside and every corner in order to make ends meet and feed their families.” He urged Batswana to embrace Chema Chema and utilise the funds to stimulate business growth. ENDS