The Citizen Entrepreneurial Development Agency (CEDA) has introduced to the market a specialized product for the co-operatives aimed at resuscitating the economy as espoused by Government Cooperative Transformation Strategy.
With co-operatives having collapsed around the country, the new product aim to bring them back to life, revamp and re-direct the development of co-operatives into globally competitive businesses with a human face.
When giving an overview of the product, CEDA Chief Executive Officer (CEO), Thabo Thamane said government has in the past supported Co-operatives through various initiatives such as the Public Debt Service Fund and the Revolving Trust Fund that was administered by Botswana Cooperative Association (BOCA).
However, these were not effectively utilized therefore were not sustainable, Thamane said. In an effort to create a sustainable product that support Government’s transformative strategy, the Agency invested in research and extensive stakeholder engagement during the creation of this product.
To understand the operating environment and map out the key success factors, CEDA engaged a Kenya-based consulting firm, KUSCCO to assist in product development which included, stakeholder consultations in Botswana ranging from meetings with leaders of selected Co-operatives, the Director of Co-operative Development as well as meetings with the apex Co-operatives associations.
According to CEDA CEO, extensive field work was also done for consultants to get first-hand information on operations of local Co-operatives, as well as to allow for knowledge exchange between locals and the consultants.
The product is aimed to finance the following: Equipment, plant and other asset acquisition, Property development, and working capital needs.
Criteria for funding is similar to other existing CEDA products, open to viable and sustainable start-up and expansion businesses. Co-operatives with income generating activities or businesses, and assistance will only be offered to those that are registered with the Department of Co-operative Development.
“It is also important to note that the Agency will not fund Co-operatives for on-lending purposes, that is those that will borrow so that they can further offer loans in the market,” Thamane stated.
The funding for co-operatives will have a ceiling of P50 million, and as a rule, promoters of projects to be financed by CEDA are expected to show commitment through contribution. Contribution may either be in cash or in kind (tangible assets).
As part of the recently revised CEDA guidelines, priority will also be given to Co-operatives operating in the special sectors, which are manufacturing, mining, construction, energy, technology and innovations, agriculture, creative industry and tourism.
When officially launching the CEDA Co-operatives Product, Minister of Investment, Trade and Industry, Mmusi Kgafela said it is evident that although Co-operatives have operated in Botswana for many years, their economic impact is mixed because, while many of them are successful, there are equally many others, which are less successful.
He said Government developed the Co-operative Transformation Strategy for Botswana in 2011, to resuscitate, revamp and re-direct the development of co-operatives into globally competitive businesses with a human face.
“The main goal of the Strategy is to develop new generation co-operatives based on modern business practices,” Kgafela said.
“To achieve this, the Strategy sets to implement eight strategic pillars, which drive co-operatives transformation in Botswana. These include: Co-operatives Branding; Cooperatives Growth Pillars and Linkages; Co-operatives Environment for Doing Business; Co-operatives Financing and Insurance; Youth Participation in Co-operatives; Co-operatives Mindset Change; Cooperatives Corporate Governance; and Member Participation and Commitment.”
Kgafela, who also represent Kgatleng West in parliament, said, the Co-operatives Financing and Insurance pillar seeks to address co-operatives access to financing and insurance, indicating that it seeks to present co-operatives as credible businesses that may be financed and insured as non-high-risk businesses.
“The strategic aims of the Pillar are to diversify co-operatives sources of funding; ensure that cooperatives finance efficient production methods; improve co-operatives financial management skills; Improve co-operatives staff financial skills, competencies and attitudes,” he stated.
Kgafela said the launch of the CEDA Cooperative Product, therefore, is a step in meeting the aim of this pillar, by providing a targeted product to finance cooperatives and enhance their sustainability.
“Cooperatives play an important role in our economy, and they encourage the spirit of self-help and reliance. One of the targets of the Strategy is to increase the number of co-operatives sources of funding by 50% and CEDA is a key player is ensuring that the target is achieved as per the Strategy,” he stated.
“Most co-operatives in Botswana are undercapitalised. This negatively affects their working capital. It constrains them from responding competitively to market challenges and opportunities,” the minister added.
“Continued efforts are needed to encourage co-operative societies to explore viable ways of recapitalising themselves, including increasing the share capital that members contribute as a condition of membership.”