Own Correspondent
5th July 2021
Letshego Botswana which introduced Invoice and Purchase Order financing in 2016, offering P200, 000 has doubled their borrowing limit from P1, 000 000, to offer offer Micro and Small Entrepreneurs (MSEs) up to P2, 000 000, to enable them to fund their venture and project needs.
Letshego’s Micro and Small Entrepreneurs strategy supports micro and small businesses that would have otherwise struggled or failed to obtain short-term project financing and venture capital.
Letshego Botswana CEO, Fergus Ferguson said, “We are committed to delivering relevant solutions that trulyprovide value for our customers.”
He said, “Our invoice and purchase order discountingsolutions enable our micro and small entrepreneurs to focus on the critical aspects of growing their businesses and promote long term sustainable economic growth and job creation through the development of a vibrant entrepreneurial sector, particularly as they manage through these challenging times caused by the COVID-19 pandemic.”
Small and Medium Enterprises (SMEs) represent a key sector for driving economic diversification and sustainable growth. According to the World Bank, SMEs make up 35% of GDP and contribute 75% to formal sector employment in Botswana.
Micro and Small Enterprisestherefore provide valuable economic potential for this country, to support poverty eradication, employment and economic diversification. Despite their valued economic contribution, Micro and Small Entrepreneurs often struggle to competewith high value projects, while often having to deliver projects undernon-negotiable timelines.
For MSEs, cash flow remains one of the biggest challenges, and often the main reason why many small businesses fail within the first two years of starting up. The cash flow shortages experienced by Micro and Small Entrepreneurs (MSEs) are exacerbated by barriers to accessing finance, potentially leading to solvency problems.
Typically, Micro and Small Entrepreneurs find it difficult to obtain bank loans and instead rely on internal funds, or cash from friends and family, to start up and initially run their enterprises.
Access to finance and formal lines of credit persist among the top challenges to Micro and Small Entrepreneurs growth, particularly in middle-income countries like ours, where SMEs are constrained due to a lack of collateral security.
These challenges are further heightened by the stringent lending requirements and screening models used by most financial institutions, where lenders often charge high interest rates and services fees that Micro and Small Entrepreneurs (MSEs) are unable to afford due to their weak cash flow positions.
Letshego’s purchasing order financing provides a unique lifeline to Micro and Small Entrepreneursas their purchase order and invoice financing istailored to match the needs and risk profiles of small businesses in Botswana. Further, Letshego’s MSE customers are only charged a highly competitive minimal interest fee on their borrowing.Additionally, their quick turnaround times present a welcome advantage for Micro and Small Entrepreneurs, as it helps to quickly alleviate their cash flow problems.
Micro and Small Enterprisesoften have slow collections and receivables, which significantly affects how quickly they can make payments for operations and to their suppliers.Letshego Botswana’s Purchase Order Finance solution is available across Letshego’s 16 branch network.
