Today the 6th August 2020 during the “Business-Government Consultation” chaired by the Right Honourable Prime Minister Dr Moeketsi Majoro, the Lesotho National Development Corporation(LNDC) unveiled the first series of three (3) financial instruments designed under it new Development Finance Unit. The three instruments, a restructured Partial Credit Guarantee (PCG) scheme, the Quasi Equity and Project Preparation Facility, come with a total envelope of close to M410 million including M350 million pledged by the Government for the PCG, with the balance financed through the LNDC balance sheet. The instruments were launched as a means of offering financing solutions to support private sector led industrial development and broader economic diversification, and to alleviate the effects of Covid-19 pandemic.
The PCG Scheme within LNDC started operations in 2011 and has leveraged M34 million worth of lending to small and medium enterprises (SMEs) since its inception. The scheme is now restructured, simplified and scaled up to respond to effects of Covid-19 on the economy and to improve its impact and reach. It expands guarantee cover from the previous 50% to 75% of the loan; waives all fees; covers all sectors and business activities except normal negative list activities. The guarantee amount will also increase to a maximum M8 million, from M5 million previously. The minimum loan supported is M200,000. This instrument is accessed only through applying for loans directly to participating commercial banks, which in turn approach the LNDC on behalf of their clients.
Quasi Equity instrument will provide innovative finance to fast growing local companies which promise high development effects, mostly in agriculture and manufacturing. The product will be offered as a standardised profit-sharing arrangement with up to 2 years of moratorium.
The Project Preparation Fund is designed following a trust fund model where the Government of Lesotho and LNDC contribute funding together with external partners, and the LNDC acts as the administrator. A broad range of feasibility studies and other related activities will be supported to prepare private sector projects to bankability, mostly those that go through the Lesotho Economic Labs program. Applications for both the quasi equity and project preparation funding can be applied for online on the LNDC’s website. No in-person or hard copy applications will be accepted.
Today marks the first product launch by LNDC’s Development Finance Unit since the unit was established in 2018 after the approval of the LNDC Strategic Plan 2018-2023. The launch by the Right Honourable Prime Minister was witnessed by a select number of stakeholders from Government, the Private Sector and Media due to social distancing requirements.
The LNDC is mandated though an act of parliament to “initiate, promote and facilitate the development of manufacturing and processing industries, mining and commerce in a manner calculated to raise the level of income and employment in Lesotho.”
Inquiries: Tiisetso Moremoholo or Lerato Tsoinyane
Contact: [email protected] or [email protected]
Tel: +266 22312012
