Thesis (MDF (Development Finance))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: Small and Medium Enterprises (SMEs) are regarded as core drivers of private sector
development in many countries. By their nature, SMEs encounter enormous problems,
ranging from usage of appropriate technology, access to raw materials, lack of skills, etc.
However, access to finance is frequently cited as the most prominent problem facing the
SMEs. Access to finance is defined as the easiness to access credit from financial
institutions and the costs associated with accessing credit from such institutions. This
study focuses on credit guarantee schemes as one of financial instruments commonly
used to encourage banks to provide credit to small businesses and first time borrowers.
Specifically, we review the performance of the two schemes initiated by the Government of
Lesotho through assistance of the donor community. The first scheme (Comprehensive
Export Finance Scheme) was administered by the Central Bank of Lesotho through
Lesotho National Development Cooperation between 1988 and 1996. The second scheme
(Facility for small-scale financing scheme) was funded by United Nation Capital
Development Fund, United Nations Development Programme and Lesotho Government.
The latter was operated by Basotho Enterprise Development Corporation (BEDCO),
Women in Business and Lesotho Council of Non Governmental Organisations (NGOs)
between 1992 and 1997.
We analyse the performance of these schemes in relation to their diversification and
outreach objectives. We also compare these schemes in terms of the design features and
operational issues as per global best practices. Further, some of the factors that affected
effectiveness of the two schemes under consideration and the overall financial
intermediation process in Lesotho are outlined.
One of the findings of this study is that generally the two schemes failed to achieve the
intended objectives as a result of a number of problems. Apart from the deficiencies of the
scheme itself, problems in the business and financial sector affected the performance of
these schemes.
A striking common feature of these schemes is that they concentrated in few sectors. We
also observed a general negligence by the banks in relation to screening and monitoring
as a result of low risk exposure. In retaliation of poor due diligence by the banks, and a
resultant high default rate by borrowers, guarantors repudiated claims and this led to the
eventual erosion of the credibility of the schemes, and ultimate deterioration of guarantor lender
relationships.
From the findings, we have concluded that the schemes should be designed and be
operated according to global best practices. For example, risk exposure should be shared
in such a way that all the three parties, that is guarantor, lenders and borrowers, are
exposed to some degree of risk. At the same time, where defaults occur, we recommend a
speedy processing of claims by the guarantor, and that loan loss recovery activities are
continued even when claims have been paid.
We also make some recommendation in respect of the financial sector and business
sector respectively. For the financial sector the recommendations include the
establishment of credit bureaus and a National Identification System so that financial
institutions can isolate good clients and price products accordingly. In respect of the
business sector, key recommendations include the improvement of basic infrastructure,
decentralisation of key support services to the districts, linking smaller entrepreneurs with
large foreign firms, and increasing vocational and technical training in Lesotho. / AFRIKAANSE OPSOMMING: Kleinsake word in baie lande as die vernaamste dryfkrag van groei in die privaatsektor
beskou. Vanwee hulle aard ondervind kleinsake egter 'n wye reeks probleme, wat strek
van die benutting van gepaste tegnologiee en die toegang tot natuurlike hulpbronne tot die
beskikbaarheid van die regte vaardighede. Toegang tot finansiering word dikwels as die
mees belangrike probleem van klein sake beskou. Dit word gesien as die toeganklikheid
van finansiele instellings vir krediet aan kleinsake en die koste van sodanige finansiering.
Hierdie studie plaas die klem op kredietwaarborgskemas as een van die finansiele
instsrumente om banke aan te moedig om krediet aan kleinsake en sakebeginners toe te
staan.
Binne die konteks van Lesotho kyk ons na twee sodanige skemas, geinisieer deur die
regering van Lesotho, in samewerking met buitelandse donateurs. Die eerste skema (die
"Comprehensive Export Finance Scheme") is gedurende die jare 1988 en 1996 deur die
Central Bank of Lesotho geadministreer, in samewerking met die Lesotho National
Development Corporation. Die tweede skema (die "Faculty for Small-Scale financing") is
geborg deur die UN Capital Development Fund, die UNDP en die regering van Lesotho.
Dit is geadministreer deur die Basotho Enterprise Development Corporation (BEDCO),
"Women in Business" en die Lesotho Council of NGOs en was aktief gedurende die jare
1992 en 1997.
Die studie ontleed die werking van kredietwetskemas met die oog veral op hul
dekkingswydte en trefkrag. Daar word ook gekyk na die aard en operasionele
besonderhede van die skemas, teen die agtergrond van wereldwye praktyke. Ten derde
word gekyk hoe die skemas ingepas het by die breer finansiele proses van Lesotho.
Die studie toon dat albei skemas, vanwee 'n hele reeks faktore, in hul oogmerke gefaal
het. Afgesien van 'n reeks tekortkominge van die twee skemas self het probleme in die
sakemilieu en die finansiele sektor hul werking nadelig beinvloed.
Een van die tekortkominge van die skemas was 'n te eng fokus op slegs enkele sektore.
Daar was ook 'n gebrek aan deeglike voorondersoeke en monitereing, o.a. as gevolg van
'n lae risikoblootstelling aan die kant van die banke. Een van die gevolge van die beperkte
aandag van banke en die hoe mislukkingskoers van kleinsake was 'n toenemende
onbereidwilligheid van die skemas om eise te erken. Dit weer het die geloofwaardigheid
van die skemas in gevaar gestel en verhoudings tussen die uitleners (banke) en
waarborgvoorsieners vertroebel.
Die ondersoeke kom tot die slotsom dat die skemas volgens die beginsels van
internasionale skemas van die soort hersien behoort te word. Dit sluit in die behoorlike
deling van risikos (tussen lener, uitlener en waarborgverskaffer). Dit behoort ook 'n
spoediger afhandeling van eise in te sluit.
Die studie maak ook enkele voorstelle gerig op die wyer finansiele en sakesektor van
Lesotho, soos bv. die noodsaaklikheid van "kredietburo's" en 'n nasionale
identifikasiestelsel. Op 'n nog wyer vlak word verwys na die belangrikheid van 'n beter
kommunikasie-infrastsruktuur, die desentralisasie van ondersteuningsdienste, nouer
skakeling tussen klein sake en groter ondernemings asook beter tegniese- en
sakeopleiding.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/5544 |
| Date | 12 1900 |
| Creators | Lepolesa, Gerard |
| Contributors | Thomas, Wolfgang, Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Rights | Stellenbosch University |
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