BEDCO must be reform, innovate to remain relevant: Penane
IT has been eight months since Idia Penane was appointed chief executive officer (CEO) of the Basotho Enterprises Development Corporation (BEDCO).
The former Lesotho Revenue Authority (LRA) chief planning and modernisation officer recently sat down with the Sunday Express’ (SE) senior business reporter Bereng Mpaki, to give an update on time in charge of the organisation which is tasked with spearheading the creation and growth of locally owned enterprises.
In this interview, she shares her concerns about the need for new thinking and innovation in line with the times if the state entity is to fulfil its mandate.
SE: In what state did you find BEDCO when you joined in February this year?
Ms Penane: it is perhaps necessary to begin by explaining the mandate of BEDCO because many people do not know what it is all about. BEDCO is tasked with developing Basotho-owned enterprises. It is meant to assist in their establishment, promotion and growth.
Historically, there has been a lot of entrepreneur capacitation focused on dressmaking and handicrafts like woodwork.
Unfortunately, the organisation has not been able to effectively carry out its mandate because of its limited focus on woodwork and tailoring among others.
Yes, these may have been relevant when the organisation was established in 1980 but the organisation has remained stuck there and is not moving with the times to include other projects.
Due to its failure to identify new projects and new directions, BEDCO unfortunately started losing relevance and credibility in terms of carrying out its mandate.
When I came in, I found the organisation in dire need of a turnaround strategy especially at a time when the government is struggling in terms of revenue generation.
In Lesotho, the unfortunate reality is that the public sector contributes more to the economy than the private sector. This means that BEDCO is not effectively doing its work to turn things around and ensure that the private, small business sector is becomes the major driver of the economy.
SE: How do you plan to remedy the problems you have identified?
Ms Penane: My vision entails ensuring that BEDCO regains the credibility that it has lost. The idea is to ensure that BEDCO starts impacting on the development of the micro, small to medium enterprises (MSMEs) sector to alleviate poverty among other things. It is one thing to say we have trained so many entrepreneurs but their impact is what counts. We must train entrepreneurs and afterwards ensure they establish enterprises that will eventually grow into larger businesses.
There is also an urgent need to transform and turnaround the organisation to be able to follow through from just training entrepreneurs to helping them set up business and to assist them grow those businesses.
These also have to be businesses which respond to the ever-changing times.
BEDCO has to address these concerns but for it to do so, it must first be adequately funded.
BEDCO is partially financed by the government. It also has some commercial properties that it collects rentals from. Most of our properties are used rent-free by small businesses but given our challenges, we may have to start charging rent to generate more income.
Government coffers are drying up and we must become financially independent to relieve the pressure on government.
The funding challenge is not a unique to Lesotho. It affects almost every African country. To address it, we must consider the factors behind it.
Most of the time, you will find that business start-ups are unable to meet the financing requirements to access funding. There is also inadequate support like business plan writing for enterprises to satisfy some of the financiers’ requirements.
Most of our banks have dedicated divisions for small enterprises but there remains a gap in terms of financing small enterprises. Their rationale is that start-ups are risky investments.
This is where BEDCO comes on board. We must assist them with how to draw proper business plans that are bankable. We must also provide assurance to the bank that after they have given a loan to a small entrepreneur, we will be there to take them through our enterprise incubation programmes.
There are partial credit guarantee schemes administered in the Ministry of Small Business Development, Cooperatives and Marketing. This is a financing option but I think many people are not aware of it.
We have recently developed an access to finance strategy looking at non-traditional mechanisms of financing. These include equity financing where, for example, somebody buys a 30 percent stake in your business and invests to assist with the acquisition of the necessary business assets.
Another way of financing is invoice factoring. For instance, if I run a start-up and have an order to deliver but do not have the means to finance it, I should be able to sell my invoice to somebody to get the money I need.
In other countries they use crowd sourcing where many people can each contribute say M10 to finance a start-up business. This is normally being done for charity purposes but it can also work to raise finance to fund business enterprises that have no other ways to raise it.
Philanthropy is another area that is an opportunity for financing businesses. The biggest risk is whether the money will be used for its intended purpose or something else that will collapse the business. This is where we must come in to ensure that the money is used for its purpose and there is business growth.
SE: The government has listed agriculture, manufacturing, tourism and creative industries among the priority sector to drive economic growth. What is BEDCO doing to encourage investment in these sectors?
Ms Penane: Our new strategy is aligned to the National Strategic Development Plan (NSDP II) priority areas. We are working on several initiatives in the various sectors.
This year we will initiate projects in agriculture to address the needs of MSMES in that sector. Agriculture can really become a vibrant sector. So we will design projects to address the priority sectors of the NSDP II starting with agriculture for poverty reduction and improving food security especially in these times when we continue to experience recurring El-Nino induced droughts.
SE: Do you think we have the requisite creativity to promote entrepreneurship in Lesotho?
Ms Penane: Those who study behavioural sciences will tell you that there are people who are naturally followers. Then there are trendsetters. It looks like the majority of people who want to start businesses in Lesotho are typical followers and not leaders.
We were trained at school to be employed and the education system needs a massive overhaul in terms of educating people to become employers instead of being employees. Our education must incline learners towards their ultimate careers and train them from an early age.
We are considering starting an entrepreneurship promotion programme to change the mindsets of our people. We are even thinking of roping in successful businessmen like Sam Matekane to mentor small entrepreneurs and share with them how they made it.