Africa-Press – Lesotho. THE Basotho Enterprises Development Corporation (Bedco) on Monday signed a deal with a United States-based venture company to promote Lesotho’s Micro, Small and Medium Enterprises (MSMEs). The company, Enygma Ventures, also has operations in South Africa.
The Investopedia describes venture capital as a form of private equity and a type of financing that investors provide to start-up companies and small businesses that have long-term growth potential.
Venture capital generally comes from well-off investors, investment banks, and any other financial institutions. However, it does not always take a monetary form; it can also be provided in the form of technical or managerial expertise.
Venture capital is typically allocated to small companies with exceptional growth potential, or to companies that have grown quickly and appear poised to continue to expand.
The Communications, Marketing and Stakeholder Engagement Manager at Bedco, Mpoi Lebakeng, said the main objective of this collaboration is to assist MSMEs to access funding in the form of Venture Capital with each party playing a distinct role to enable this.
The Bedco CEO, Idia Penane, said the primary basis of the 2021/25 Bedco strategy is the government of Lesotho National Strategic Development Plan (NSDP) II and the MSME policy.
She said that the strategy particularly draws from the first Key Priority Area (KPA) of the NSDP II, which is Enhancing Inclusive and Sustainable Economic Growth and Private Sector Job Creation.
She said the strategy recognises the significant role that entrepreneurship plays in the achievement of the NSDP II and therefore aims to provide a more focused approach to the development of Basotho enterprises, based on the NSDP identified priority areas.
“The MSME sector is crucial to the development and sustainability of the Lesotho economy,” Penane said.
“In most countries, they contribute about 70 percent towards job creation,” she said, adding that Lesotho’s MSMEs “are however faced with numerous challenges that inhibit their growth and impact”. Penane said access to finance and capital has been identified as one of the biggest constraints that these MSMEs are faced with.
She said as a government of Lesotho agency mandated to grow and promote Basotho enterprises, particularly MSMEs, Bedco has made concerted efforts to assist in addressing some of the access to finance problems.
She said these efforts include exploring the use of non-traditional financing methods one of which includes venture capital. Penane said Enygma Ventures will support MSMEs by ensuring that they get funding to grow and scale up their business ventures.
She said this will be done by offering adequate support to meet investor requirements. “This MoU will enable us to collectively assist identified MSMEs address their access to finance challenges,” she said.
She added that this will, in turn, enable Bedco to contribute to the economic growth of Lesotho through an increased number of sustainable MSMEs that contributes to job creation and poverty alleviation in Lesotho.
The Principal of Enygma Ventures (Africa Trust Group), Lelemba Phiri, said Enygma Ventures is a Venture Capital fund focused on investing in female entrepreneurs and women founders in the southern Africa or the SADC region.
“The US-based fund is a unique purpose-driven investment fund, aimed at empowering, mentoring, and capitalizing outstanding female entrepreneurs in the region,” she said.
Phiri said that the MSMEs will receive capital injection ranging from a minimum of M365 000 up to M14 million towards their businesses in exchange for an agreed stake in the business.
She said that they do not just inject money into organisations and businesses but they come on board as partners. “If the business fails, we can both face the challenge together with the entrepreneurs,” she said.
Phiri said sometimes entrepreneurs face market failures, so they are training entrepreneurs to ensure that businesses grow. She said they look for businesses that have the potential to grow.
She said in partnership with Bedco they will ensure that Bedco understands the kind of businesses they are looking for because they realised that this is the real challenge in most countries. This will enable the organisations to be able to identify eligible entrepreneurs.