Campaign Story

Government spends Billions a year to procure services from businesses and enact its mandate. It is the biggest buyer of anything in Botswana. In line with understanding its power, it has made a conscious effort to try stimulate the growth of small businesses, by committing 10 Million on its total spend to small businesses. This means a total of P10 Million of its spending is earmarked for emergent small businesses.

The problem with this though, is that most small businesses do not have the capital to execute on the jobs and then receive payments 7 to 60 days after completing the job. This is a major contributing factor to delays in service delivery for the citizens of the country.

Entrepreneurs who do get these contracts are forced to give up to 25% of the contract away to shark businesses that are their only option for financing.

On one side, how do you make the workings of government efficient and at the same time allow them to play a critical role in the development of small businesses?

We feel this is where a people owned funding mechanism comes in. You contribute to this campaign, we then use the proceeds to pay for the needs of entrepreneurs who have contracts with government (& the private sector) and they then pay us 6% of the value of their purchase orders once they receive their payment.

e.g. Tshepo just received a contract with North East District Council to deliver 20000 pencils for  P20 000.

The cost to manufacture these for him is P10 000. We, as the fundspoters, extend him this P10 000 and he agrees to pay us this back as well as 6% of the invoice value (P20 000 * 6% = P1200). He takes 3 weeks to manufacture & deliver these pencils. North East agrees to pay him 30 days from Statement (or after delivery) so he pays us back P11 200 almost 60 days from the time we advanced the capital. He now has P8 800 in profit. He can now use this to finance his next purchase and request less from us. The ultimate objective is to allow entrepreneurs to become self reliant.

We have validated this model with a few small entrepreneurs and have developed relationships with certain municipalities to execute on this.

HOW IT WORKS:

1. You contribute to this campaign (minimum P100; Maximum P1million).
2. 10% of your contribution is deducted from the fund to cover administrative costs (around 6% is lost in banking fees when receiving, transferring and moving the capital around. The other 4% are running and administrative costs such as site visits for entrepreneur procurement as well as legal on-boarding).
3. At the end of each month, your money is put to work as described in the example. We expect it to do 6 purchase orders with your money in a year (from disbursement to entrepreneur; to receiving payment back takes anywhere from 45 days to 60 days).
4. We take 0,6% as service fee for management of the process (hence leaving you with 105,4% per rotation).
5. At the end of 12 months from the time you contributed, we then pay you back your original capital as well as the facilitation fee. On six purchase orders per year we expect this to be 124%. Put another way, at the end of 12 months we expect to pay you P124 for every P100 you put in today.
6. The entire payment process will be managed by Venus Global and Audited by Lingaro Chartered Accountants & Auditors

EXPECTED RETURN:

NB!! First & foremost, we need to declare that this does not constitute financial advise in anyway and that we have made our projections based on historical yields. Buying assets that will be run by a small business is risky and you should only commit money you are willing to lose.

We have made a table of expected returns.