MASERU – THE Government of Lesotho has received M780 million (US$45 million) financing from the World Bank to implement the Competitiveness and Financial Inclusion (CAFI) Project.
The project starts this month.
Trade Minister Dr Thabiso Molapo said “entrepreneurship is the main driver of economic growth”.
“It is also a factor that makes communities more vibrant, inclusive, and secure,” Dr Molapo said.
He said these are some of the reasons that motivated the design of the CAFI Project, and they are confident as the ministry that the initiative is going to address the challenges faced by Basotho business people, especially women and youths.
“This facility will be an entrepreneurship knowledge hub and business incubator that will work with entrepreneurs to help them learn how to turn their ideas into enterprises,” he said.
Dr Molapo said this initiative has come at an opportune time when the country is facing serious socio-economic challenges including the scourge of poverty and high rate of youth unemployment.
He said this is by far the biggest and the most transformational intervention that is designed to address lack of access to business support services and financial products in Lesotho.
The World Bank Country Director, Marie-Françoise Marie-Nelly, said the money will not only promote business but further improve the entrepreneurship ecosystem.
Marie-Nelly said the project is targeting youths and women.
“This will help Basotho to participate in the development of wealth by turning their ideas into business,” she said.
“This will also be addressing the challenge of inequality in the country.”
She said they are also ensuring that the initiative is connected globally so that entrepreneurs can have access to global markets.
The Project Manager of Private Sector Competitiveness and Economic Diversification, Chaba Mokuku, said the project started on September 2 and is expected to run for the next six years.
He said they evaluated the economic performance of Lesotho over the decade prior to Covid-19.
He explained that in 2012, the economic growth was negatively affected by the political instability.
In 2020 and this year, the situation was exacerbated by Covid-19 and the war in Ukraine.
“This also affected our performance in terms of doing business,” Mokuku said.
Mokuku said the new competitiveness and financial inclusion project was then built on the previous Private Sector Competitiveness and Economic Diversification Project Phase II.
He said it was designed to improve the business environment for firms, strengthen select government institutions and further diversify the economy.
He said the business environment has been improved in areas such as horticulture and tourism.
Mokuku said the new project’s objective is to increase access to business support services and financial products for Micro, Small & Medium Enterprises (MSMEs).
Mokuku said the project is composed of scaling support for business and MSMEs by enhancing an entrepreneurship hub and seed financing facility.
It will also scale the Lesotho enterprise assistance programme Lesotho Enterprises Assistance Program (LEAP) for MSMEs.
Mokuku said the project also seeks to explore SME participation in high potential chains where they will focus on the textile and horticulture sector.
He said there are currently 42 active textile firms after eight were shut down during the Covid-19 pandemic.
Basotho only own six out of 42 firms.
“We want to encourage Basotho to venture into the textile sector.”
The Senior Private Sector Specialist at the World Bank, Michael Ehst, said Lesotho entrepreneurship ecosystem is currently in the activation phase where there is limited start-up experience, low start-up of around M1 000.
He said they want to focus on increasing the start-up output and early stage funding.
He further said they are seeking to activate entrepreneurial minded people and grow a more connected local community that helps each other.
Refiloe Mpobole