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WORLD BANK APPROVES US $ 45 MILLION TO SUPPORT SMES IN LESOTHO
The World Bank Group ’ s Board of Directors approved a US $ 45 million loan for the Government of the Kingdom of Lesotho to increase access to business support services and financial products targeted at micro , small and medium enterprises ( MSMEs ) and entrepreneurs , especially women and youth . The project is cofinanced by a Global Risk Financing Facility ( GRiF ) grant in the amount of US $ 7.5 million .
Lesotho – a lower-middle income country – is struggling with persistently high levels of unemployment , informality , inequality and poverty – all of which have been further exacerbated by the pandemic . It is also facing economic challenges which include a crowding out of the private sector by a large public sector , a lack of diversification , a largely informal small and medium enterprise ( SME ) sector and limited support for SMEs and entrepreneurs .
The Second National Strategic Development Plan ( NSDP II ) ( 2019 – 2023 ) identified an uncompetitive business environment as one of the key binding constraints for private investments .
“ As our local businesses recover from the devasting impacts of the pandemic , a deliberate government intervention is crucial to stimulate MSMEs ’ recovery and competitiveness ,” said Dr . Thabiso Molapo , Honourable Minister of Trade and Industry for Lesotho .
“ This project will provide a timely boost to these enterprises through a digitalisation of Government to Business services ; improved access to finance , especially for women and youth owned enterprises ; a strengthened entrepreneurship ecosystem and
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THE PROJECT IS EXPECTED TO DIRECTLY SUPPORT THE GROWTH OF 500 OR MORE ENTREPRENEURS AND SMALL AND MEDIUM ENTERPRISES . improved SMEs participation in horticulture and apparel value chains .”
The project is expected to directly support the growth of 500 or more entrepreneurs and small and medium enterprises ( SMEs ), 50 % of which will be women-owned and 25 % of which will be youthowned . It will also support the resilience of 15,000 or more MSMEs to climate related and other shocks .
“ Lesotho has tremendous potential to shift from public sector dependent to private sector driven growth ,” said Marie Francoise Marie-Nelly , World Bank Country Director for Eswatini , Botswana , Lesotho , Namibia and South Africa .
“ However , the pandemic and repeated climate related shocks have slowed the pace of this transformation . SMEs face business environment challenges and access to finance is challenging , particularly for women-owned businesses given their low credit history .
“ The Competitiveness and Financial Inclusion project will build the resilience of SMEs and their capacity to weather shocks and successfully compete in regional value chains . It will also unleash the entrepreneurship potential of youth and women .” �
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