Renewed hope for small business financing

MATHATO SEBOKA
MASERU – The Minister of Finance and Development Planning, Dr. Retšelisitsoe Matlanyane has highlighted the government’s commitment to enhancing access to inexpensive and customised finance, addressing a major difficulty in the private sector, especially for small enterprises. In her budget speech before parliament on Wednesday this week, Dr Matlanyane, said the government is committed to improving access to affordable and tailored finance to assist small businesses.
Micro, small, and medium enterprises (MSMEs) in Lesotho grapple with a lack of finance, particularly in the form of loan financing, making it challenging for enterprises to expand and evolve into prominent business ventures.
Dr Matlanyane underscored the persistent challenge of limited capacity and access to affordable finance affecting MSME growth. The government is actively addressing this constraint by enhancing capacity and providing funding to targeted groups through initiatives such as the Lesotho Youth Acceleration Project (LYAP), the Competitiveness and Financial Inclusion Project (CAFI), and the Lesotho Enterprises Assistance Programme (LEAP).
Dr. Matlanyane revealed that LYAP, over a three-year period, aims to build the capacity of 1,200 enterprises, with a minimum of 150 MSMEs annually accessing project funds to scale up their businesses, thereby creating and sustaining jobs. Additionally, 50 MSMEs per year are earmarked for support in accessing the Lesotho Post Bank seed funding, with the overall goal of creating 1,000 jobs annually.
To address the needs of the private sector, the Millennium Challenge Corporation (MCA) will establish the Lesotho Impact Investments Fund (LIIF), providing tailor-made funding instruments. The LIIF will offer Basotho and local corporations an opportunity to co-invest, thereby increasing the pool of funds to support the local private sector.
Dr. Matlanyane also highlighted the recent launch of the Public-Private Dialogue (PPD) platform by Prime Minister Samuel Matekane. This platform aims to facilitate dialogue between the private sector and the government on issues affecting the business community in Lesotho.
The MCA has allocated M190 million to support this noble initiative over the course of five years of the compact. Expressing the government’s commitment to inclusive and sustainable economic growth, Dr. Matlanyane emphasised the importance of institutional and policy reforms, allocating M2.1 billion to improve food security, job creation, and poverty reduction through private sector development.
However, MSMEs face various challenges, with finance and working capital being the most frequently cited issues, followed by market problems, despite high demand for their products. The small-scale business sector confronts hurdles such as limited social networks, access to larger markets, international market participation, the cost of doing business, and competition.
Given the pressing issue of joblessness in Lesotho, the MSME sector is recognised as a key contributor to the economy through employment and income generation. Basotho entrepreneurs identify collateral requirements, access to financial information, and the availability of bank and business support services as critical factors restricting enterprises from obtaining the necessary credit, ultimately impacting the MSMEs’ capacity for competitive growth in Lesotho.