THE PRINCIPAL Secretary in the Ministry of Trade and Industry Fusi Notoane has welcomed the World Bank’s provision of M170 million additional funding to support economic diversification which he said was crucial for the country’s development.
Mr Notoane said this in an interview with the Lesotho Times in the wake of the recent approval of the additional funding for the second phase of the Private Sector Competitiveness and Economic Diversification Project (PSCEDP II) which is implemented by the Ministry of Trade and Industry.
In a statement released on 24 March, the World Bank Group indicated that the funding would help to improve the business environment through the continued facilitation of reforms to reduce the time and cost associated with doing business in Lesotho, provide easier access to finance, make trading across borders simpler, and provide streamlined, accessible, and efficient government to business services in order to attract private investment and boost growth.
“We are pleased to provide additional support to this important project which will help the Government of Lesotho’s efforts to promote private sector-led economic growth and job creation in line with the World Bank’s goals to reduce poverty and promote shared prosperity for the poorest people in the world,” said Paul Noumba Um, the World Bank Country Director for Lesotho.
The statement further indicated that while the reform agenda underpins private sector growth, PSCEDPII also works to further economic diversification through continued support of the handicrafts and commercial fruit tree sectors. For the latter, the goal is to build out the value chain and catalyse private sector efforts to scale up production, thus providing significant local employment and business opportunities.
And this week, Mr Notoane welcomed the additional funding, saying it would allow Lesotho to continue its drive to diversify its economy.
“This project is very important for us especially because we rely heavily on the textile manufacturing industry to boost our economy. However, through the intervention of the PSCEDP, we discovered that our country has a potential to engage in commercial production of deciduous fruits in order to diversify our economy.
“We are already exporting these fruits to neighbouring towns in South Africa on a small scale despite indications that we have suitable areas to produce the fruits on a much larger scale. So the importance of diversifying our products and markets, which is done through the PSCEDP, cannot be overemphasised.”
He said diversification was especially important since the African Growth and Opportunity Act (AGOA) on which Lesotho’s textile industry is anchored, would not be renewed beyond 2025.
“We are left with about eight years of AGOA access possibility, so that means we should start looking for alternative sectors to fall back on when AGOA ends right away.”
Mr Notoane further indicated that Lesotho’s economic diversification efforts were not yet at a stage where the government wants them to be.
“We need to do more, we are currently serving a small portion of the market through the PSCEDP initiative. There is still room for improvement and growth.”
Under PSCEDP II, Lesotho has improved its business environment, particularly with regards to access to credit.
Lesotho’s Doing Business ranking jumped by 12 places to number 100 in 2017, largely due to the credit bureau supported under the project and now covering over 7% of the adult population.
In addition, initiatives to boost private sector diversification have also yielded positive results with the deciduous fruit farm which serves as the hub for horticulture expansion earning a GLOBAL G.A.P. certification and having begun to export apples, plums, peaches and apricots.
The project also financed administrative support to the Lesotho Enterprise Assistance Program (LEAP) which has offered business development support to more than 130 micro, small, and medium enterprises (MSMEs). Moving forward, LEAP will offer funding for equipment in addition to business development support, deepening the impact of the programme.