MASERU — The private sector development division in the Ministry of Finance says it will this year introduce a raft of measures to improve the investment climate in Lesotho.
In an interview with the Lesotho Times this week, the chief executive officer for the private sector development division, Lekoatsa Lichaba, said the investment climate was a major constraint for business development in Lesotho.
Lichaba said small, medium and micro enterprises (SMMEs) had found it difficult to do business in Lesotho as a result of the unfavourable investment climate.
He however added that the Ministry of Finance had already put in place measures to improve the business climate in Lesotho.
Lichaba said Finance Minister Timothy Thahane had this year allocated M50 million for the creation of a credit guarantee facility.
The facility will seek to assist SMMEs to have access to financial capital and training, Lichaba said.
Banks will also be heavily involved in operating the scheme where the government will act as a guarantor for a certain percentage of the loans.
“The banks will have an incentive to make the necessary follow up and the entrepreneurs will also have an obligation towards the success of their businesses as the government will not offer 100 percent guarantee,” Lichaba said.
He said the government had learnt its lessons from the block farming scheme where the government acted as a guarantor for loans to farmers.
Most of the farmers have however failed to repay the loans leaving the government to service or write off the loans.
He said the government will come up with a comprehensive credit facility that will be sustainable for the development of the private sector.
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“The commercial banks will be involved in this process, and we believe it will be implemented around September this year,” he added.
“We are going to reform the land survey and physical planning (department) to speed up the land ownership administration,” Lichaba said.
The government of Prime Minister Pakalitha Mosisili has in recent months been pushing for a change of laws that regulate the business sector in an effort to improve Lesotho’s investment climate.
For instance, the Land Bill which was passed by parliament in March, could help small companies access loans from banks as they can use their land as collateral.
Makama Masitha, a co-ordinator at SMME-Network, said a policy that specifically targets small businesses will help remove some of the huddles facing entrepreneurs.
“In addition to entrepreneurship, there is no innovation, so we need to look at other industries such as the agro-industry,” she added.
She added that one of the challenges for businesses is the lack of product certification to cater for the export market.
“We need a Bureau of Standards in the country because it is difficult to export to international markets because there is no certification on the safety of the goods,” Masitha said.