Govt, AfDB partner for economic diversification
THE government is implementing the Economic Diversification Support Project (EDSP) to create jobs and promote inclusive growth in the economy. The project is financed by the African Development Bank (AfDB). Lesotho Times (LT) reporter Bereng Mpaki speaks to project manager Chaba Mokuku to find out more about the programme.
LT: What is the EDSP all about?
CM: The EDSP is an initiative of the government and the AfDB. The aim is to support the government’s plan for inclusive growth through enhanced economic diversification and enterprise development. It is coordinated by the Ministry of Trade and Industry. Over four years, the project will provide financial and technical assistance to improve the policy environment.
The project has three mutually reinforcing components: (i) promoting enterprise development, (ii) enhancing economic diversification and (iii) project management support.
Its subcomponents include (1) matching curriculum development to the job market to ensure that graduates go into key economic driving sectors (2) business incubation and mentorship to ensure SMMEs graduate to medium and large enterprises through capacity building of business development services, as well as partnerships and apprenticeships (3) Development of Standards framework to ensure public health and safety, as well as competitiveness for Lesotho products to access local and international markets.
The project is financed by the AfDB to the tune of (Unit of Account) UA7, 22 million (about US$10, 06 million, M135,81 million), which comprise of UA 5 million (about US$ 6, 97 million, M94, 1 million) in loan and UA 2, 22 million (about US$ 3, 09 million or M41, 72 million) in grants. It will be implemented over a period of four years between January 2017 and December 2020.
LT: Are there any specific sectors that the project is targeting and why?
CM: Lesotho has more than 76 000 micro small and medium enterprises (SMMEs) and approximately 7500 youth graduates from tertiary institutions annually. These are the two broad groups that the project will target directly and indirectly that are an emerging force for economic development and job creation. The project will also ensure that at least 50 percent of direct beneficiaries are women.
LT: What are the key expected outcomes at the end of the project?
CM: The expected outcomes are improved environment for trade and investment and strengthened capacity and improved environment in key identified sectors. These will be achieved through: (a) enhanced entrepreneurial skills for SMMEs, (b) improved access to finance, (c) economic diversification programme implemented, (d) strengthened capacity in industrial policy planning, implementation and monitoring, (e) improved capacity for standards and certification of products and (f) improved public-private dialogue in selected sectors and strengthened partnership with the private sector.
LT: How is the project being implemented?
CM: To support the revamping of Lesotho’s economy, the project will first build public sector capacity in policy planning, implementation and results monitoring leading to sustained reforms. Progress with the investment climate reforms needs to be pursued and complemented through promoting strategic partnership and dialogue between the public and private sectors.
Furthermore, reforms that have helped to attract FDI (textile and garment) should be complemented through targeted technical assistance and support to enhance entrepreneurship and strengthening backward and forward linkages. Secondly, the private sector is expected to be the engine of growth while the government is focusing on maintaining peace and security, ensuring rule of law, providing basic infrastructure and promoting human development. In this regard, there has to be a mechanism by which the public and private sectors engage on policy design and implementation issues.
The “Lesotho Doing Business Report” and “Private Sector Diagnostics” studies concluded that the private sector is confronted with several challenges including: poor infrastructure (electricity, roads, and transport); lack of access to finance; administrative barriers; lack of entrepreneurial and technical skills and lack of access to markets. In tackling these challenges, complementary initiatives and projects are being implemented by the government and its development partners.
The project complements ongoing initiatives by focusing on selected sectors critical for economic diversification and promoting enterprise development through supporting SMMEs to develop entrepreneurial skills, create linkages with large scale firms through mentorship programmes, improve their access to the services of financial institutions and enhance their access to markets.
LT: What progress has been made through the project so far?
CM: The project has made concrete and measurable progress in the implementation of some sub-components. Two assignments have been completed and final reports submitted upon validation by stakeholders; value chain analysis for the skins, leather and footwear sector and review and development of the operational framework for a competitive grant scheme for SMMEs.
A stakeholders’ workshop was subsequently held to develop a high level work plan based on the skins, leather and footwear sector value chain report. The work plan which has categorised mitigatory measures into short, medium and long term with responsible institutions is in place and shared with stakeholders.
Work to review and develop a tourism policy, national strategy, legal framework and national tourism master plan is in progress. The consultants have so far produced an inception report, situational analysis/diagnostic assessment of the tourism sector in Lesotho, draft tourism policy and recommendations for review of Tourism Act.
Stakeholders training workshop on tourism value chains was held in April 2018 and substantive contributions were made towards development of the envisaged Tourism Master Plan.
Work on resuscitation of the National Tourism Council is also underway.
On the other hand, work on promotion of enterprise development (incubation and business plan competition design) is in progress. The Promoting Enterprise Development Project was officially launched by Basotho Enterprise Development Corporation (BEDCO) in April 2018 and the activities include, among others, the development and piloting of national incubation strategy and an operational framework for business plan competition. Work on development of an apprenticeship programme for Lesotho has also commenced. This will be follow be establishment of a tripartite partnership between the government, business and training institutions to address the issue of skills mismatch.
LT: What are some of the challenges that the implementation has faced?
CM: The limited capacity within some stakeholder agencies and the complex design of the project are the main challenges. Both challenges are manageable and will be addressed through a comprehensive capacity building programme.