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Lesotho not serious about SMMEs

by Lesotho Times
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‘Mako Bohloa 

IT is a well-known fact that small businesses act as a backbone to growing economies around the world. However, the amount of abuse we receive as entrepreneurs in Lesotho has become totally unacceptable.

Lesotho has its ways of frustrating entrepreneurs that carry a very heavy responsibility of generating jobs, increasing the tax base and contributing to the well being of communities at large.

This letter has been written against the backdrop of a recent announcement made by the Central Bank of Lesotho (CBL) Governor Dr Retšelisitsoe Matlanyane regarding dwindling foreign currency reserves (“CBL warns over forex reserves” Lesotho Times, 22 September 2016). The governor highlighted a need for private sector involvement in the mainstream economy and for Lesotho to decrease imports of products that can be locally produced. I assume she was referring to products such as toothpicks, toilet paper, bottled water, traditional blankets and hay for animal feed.

Dr Matlanyane also pointed out that although currently sound, Lesotho’s net international reserves (NIRs) could soon run out if there was no revenue generation from the economy. My interpretation is that if the loti weakened we would have to use wheelbarrows full of cash to by a loaf of bread.

I have nothing against the CBL governor, but I must point out that it was not the first time I saw officials talking passionately about private sector involvement in the mainstream economy and how entrepreneurs can be involved in generating jobs. In-fact, I always watch the so-called “Lesotho’s captains of industry” talking on Lesotho Television about job creation and economic development but what happens on the ground is a totally different story.

There are several glaring examples that I would like to highlight regarding Lesotho’s lack of commitment towards small businesses. I recently had to renew my company’s tax clearance certificate at Lesotho Revenue Authority (LRA). I was confronted by very complicated conditions that required me to re-register my business at the Ministry of Trade and Industry.

I quickly learned that there are no clear synergies between the LRA and the Ministry of Trade and Industry because the demands from LRA were creating a chicken and egg situation. Customer service at LRA was also not business friendly considering the limited time businesspeople have.

I then proceeded to the One-Stop Shop located at the Ministry of Trade and Industry only to find the system was off-line and no services could be offered. The system had been off-line for over a week and I was told repeatedly nothing could be done about the situation. As things stand, I am still waiting for the system to be back online so I can start the re-registration process. Please be mindful that a productive week has been lost in the process.

Businesspeople know that “Time is Money” in the literal sense. However, Lesotho lacks a sense of urgency. Everything is relaxed. There is no rush. If it can’t be done today, don’t worry, it can always be done next year. As a result, the victims are jobless young people. Neglect of jobless young people is totally uncalled-for yet promises are made on TV about government’s commitment to the private sector. Young people can’t even get married and have stable families because of the tough economic conditions.

There is a very bad habit that I would like to highlight and has become common in all sectors of the economy. It is a habit of not paying small businesses on time. How are small businesses expected to survive if they are paid after six to 12 months of granting services? How are employees of small businesses expected to survive if payments will only be granted when it’s convenient to certain individuals in accounts departments?

There is also a bad service culture that I believe is slowing the growth of our economy and has become an irritation to most entrepreneurs. It is a service culture of not acknowledging receipt of proposals or letters. I always wonder why it is so difficult to send an e-mail to say, “sorry, I’m not interested” or “sorry, your proposal was not successful”. Captains of Industry resort to keeping quiet or ignoring proposals. In fact, of late, security guards seem to be given a task of saying, “sorry, the CEO won’t be interested”. So, will our economy ever grow with this kind of service culture? I really doubt it.

The other point that has become a cause for concern is lack of funding for small businesses. Since most commercial banks are not really interested in helping out, entrepreneurs have to resort to family savings or get expensive loans to finance new ventures.  Most of those ventures end up being under-funded and collapsing as a result.

Livelihoods of most people have been severely affected by failed business ventures. In most cases, you find that savings and even pensions are lost due to lack of government support or interventions such as business rescue in order to sustain jobs.

To conclude, small-businesses are a life-blood of growing and established economies. Entrepreneurs are very important for creating jobs and increasing the country’s tax base. Unless there is a genuine commitment towards small businesses, the LRA will end up having nothing to collect.

If Lesotho continues to abuse entrepreneurs, there won’t be any money to pay for government fleet vehicles, no fuel for government vehicles, no salaries for civil servants (I see this one coming soon), no workshops, no oversees trips and no per diem allowances or buying building material. At the end of the day, we will all have nothing left to eat and end up eating imported grass meant for cows.

Having written all this, do you believe that Lesotho will one day stop importing toilet paper, toothpicks, bottled water, traditional blankets, seshoeshoe material, cabbage and grass for cows?

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