PSCEDP | Private Sector Competitiveness and Economic Diversification

1. Supporting Investment Promotion and Increasing Linkages to the Local Economy

Investment in Lesotho has enjoyed the benefits of preferential trade agreements with The US Market through the African Growth Opportunity Act (AGOA) focused on manufacturing. This has brought Foreign Direct Investment through manufacturing factories but has not provided skills transfer or real opportunities for local SMMEs to compete in the manufacturing sector. The main driver of investment promotion in the country is Lesotho National Development Corporation (LNDC), PSCEDF is working with LNDC to pilot the commercialization of factory shells at Nyenye Industrial Estate in Maputsoe. This will be achieved through the technical assistance that will design a PPP model that would attract private developers to construct and manage factory sites on a commercial and sustainable basis. This would among others, introduce domestic real estate private sector, user-specified design and improved quality of maintenance and support. The proposed PPP model will also introduce industrial real estate prices that are market related and competitive in Lesotho.

The programme will also provide technical assistance on implementing targeted initiatives that would facilitate linkages between foreign investors and domestic SMEs. In particular, the initiatives will include networking with external investment promotion agencies and Basotho in the Diaspora for business development as well as supporting local businesses to become input suppliers to foreign firms. The PPP model will also seek to support LNDC to develop incentive schemes for both foreign enterprises and local SMMEs to encourage business cooperation and the cross pollination of skills and experience.

Initiatives under this programme aim at improving the capacity of local SMMEs and to build a pipeline of domestic service providers, thereby opening new markets for SMMEs and potentially creating new and improved jobs for Basotho.

2. Lesotho Enterprise Assistance Program (LEAP)

The Lesotho Enterprises Assistance Program (LEAP) is a matching grant scheme that has been designed to strengthen the business capacity of privately owned Basotho –owned SMMEs through financial and technical support. The intention of LEAP is to empower these businesses to increase their efficiency, productivity and access to new markets.

The Programme operates and provides cost-sharing grants for the use of specialized business development services. A considerable demand for LEAP interventions has been realized and the Government of Lesotho is currently considering continuing with the Programme using its own funds.

3. Expanding Commercial Horticulture

As a continuation of the initiative towards expanding commercial horticulture, the Programme will harness endowments in favourable microclimate conditions that allow for high value horticulture and early season harvest to the market.

The programme will transform strategic areas in Lesotho into major producers and exporters of early variety fruits in a competitive and sustainable manner. The Programme will also facilitate the shift from reliance on maize as the main source of income to a diversified high yield cropping structure with fruit trees.

This component will also improve the livelihoods of rural farmers through the production, export and processing of high value tree crops. The competitive value chain for tree cops includes the sales of fresh produces destined for both the export and local markets. Lower grade produce will go into juicing and canning by-products and other derivatives from the fruit production industry.

The Programme will also expand activities related to the development of nurseries and provide technical support to existing and new farms. An attempt will be made to facilitate the participation of commercial banks in the provision of financial products including loans. LNDC will also participate in this venture by extending the partial credit guarantee for the financing of new market entrants.

With these interventions, Basotho farmers will be gradually empowered to shift from subsistent maize farming to high yield and commercially viable deciduous fruit market. The production of high quality, early to market produce will be marketed through South African brokers and other market agents. Participating farms will also be Global GAP certified to enable them to export to South Africa and other international markets. The production and development of the deciduous fruits horticulture will cut across all stages of the value chain ranging from the production of parent stock to processing of lower grade produce downstream, which includes canning and dried fruits production.

4. Tourism

Tourism has been identified as one of the most important sectors that can influence job creation and growth in the economy. The Government intends to triple the number of tourist arrivals to almost a million visits by 2020. As a start, the Programme intends to provide technical support for building a data repository on tourism statistics in order to provide requisite information required to inform investors, the sector and government to make informed investment and policy decisions about the sector.

In collaboration with key stakeholders such as the Lesotho Hotels and Hospitality Association, the programme has so far completed the accommodation grading and certification system to set standards in the accommodation industry in line with regional standards set by the Regional Tourism Organization of Southern Africa (RETOSA). The grading system has set a benchmark to increase competitiveness and foster improved in the accommodation sector.

The programme is also set to develop a competitive handicrafts industry to expand the tourism value chain. Components of this intervention include capacity building, product development, and the expansion of both the domestic and export market for handicrafts. To that end, the Programme has set itself to develop a handicrafts market place, artisan development centre and tourist information centre following the destruction of Basotho Shield in 2011. The centre will be developed following a PPP model based on global best practices.

Improved business and product development skills for artisans will enable increased market access to tourists and export markets. This will in turn yield increased sales and revenues for handicraft enterprises, thereby increasing the competitiveness of Basotho crafts and the revitalization of the handicrafts market for Basotho.

Supporting Economic Diversification

1. Supporting Investment Promotion and Increasing Linkages to the Local Economy

2. Lesotho Enterprise Assistance Program (LEAP)

3. Expanding Commercial Horticulture

4. Tourism