By Thandiwe Kubere
MASERU – The Ministry of Finance and Development planning and stateholders held a workshop for the validation of the SDG Investor Map report and priorities within the Ministry. The aim was to facilitate endorsement of the emerging prioity sectors within the ministry and the investment opportunity areas, as well as the linkages to the national efforts for mobilising investments for SDGs.
The Ministry and different key stakeholders which are;Ministry of Trade and Industry, Small Business Development and Tourism, Lesotho National Development Corporation (LNDC), the Private Sector as well as theDevelopment Partners, deemed it essential to collaborate and access the capacity of Lesotho to access investment opprtunities.
Ministry of Finance and Development Planning PS, Nthoateng Lebona declared this opportunity marks yet another important landmark in strengthening the long recognised relationship that exists between the Government of Lesotho and the UN Agencies. She expressed gratitude to the UN agencies for the financial and technical support afforded within the Joint Programme on Economic and Financial Management Integration for Sustainable Development (JP-EFMIS) aimed at promoting integrated planning and financing for sustainable development to accelerate attainment of the SDGs.
The SDG Investor Map initiative was started in 2022 as one of the residual activities of the JP-EFMIS, a joint programme implemented with UNICEF and IOM for establishment of a development finance architecture in Lesotho. The project ended in March 2023, and the remaining activities, led by UNDP, the Integrated Financing Strategy and the SDG Investor Map which are scheduled to conclude by October 2023.
The SDG Investor Map is a market intelligence tool aimed at identifying development sectors and investment opportunity areas for SDG impact. The tool aims to provide business intelligence for the government to identify business opportunities areas with the highest business and development impact in the context of Lesotho and inform investment decisions.
In relation to the National Financing Framework, Lebona said this comes at a time when the Ministry encountered a number of challenges due to the impacts of COVID-19 pandemic which crippled the global economy, Lesotho being not immune to the catastrophe. “But as servants of the people, we are obliged and feel compelled, to come up with strategies and to change the narrative and normalize the situation amidst little or no resources at all, hence the development of SDG investor map”, she said.
She highlighted In 2020, the Government with support from UNDP , carried out the Development Finance Assessment (DFA). The DFA is an inception tool of the four-tiered Integrated National Financing Framework (INFF) process which provides a broad picture of the development finance landscape and identifies related shortcomings and opportunities to inform enhancement of development finance and strategies for delivery of long-term development results in the country. In that regard, the DFA Lesotho has assessed the government’s existing financing strategies, policies and institutional structures and identified specific roles and responsibilities of key stakeholders for implementation of the DFA recommendations (INFF road map).
Lebona declared the assessment identified challenges in mobilisation and management of public financial sources, which include a high sover-reliance in traditional and unstainable sources of development finance such as SACU revenue; limited private sector participation, resulting from lack of incentives to encourage private investment and financing flows towards national development priorities and the SDGs.
“These challenges to development financing have resulted in a financing gap and shortfall of M3.3billion throughout the NSDP II implementation plan period of 5 years. The situation has further been worsened by the outbreak and impact of COVID -19. In order to achieve full economic recovery from all these shocks,the government needs to implement deliberate strategies to ensure mobilization of alternative sources of development finance, specifically private capital and as a way of mitigating the scarcity of development financing, the DFA recommends that Government undertake SDG investor mapping to provide a comprehensive picture on potential SDG aligned investments that would provide best returns for economic development, sustainability and achievement of the SDGs”, said Lebona.
The assessment sought to determine existing private investment barriers and private sector capabilities with the view to providing recommendations that needs to be done to facilitate private investments and instigate public-private collaboration for mobilising development financing.
Additionally, the assessment provided an understanding of the private sector landscape in Lesotho to identify the bottlenecks and disincentives, investment opportunities and potential sectors that may be earmarked to stimulate private capital investment and ultimately, determine the local private sectors’ potential to invest/participate in development initiatives. The assessment has been instrumental in helping the selection of the five sectors, namely, Agriculture, Manufacturing, Health Care, Financial Services and Energy, under the SDG Investor Map which are deemed to have potential to attract more SDG-aligned private investment.
The SDG Investor Map is a market intelligence product aimed at assisting private investors (funds, financiers, corporations), identify investment opportunities and business models that help address the national development needs and advance the national priorities to accelerate achievement the SDGs. The ensuing SDG Investor Maps was assured to also provide insights and tools needed by the private sector to increase their investments towards the SDGs and have potential of making a significant contribution to filling existing financing gaps by mobilizing private capital for achievement of the SDGs. The SDG Investor Map has further been complemented with a rapid assessment of private sector capabilities.
“May I remind you that this assignment, is also aimed to support the Government of Lesotho to achieve key priority Area1 of the NSDPII which is; promoting inclusive and sustainable economic growth and private sector-led job creation; and UNDAF outcome 3 which states that by 2023, the Government and private sector should increase opportunities for inclusive and sustainable economic growth, improve food security and decent work for all especially for women , youth and people with disabilities, by facilitating creation of conducive policy environment, providing platforms for dialogue and generating evidence for private – public dialogue” expressed Lebona.
She declared the overwhelmingly high unemployment rate, particularly amongst the youth, still remains the country’s biggest challenge. She stated the government could not continue being reffered as the largest employer, as its central responsibility is creating an enabling policy environment that facilitates private sector investment. “There is an urgent need for structural shift where the private sector is indeed the main driver of economic activity and job creation”, she said.
Therefore, the objective of the workshop was to consolidate potential investment opportunity areas and chart a way forward on how the government might continue improving the investment climate and become able to attract more private investment in the medium to long term.
These efforts are part of the Joint Programme’s objective to help national authorities to increase financial resources, improve spending efficiency, tap into remittances, leverage international development cooperation, as well as to promote foreign and domestic private-sector investment.
Outcomes one of the Joint Programme is “Strengthened and gender responsive INFF is developed and implemented”, an INFF that promises to preserve fiscal sustainability and stimulate partnerships, especially with the private sector. The ongoing SDG Investor Map also uses Gender and Marginalization lens to ensure that sustainable development is inclusive and covers all segments of society.
Achieving adequate financing is critical to meet the SDGs by 2030 and providing a credible budget to the citizens. The Ministry of Finance and of Development Planning through its different agencies therefore, realised a need to work together towards establishment of a mechanism of documenting Government commitments that are in line with the SDGs, NSDP II and other development agendas, and thus ensure their proper costing for development of credible financing strategy.
Domestic public finance and international development cooperation remain central for the achievement of the SDGs NSDP II and other development agendas. She emphasized that domestic public finance in particular, is the largest and most important source of finance for sustainable development. However, in many developing countries, even with enhanced efforts, domestic resources always remain insufficient.
While international public finance will continue to play a critical role, particularly in countries like Lesotho with reduced capacity to raise domestic resources as well as those most vulnerable to shocks and disasters, we as a country, also need to join efforts as both government and the private sector to curtail over dependence on external sources which always come with very stringent and somehow costly terms. South-South cooperation will be important.
Many investors and private sector companies are leading the way and investing in the SDGs under innovative categories like ‘sustainable finance’ or ethical investments. “Tapping into a fraction of this pool for investment towards the 2030 Agenda would have a very large impact. Today’s meeting, therefore, aims to validate the roadmap in order to facilitate the adoption of the recommendations as well as to agree on the next steps and timelines”, she said. Given the role of financing for the achievement of SDGs and NSDP II and other Development Agendas, the implementation of this roadmap will support the Government of Lesotho to take giant strides towards 2030 and into the future.
“Allow me to reiterate that you engage robustly on the activities of the roadmap and anatomize each recommendation to ensure that we will jointly benefit as a country” she concluded.