By: Thoboloko Ntšonyane
MASERU – The Millennium Challenge Corporation (MCC) Compact II, came into effect in April this year, marking a step towards strengthening Lesotho’s business ecosystem.
The Business Environment and Technical Assistance (BETA) Project, part of the MCC Compact II, has earmarked to the tune of $62 million; about M1 billion to support the Micro, Small and Medium Enterprises (MSMEs), including women and youth-led enterprises.
This initiative aims to upscale numerous businesses, fostering growth and development within these sectors as it focuses on broadening financing options.
Millennium Challenge Account (MCA) Lesotho II, Director Communications, Palesa Motleleng said the overall goal of the Compact is to ensure greater access to quality healthcare services; create equitable business development opportunities, especially for women and youth-owned enterprises; invest in high-value crop production, and boost profits and formal employment for Basotho.
This will be achieved through three interrelated projects aimed at improving capital investment, institutionalizing effective planning, delivery, and management of capital projects, and strengthening the health system for improved outcomes.
When asked about the core objectives of the BETA project, she explained that the initiative seeks to stimulate firm-level profits and formal employment, particularly for MSMEs owned by women, youth, and rural entrepreneurs.
The Director Communications further mentioned that innovative funding methods are also a crucial component of the project adding that there are plans to establish an impact investment vehicle and promote financial inclusion. These mechanisms are envisaged to create financing options for MSMEs and larger firms, addressing issues of access to credit, particularly for women and youth-owned businesses.
For women and youth, she highlighted that the capacity-building programmes will support women’s savings groups through initiatives like group lending and credit policies and that the enterprises led by women and youth will benefit from competitive in-kind grants and access to training as well as the technical assistance programmes.
She noted that the project will focus on pipeline development by identifying and nurturing high-growth potential firms. These businesses will be connected to direct technical assistance and Business Development Services (BDS), such as training and mentoring, to increase profits and ensure business nurturing and maturation and, the grants will be available for women and youth-owned enterprises, while incubator and accelerator programmes will support startups and early-stage firms.
Small grants of $5,000 (approximately M85, 000) will benefit 500 MSMEs, while medium grants of up to $100,000 (around M1.7 million) will support 50 firms, preparing them for investment and scaling opportunities.
Motleleng added that the project also aims to strengthen the business ecosystem through public-private dialogues, allowing private sector actors to engage with the government to improve service delivery and address cross-border issues, local business empowerment, and market access.
The initiative, she said, will work with the Lesotho Standards Institute (LSI) to help producers meet stipulated standards required by retail and export markets; help develop financing vehicles like the Lesotho Impact Investment Fund (LIIF), which will then incentivize domestic investment; provide technical assistance to the National Financial Regulator to strengthen the regulatory framework for SME financing, and support the commercial banks, enhancing their ability to assess innovative credit options.
Meanwhile, she mentioned that the criteria for prospective beneficiaries are still being developed, with an expected start date of January 2025.
She further indicated that businesses in key sectors such as manufacturing, tourism, agriculture, and cultural and creative industries should position themselves to benefit from the investment.
When asked about the impact on rural communities, Motleleng pointed out that the project will drive economic growth; create employment; increase household incomes; wherein SMEs are expected to see a revenue growth.
She called on the potential beneficiaries to prepare by refining their business plans with identifying growth strategies, accessing potential for markets, and identifying capacity gaps that the project could address.