An Assessment Of The Enabling Environment For Women's Enterprises In Lesotho 1 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho
May 2011
Prepared by Cilo Consulting: Maxine Langwenya Barbara Mabuza Doris Tshabalala
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 2 Acknowledgements
The authors are grateful to all the government ministries, public and private business development institutions, member based organizations and women entrepreneurs that contributed to this report with their time and knowledge. Special gratitude goes to the consultants who worked on various components of the report. This research has been made possible by the International Labour Organization through the ILO’s Women’s Entrepreneurship Development and Gender Equality Project, funded by the Norwegian Agency for Development Cooperation.
3 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Foreword
The small business sector plays a crucial role in Lesotho’s development and is identified as a key tool for economic growth, job creation and poverty alleviation. (National Strategic Development Plan, 2012-2017) The current global recession holds significant challenges and opportunities for small entrepreneurs in general and even more so when viewed from a gender perspective. Women generally lack the necessary resources for starting and developing their own businesses due to gen- der based barriers and in particular Basotho women entrepreneurs often still remain in the periphery of the economy.
The international Labour Organization (ILO) is working to advance opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity. Its main aims are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogues in handling work-related issues. The Small En- terprise Programme of the ILO has had a dedicated programme, Women’s Entrepreneurship Devel- opment and Gender Equality (WEDGE) Project. Through this programme the ILO has developed and established a robust methodology and a wide range of tools for supporting women entrepre- neurs and their service providers. This research is part of a larger WEDGE project funded by the Norwegian Agency for Development Cooperation (Norad). Furthermore, the WEDGE project fol- lows a development and rights-based approach which aims to satisfy the practical needs of women entrepreneurs, to remove socio-cultural, legal and political barriers for women entrepreneurship and to advocate for an enabling environment for business development and gender equality.
Vic van Vuuren Director, ILO Pretoria Office International Labour Organization.
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 4 Introduction
As part of the WEDGE Lesotho project, three (3) Separate pieces of research were commissioned and written by consultants to assist the project team in implementation of the project from 2009- 2011. This report consists of a compilation of these four research reports with the aim of further contributing to the body of knowledge in Lesotho about women entrepreneurs. The reports have a specific focus on growth oriented women entrepreneurs. This research should be utilized by nation- al and district decision makers and business development service providers to better understand the operational and legislative and environment for women entrepreneurs in Lesotho. The responsibility for opinions expressed in these pieces of research rests solely with their authors, and publication does not constitute an endorsement by the International Labour office of the opin- ions expressed in them.
5 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Contents Contents pg List of abbreviations 8 Executive summary 9 1. Introduction 11 1.1 Objectives of research 12 1.2 Methodology 13 1.3 Limitations of research 13 2. The smme sector in lesotho 14 2.1 Smme definition and charectaristics 14 2.2 Women and the smme policy environment 15 3. Assessment of the enabling environment for women’s enterprises in lesotho 17 3.1 Policy leadership and coordination 28 3.1.1 Enabling aspects of policy leadership and coordination for wed in lesotho 22 3.1.2 Hindering aspects of policy leadership and coordination for wed in lesotho 23 3.1.3 Recommendations 24 3.2 Legal and regulatory issues 24 3.2.1 Enabling aspects of legal and regulatory issues for wed in lesotho 26 3.2.2 Hindering aspects of legal and regulatory issues for wed in lesotho 26 3.2.3 Recommendations 27 3.3 Promotion of wed in lesotho 27 3.3.1 Aspects enabling the promoton of wed in lesotho 29 3.3.2 Aspects hindering the promotion of wed in lesotho 29 3.3.3 Recommendations 29 3.4 Access to enterprise education and training 29 3.4.1 Enabling aspects for wed enterprise education and training in lesotho 34 3.4.2 Hindering aspects for wed enterprise education and training in lesotho 35 3.4.2 Recommendations 35 3.5 Access to business development services and information services 36 3.5.1 Enabling aspects of business development services and information services for wed in lesotho 37 3.5.2 Hindering aspects business development services and information services for wed in lesotho 37 3.5.3 Recommendations 38 3.6 Access to women’s enterpreneur associations and networks 38 3.6.1 Enabling aspects for access to women’s entrepreneur associations and networks in lesotho 40 3.6.2 Hindering aspects for access to women’s entrepreneur associations and networks in lesotho 40 3.6.3 Recommendations 40 3.7 Access to business premises 41 3.7.1 Enabling aspects to access to business premises for women’s enterprises in lesotho 42 3.7.2 Hindering aspects to access to business premises for women’s enterprises in lesotho 42 3.7.3 Recommendations 43
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 6 3.8 Access to markets 43 3.8.1 Enabling aspects to access to markets for women’s enterprises in lesotho 45 3.8.2 Hindering aspects to access to markets for women’s enterprises in lesotho 46 3.8.3 Recommendations 46 3.9 The state of research on women smme’s 46 3.9.1 Enablings aspects of research on women smme’s in lesotho 47 3.9.2 Hindering aspects of research on women smme’s in lesotho 48 3.9.3 Recommendations 48 4 Conclusions 48 Annexes 50
7 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Acronyms AfDB African Development Bank AGOA African Growth and Opportunity Act ALE Association of Lesotho Employers and business BEDCO Basotho Enterprise Development Corporation BDS Business Development Services CBL Central Bank of Lesotho CEF Commonwealth Education Fund CEDAW Convention on the Elimination of all forms of Discrimination Against Women DWCP Decent Work Country Programme ESSP Education Sector Strategic Plan FPE Free Primary Education GoL Government of Lesotho GOWE Growth Oriented Women’s Enterprises HIV/AIDS Human Immuno Virus/Acquired Immune Deficiency Syndrome ILO International Labour Organisation IMP Industrialisation Master Plan INDF Interim National Development Framework IPRGS Interim Poverty Reduction and Growth Strategy LCCI Lesotho Chamber of Commerce and Industry LCTU Lesotho Congress of Trade Unions LEAP Lesotho Enterprise Assistance Programme LNDC Lesotho National Development Corporation LTDC Lesotho Tourism Development Corporation LNFOD Lesotho National Federation for Organisation of Disabled MCA-L Millennium Challenge Account – Lesotho MGYSR Ministry of Gender, Youth, Sports and Recreation MOET Ministry of Education and Training MOF Ministry of Finance and Development Planning MSG Matching Grant Scheme MSME Micro, Small and Medium Enterprises MTEC Ministry of Tourism, Environment and Culture MTICM Ministry of Trade and Industry, Cooperative and Marketing NCDC National Curriculum Development Centre NGO Non- Governmental Organisation NORAD Norwegian Agency for Development Cooperation NUL National University of Lesotho SABS South African Bureau of Standards SACU Southern African Customs Union SADC Southern African Development Community SMME Small, Medium and Micro Enterprises TNA Training Needs Analysis TTI Trades Training Institutions TVD Technical and Vocational Training Department TVET Technical and Vocational Educational Training UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organisation UNICEF United Nations Children’s Fund USAID United States Agency for International Development VAW Violence against Women WE Women’s Enterprises WEDGE Women’s Entrepreneurship Development and Gender Equality WIB Women in Business
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 8 The introduction outlines why it is necessary to Executive summary carry out an assessment of conditions for small and medium enterprise development, includ- Small business and entrepreneurship play an ing women entrepreneurs. It also brings to the important role in stimulating economic ac- fore the difficulties that women entrepreneurs tivity, creating jobs, alleviating poverty and encounter in growing and nurturing their enter- uplifting standards of living. This fact is now prises to full potential and in the process, create trite especially as there are studies to buttress it jobs and income for themselves and others. both regionally and internationally1. Lesotho is a developing country with high unemploy- The methodology is based on the AfDB/ILO ment rates, low levels of formal and higher integrated Framework Assessment Guide and education, the migration of individuals from the Consultant’s guide to assessing the busi- rural areas to cities, corporate restructuring and ness environment for women entrepreneurship government policies, regulations that enforce development. It has been designed to ensure the the restructuring of larger organisations. The attainment of the assessment objectives within country therefore has an urgent need for entre- the Swaziland environment. The approach is preneurs in the small, micro and medium enter- designed to promote a systematic assessment prises (SMMEs) who can act as a tool to com- of the enabling environment for the growth of bat unemployment and crime and by extension women’s enterprises in ten core areas to map stimulate the economy as a whole. current initiatives and actions, and to iden- tify gaps and recommend concrete actions to SMME development for women is currently be- address these. It is now a settled fact that the ing promoted as a key intervention for women growth of women’s enterprises will certainly by governments and development agencies positively impact on job creation and economic including ILO. This research is a result of the growth. Laws and policies that support wom- ILO and the government of Lesotho initiative en’s enterprises also contribute to improved of March, 2010. In March 2010, the Ministry of productivity and better quality working envi- Gender, Youth, Sport and Recreation (MGYSR) ronments, and to the economic empowerment signed a partnership agreement with the ILO’s of women, to poverty reduction and to a better Women’s Enterprise Development and Gender future for their children. Equality Southern Africa (WEDGE-SA) project. The aim of the project is to strengthen the na- The report is premised on the proposition that tional existing gender imbalances in enterprise if women are equipped with the necessary re- development through approaches and activities sources, skills and opportunities to start stron- aimed specifically at women enterprises and ger businesses, and if they are more readily able gender sensitive small enterprise initiatives. to pursue the growth potential of these enter- The ILO is renowned for its promotion of the prises, the economy will benefit from reduced Decent Work concept-a concept that promotes poverty, from greater employment and from the creation and sustenance of opportunities economic growth. for women and men to obtain productive work in conditions of freedom, equity, security and Reports from Key Informants and feedback human dignity. from participants on the validation workshop reflects that the business environment in Leso- This report reviews the business environment tho is characterised by shortcomings including for women entrepreneurship in SMME develop- laws and regulations; influence of the socio-cul- ment in Lesotho. Particular emphasis is placed tural environment and isolation from the busi- on the gender dimensions of entrepreneurship ness networks. It was also established that even development and barriers and possibilities for where laws have been amended and brought in the development of women’s entrepreneurs’ line with the constitutional provisions on non- (WE’s). 1 Van Vuuren & Groenewald, 2007:269
9 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho discrimination, women and financial institu- Though it is crucial to state that many obstacles tions still behave as if the laws which perpetu- faced by entrepreneurs are universal, women ate discrimination still exist. An example is that entrepreneurs tend to face these difficulties to Banks still require a husband’s approval before a greater degree than men, and disabled women granting credit to a woman who is married in at an even higher degree. This is true in the case community of property. This report recom- of Lesotho as it is in Swaziland. As previous mends that the government should monitor research has identified registration and licens- the implementation of the Legal Capacity of ing of businesses as well as access to credit and Married Persons Act in order to encourage con- finance as major barriers to the creation of an formity. The report also established that most enabling environment for women’s enterprise women entrepreneurs experience the pressure development; the findings of these components of child care and experience work-home con- are presented in sub-reports annexed in this flict. The report recommends that more crèches report. should be built to minimise this obstacle. The report concludes with recommendations The report further alludes to the barriers to on how to improve the institutional and legisla- development of women’s entrepreneurship. tive system as well as on how to remove barriers It establishes that women entrepreneurs face to the development of women entrepreneurship difficulties, many of which are gender-specific. and SMME in general.
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 10 1 INTRODUCTION social opportunities in the arena of entrepreneurship development. Adopting a development and rights- The Department of Gender under the Ministry of based approach, 3the project is funded by the Gender and Youth, Sport and Recreation (MGYSR), Norwegian Agency for Development Cooperation in its contribution towards socio-economic and (Norad). The outcomes of the project, through political development of the country, aspires for developing knowledge advocacy and services, are: gender equity and equality. The department ensures equality of all opportunities between women, men, • To create an enabling environment that girls and boys, so that development efforts have an is supportive to the growth of women equal impact on all gender issues. Their role is in owned businesses; facilitating proper integration of gender issues in all • Build the institutional capacity of agencies national and sectoral policies, programmes, budgets involved in women’s entrepreneurship and plans in order to achieve gender equality in the development and gender equality,such as development process. the capacity of Business Development Services (BDS) Providers and partners to In order to carry out its mandate the Department enable delivery of more and better services is organized into three areas of operation which to women ; and are very closely inter-related, namely; economic • Develop tools and support services for empowerment which is concerned with poverty women entrepreneurs to improve eradication; social empowerment addressing issues their productivity so as to grow of gender-based violence and HIV/AIDS; and more productive GOWE businesses which political empowerment which advocates for equal create decent employment. representation and participation of women and men in politics and decision-making positions of society. This assessment of conditions for women’s enterprise development in Lesotho will highlight the hurdles In March 2010 the MGYSR signed a partnership that women entrepreneurs face in growing their agreement with the International Labour enterprises to full potential and in the process, Organisation’s Women’s Enterprise Development creating jobs and income for themselves and others. & Gender Equality Southern Africa (WEDGE- SA) project. The aim of the project is to strengthen the According to Maas and Herrington (2006:38), the national institutional capacity of the Government growth in the trial number of female entrepreneurs of Lesotho to redress existing gender imbalances outnumbers male entrepreneurs in the SMME sector. in enterprise development through approaches and These are some of the factors that have led to the activities aimed specifically at women enterprises renewed focus on gender entrepreneurship and and gender sensitive small enterprise initiatives. the development of appropriate entrepreneurship The strategy seeks to reduce the vulnerability of interventions for gender-specific groups women’s enterprises relating to working conditions; internationally. safety and health at work; social protection; lack of organization, representation of voice; access to In Chile, a developing country, it is estimated that appropriate financial services; and all forms of women entrepreneurs recorded a 13% growth in gender based discrimination2. numbers over a three year period; it was projected that by 2010 female entrepreneurs in Chile would The WEDGE –SA Project is part of a wider equal male entrepreneurs and create more than 50% ILO programme in women’s entrepreneurship of the jobs in new enterprises. Within the African development. It aims to promote women’s context, in Cameroon women entrepreneurs manage entrepreneurship and to support women 57% of small and micro-businesses, while in Uganda entrepreneurs to create decent employment, achieve women entrepreneurs form the majority of the women’s empowerment, gender equality and country’s business people in the areas of farming and contribute to poverty reduction. The programme small to medium-sized enterprises. However, Dowing seeks to facilitate various dimensions for women such and Daniels (1992:1) explored female entrepreneurs’ as enabling easy access to business development and growth patterns using census survey data collected financial services, as well as increasing, political and in Lesotho, Swaziland, South Africa and Zimbabwe.
2Agreement between the International Labour Organisations Women’s Entrepreneurship Development and Gender Equality Project –Lesotho (WEDGE- Lesotho) and the Ministry of Gender, Youth, Sports and Recreation, Lesotho 3Stevenson L, St-Onge A, Finegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated
11 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho These surveys indicate that employment growth rates percentages of woman entrepreneurs and employees of women’s enterprises are significantly lower than in comparison with their male counterparts7. If men. In Lesotho, 17% of small and medium-sized a country ranked in high level, it also means that businesses in the manufacturing sector are owned by the country has conductive regulatory environment women (Lesotho Ministry of Trade, Commerce and both in starting and operating a local firm8. Lesotho Industry, Licence Register 2007/2008 financial year). is currently ranked 138 out of 183 countries in the ease of doing business 9McConnell (2007:2), According to the survey on the state of small furthermore, is of the opinion that women have enterprise in Lesotho (MTICM, 20084) the majority enormous potential to bring prosperity in the world of the surveyed SMMEs were retailers, followed by and therefore encouraging women entrepreneurship businesses in the service sector, and much smaller is very important10. numbers in the industry and agro-processing sectors. Businesses in the tourism, professions and 1.1 Objectives of the research financial services sectors constituted even smaller proportions of the sample. SMEs in the tourism The challenge of promoting women’s enterprise in sector in general reported a higher turnover than developing countries can be seen as two-fold. The other businesses surveyed, and were also more likely initial challenge is to legitimize and strengthen the to have experienced growth in the past few years. base of economic activity for the large number of The largest SMMEs in the sample were for the most existing women-owned MSMEs, including those part owned by men. Women were far more likely owned by women entrepreneurs with disabilities, so to own survivalist enterprises.It is thus clear that they can consolidate and expand their enterprises. Lesotho underperformed with regard the role women The second challenge is to promote entrepreneurship entrepreneurs’ play in the economy in comparison to and business opportunities with high growth many other countries5. potential among educated and skilled women, so their businesses are stronger from the start, and The Labour Statistics bulletin as presented by the have the potential for high growth and employment Ministry of Labour and Employment 20086 shows creation. For these two challenges to be met, women a major decline in employment to population ratio, will require improved access to a range of essential with females contributing to the decline by 13.35% financial and non-financial resources, along with in comparison to males 7.81%. Employment -to the removal of gender-based institutional, cultural, -population ratios provide information on the ability regulatory and legal barriers that limit the scale and of an economy to create employment; the decline scope of their business operations. This AfDB/ILO was partly attributed to the increased national guide aims to highlight effective ways in which these participation in education, which is a positive two challenges can be addressed for the benefit of development. The bulletin also shows a decrease in women entrepreneurs, and for the wider participation female unemployment from 33.1% in 1999 to 25.3% of women in national economic development11. in 2008; a 7.6% decline more than males. This can be attributed to the manufacturing sector which The objective of the research was therefore to predominantly employs women. document the situation facing women entrepreneurs in Lesotho, with particular emphasis on enabling Although 94.5% of the literate population environment aspects such as financing; expansion of (84.8%) are females this has not translated into product base and markets; increase in employment equal participation in development. McConnell and improvements in employment conditions; (2007:2), in the Doing Business Report, indicates access to entrepreneurship skills development and that countries that ranked highest on its ease of business management training; progression from doing business scale, are associated with higher informal to formal status; and growth from micro-
4 SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho P6 5 S. P van der Merwe & M. Lebakeng (undated) An empirical investigation of women entrepreneurship in Lesotho p.3-4 www.aibuma.org/proceed ings/downloads/Stephan,%20South%20Africa.doc accessed 3 March 2011 6 Directorate of National Employment Services (2009) Labour Market Information Bulletin 2008 p. 7 7 http://www.doingbusiness.org/data/exploreeconomies/lesotho/ accessed 3 March 2011 8 http://iipalbanjary.net/top-10-countries-in-doing-business-2011/ accessed 8 April 2011 9 http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/db11/lso.pdf accessed 8 April 2011 10 S. P van der Merwe & M. Lebakeng (undated) An empirical investigation of women entrepreneurship in Lesotho p.4 www.aibuma.org/proceedings/ downloads/Stephan,%20South%20Africa.doc accessed 3 March 2011 11 Stevenson L, St-Onge A. Finnegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide , ILO, p 3
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 12 to small-to medium size, The research is to inform stakeholder consultations. Annex 114 of the AfDB/ future national and ILO strategies on the promotion ILO Integrated Framework Assessment Guide of Women Entrepreneurs and to add to the national the consultant mapped out the stakeholders to be knowledge base in entrepreneurship development. consulted for the various categories of information. It is also during this stage that, using the AfDB/ Taking into account and building on existing ILO Integrated Framework Assessment Guide15 and research, it is framed within the context of the consultants guide16, customised questionnaires were designed extracting from the recommended • The Lesotho Poverty Reduction Strategy questions for the ten core components of the • ILOs International Labour conference Integrated Framework (annex 3). conclusions on sustainable enterprises • The Lesotho Decent work Country The second phase of the exercise, field work, Programme comprised of consultations with the identified • ILOs strategy on Women’s stakeholders, through one-on-one interviews and Entrepreneurship Development group interviews. During this stage additional • 2003 Lesotho Gender and Development documents were accessed ad reviewed. On completion Policy (currently under review) of the ten day phase, preliminary findings were • Any other frameworks or research currently documented and circulated as a zero draft for being developed by the government of comments. A validation workshop was held in- Lesotho or the United Nations System country to present the preliminary findings allowing for focus group discussions within the participants in 1.2 Methodology order to address the research limitations and further refine the findings. During the process of synthesis The undertaken methodology draws from the and analysis the format for mapping the enabling AfDB/ILO Integrated Framework Assessment environment for women entrepreneurs and scoring 17 Guide12 and the consultants guide13 to assessing the the policy/programme provision/gaps was utilised. business environment for women’s entrepreneurship This mapping exercise enabled the identification of development. With input from previous research major gaps and good practices substantiated with projects carried out on this subject the Objective of this observations and comments from the field work and research is to document the situation facing women literature review. entrepreneurs in Lesotho with particular emphasis on enabling environment aspects. These include The report maps out the key factors & actors in each policies and legislation that establish a favourable policy /programme area, highlights good practice climate for women’s enterprise development, and an initiatives, and recommends actions to address identification of financial and business registration identified gaps in each of the ten core areas of the barriers. AfDB/ILO integrated framework
The assignment employed a three phased approach 1.3 Limitations of the research comprising of the literature review, field work and synthesizing and analysing the findings before finally Although the terms of reference and expected outputs preparing a report. are clearly articulated by the provided documentation and clear assessment guides provided, there were The pre-field stage entailed a review of relevant several limitations that were identified during the documentation and information in order to establish assessment of the report. These are: which stakeholders would be consulted during the field work and what information was available as • Research on women entrepreneurship in well as information gaps to be addressed during the Lesotho is limited with few or no empirical studies in existence.
12Stevenson L, St-Onge A. Finnegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide , ILO, pp 9-19 13White S. (2008) Assessing the Business Environment for Women’s Entrepreneurship Development Consultants guide, pp 4-5 14List of recommended field visit contacts 15Stevenson L, St-Onge A. Finnegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide , ILO, pp 9-19 16White S. (2008) Assessing the Business Environment for Women’s Entrepreneurship Development Consultants guide, pp 4-5 17Stevenson L, St-Onge A. Finnegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide , ILO, pp 65-74 (annex 5)
13 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho • Data on entrepreneurship is not gender “indigenous business”. The poor data on SMME’s specific. renders the quantitative distinctions of the various • Delayed access to relevant literature in categories of business uncertain. As a result there is preparation for the fieldwork no official SMME definition in Lesotho. • Delayed scheduling of stakeholders interviews; resulting in their limited The white paper on the development and promotion preparation for interviews and of small business20 defines small business as an limited awareness of the assessments independently owned firm that is owner managed information requirements and has a small share in the national market. This • Some stakeholders were suffering from white paper uses the number of employees to assessment exhaustion; sceptical of the determine the category (micro,small, medium) rather fruits to be yielded by their participation in than the firms turn-over or assets. the assessment and therefore not comfortable with sharing some of the information. Table 2.1: Lesotho definition of MSME’s (source: White paper on the development and promotion of To mitigate these challenges, the initial findings of small business; November 2002) the assessment were presented to stakeholders during a validation workshop. This enabled a further refinement in the identification of key factors, best Size Number of employees practice initiatives and recommendations Micro-enterprise Less that 3 Small enterprise 3 to 9 2. THE SMME SECTOR Medium enterprise 10 to 49 IN LESOTHO According to the white paper21 , although available The importance of SMME’s in social and economic data is limited it appears that almost all Basotho- development, and the need to support their viability, owned enterprises are nearer the smaller enterprises expansion and growth, is accepted in most countries, size continuum. The 1990 GEMINI survey found irrespective of their stage of economic development.18 that 79% of indigenous enterprises were single person establishments; 18.5% employed 2-5 people Countries the world over acknowledge the need to (including the proprietor) and 2.5% employed 6-50 nurture and sustain productive and sustainable jobs people. A more recent survey22 deduced that the large through the creation of a viable, vibrant and self- majority of SMMEs are survivalists, and may have sustaining micro, small and medium enterprises limited potential for growth and expansion with (MSMEs). MSMEs are the drivers of economic a huge pre-dominance of micro-enterprises in the growth and development in so far as they create economy. The survey deliberately did not replicate jobs and provide the much needed business in any this proportion of micro-enterprises in the sample, country especially in the aftermath of the second- in order to obtain robust data on businesses with a round effects of the global economic crises in 2009. greater potential for growth. One third of businesses In the Kingdom of Lesotho, they are an integral part covered by the survey were operated solely by the of the economy as they constitute eighty-five percent business owner with no employees, and just over a (85%) of the country’s private sector19. third employed only one person in addition to the business owner. Eighty percent of businesses reported 2.1. MSME definition and characteristics annual turnover of below M200 000, and less than four percent reported turnover above M1 million. Lesotho defines its private sector according to indigenous and foreign enterprises, resulting in the The 2008 Lesotho Review estimates that there are inter-changeable use of the terms “SMME’s” and some 100 000 SMMEs in both the formal and
18 Stevenson L. St-Onge A, Finnegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AfDB/ILO Integrated Framework Assessment Guide, ILO, p13 19 SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho p 13 20 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing : White paper on the development and promotion of small business, section 20 21 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing: White paper on the development and promotion of small business. P.10 22 SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho p6
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 14 informal sectors which employ nearly 200 000 people interspersed in the Lesotho Vision 2020 document; altogether 23. the Interim National Development Framework 2009/10-2010/11; the Industrialisation Master Plan 2.2. Women and the MSME Policy environment 2007-2010; the White paper on the development and promotion of small business, 2002; and the Gender Women entrepreneurs can contribute significantly and Development Policy, 2003. The Gender and to economic development in Africa, but their Development policy is the main policy calling for the contribution has not been adequately studied and redress of gender inequality in poverty and economic developed. Although it is challenging for both men empowerment31 through specific strategies. These and women to start and sustain a successful business, include the requirement for all policies, programmes women face unique challenges to self-employment24. and plans on poverty eradication to be gender According to the white paper on the development responsive; the provision of appropriate economic and promotion of small business (SBP, 2002)25 enhancement mechanisms in the informal sector for perhaps two-thirds of small businesses in Lesotho are the empowerment of women, men, girls and boys; owned and run by women yet there is no research the creation of a development fund to enhance data to establish the size, profile’s and specific opportunities of marginalised women and men, in business premise needs of women’s enterprises. the informal sector; engender national budgeting; and a review and reform of regulatory obstacles The Gender and development Policy of Lesotho states faced by the marginalised women and men, girls and that prior to the UN decade for women, national boys in economic development programmes that statistics generally never made a distinction between discourage private and individual activities. Except women and men. With the call for disaggregating for the Vision 2020 document, the research revealed information by sex, it was realized that there are that all the above documents are under review with serious disparities between women and men. It is these an eye to, among others factors, incorporate gender disparities that prevent a larger section of population mainstreaming. from participating effectively and meaningfully in the economic development process26 . The Vision 2020 Strategy aims to develop a strong industrial base, supported by a thriving SMME In the absence of an SMME Policy, it is submitted sector and tourism industry. This long term plan32 that the government’s stance on the recognition and (Vision 2020; section 2.3.5) commits to creating “… importance of women’s contribution towards the good economic policy that will render the country MSME sector is based on other ancillary documents prosperous for many centuries to come…. The like the Lesotho Vision 202027, the Gender and country will in addition have a well developed Development Policy(currently under review)28 and Small, Micro and Medium Enterprises. ” As the the White paper on the development and promotion country’s long term vision it is the basis for sectoral of small business29. planning and national policy. Addressing three key issues, namely sustaining political commitment and In various documents30, the Government of Lesotho support; sustaining high levels of investment; and acknowledges the crucial role that SMMEs play in strengthened development management capacity the the growth of the economy but currently it does Vision 2020 strategy presents ten strategic objectives. not have a Policy to guide government planning in The only monitoring indicator related to addressing this regard. Consequently, whatever government’s gender inequality is the increased percentage of SMME sector development initiatives exist are women in parliament and in decision making
23 SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho p13 24 S. P van der Merwe & M. Lebakeng (undated) An empirical investigation of women entrepreneurship in Lesotho p2 www.aibuma.org/proceedings/ downloads/Stephan,%20South%20Africa.doc accessed 3 March 2011 25 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing : White paper on the development and promotion of small business p. 12 26 Government of Lesotho (2003) Gender and Development Policy p3 27 Government of Lesotho (2000) Lesotho Vision 2020, p6 (section 2.3.5) 28 Government of Lesotho (2003) Gender and Development Policy, p11 (section 5.1) 29 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing : White paper on the development and promotion of small business 30 Lesotho Vision 2020 document; the Interim National Development Framework 2009/10-2010/11; the Industrialisation Master Plan 2007-2010 and the Gender and Development Policy, 2003; SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing : White paper on the development and promotion of small business 31 Government of Lesotho, Gender and Development Policy (2003) p11 section 5.1 32 Government of Lesotho (2004) Vision 2020 p. 6
15 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho positions,33 which could be the reason for the limited own employers and absorb the growing number of gender mainstreamed activities in subsequent sectoral unemployed people in Lesotho. policies implementing the Vision 2020. In line with the provision of vision 2020 the Following the drafting of the White paper on the Government of Lesotho (GoL) attaches great development and promotion of small business in importance to the development of MSMEs and 2002, a range of studies and donor programmes the informal sectors. Recent estimates reveal that have been undertaken with a bearing on SMME the MSME sector employs over 130,000 people, development34. There have also been some significant (approximately 200 000 including the informal practical developments initiated by the Government sector) making it the largest employer37 . However, in of Lesotho. These include the passing of the Gender order to enable the MSME sector to grow, there has and Development Policy in 2003 by the Government to be adequate and sustainable provision of business of Lesotho; the passing of the Legal Capacity Act in services, proper infrastructure, availability of capital 2006 removing the status of women as legal minors; and access to markets and credit. The MSME sector and the establishment of the One Stop Shop by the has been without and continues to be without a Ministry of Trade and Industry, Cooperatives and clear National Industrial and SMME policies, a Marketing whose aim is to streamline regulatory factor that waters down government’s stance on procedures for businesses. developing SMMEs. Matrix 5.8 of Vision 2020 states that it is the aim of the government of Lesotho to The Draft Growth Strategy and the Interim Poverty strengthen and promote the SMME sector through Reduction and Growth Strategy (IPRGS) focus on the development of the SMME Policy. According to integrated approaches to economic development. the Industrialisation Master Plan 2007-201038 “the The Draft Growth Strategy reinforces some of the development of coherent government policies for key themes of the White paper on the development the promotion of industrial activity by SMMEs is and promotion of small business, and presents a hampered by lack of information on the composition comprehensive picture of key barriers to growth of the sector and the activities in which it engages. and approaches to address these. While these policy Although it is known that the numbers employed developments are encouraging, it must be stated that by formal and informal enterprises increased efforts to build a growth-oriented, value-add MSME significantly in recent years the last comprehensive sector requires an evolution of approaches over a review of the sector was that undertaken under the period of time. This includes a change of mind-set Gemini Programme (1990)”. to consider women entrepreneurs as important and providing an enabling environment for them within In May 2007 the GoL undertook the development which to operate. of a 3 year Industrialisation Master Plan (IMP) 2007- 2010 as a programme of government interventions In the Budget speech of the 2011/12 fiscal year, the intended to ensure the Manufacturing Sub-Sector Minister of Finance and Development Planning in of the Lesotho economy (the Industrial Sector) Lesotho states that the public sector cannot provide continues to contribute to the realisation of the productive and sustainable jobs35. The Minister government’s overall economic objectives as set out pointed out that government’s role is to facilitate in its paper Vision 2020. The IMP is based on the and create conditions, frameworks, institutions and assumption that the industrialisation process will facilities that will empower the private sector to continue to be market-driven and that the Private drive growth and create jobs. It is in this context, Sector will be the main engine of growth. The role that the Minister of Finance has established a Partial of the government will be to facilitate the process by Credit Guarantee Fund36 aimed at capacitating creating an enabling environment which will sustain young graduates, women and other self-employed industrial activity and encourage further investment entrepreneurs to start their businesses, become their in industrial enterprises39. The IMP recognises that
33 Government of Lesotho, vision 2020 p34 matrix 5.4 34 Refer to The MTICM Paper on the development and promotion of small business (2002); The Intergrated Framework Diagnostic Trade Integration Study (2003); The formulation of a PSD Strategy (2004); the Value Chain Analysis of Selected Strategic sectors in Lesotho (Global Development Solutions, 2004); World Bank Assessment of the Investment Climate; the Growth Options Study (World Bank country Economic Memorandum); IMF Article IV; the Capacity Building Plan for the Private Sector in Lesotho (2006); the Millenium Challenge compact (2007); the Private Sector Competitiveness and Economic Diversification Project (2007) and the Interim Poverty Reduction and Growth Strategy Paper (2008/09) 35 p21 36 Parliament of the Kingdom of Lesotho, Budget Speech 2011/2012 Fiscal Year p22, paragraph 50 37 Government of Lesotho, Vision 2020 p18 38 P91 Section 26 39 Ministry of Trade and Industry, Cooperative and Marketing (May 2007) Industrialisation Master Plan 2007-2010 p. III
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 16 currently most investment in industrial activity and the USAID/Booz Allen Hamilton’s Gender comes from external sources, reflecting both the - Commercial Legal and Institutional Reform shortage of domestic capital; the reluctance of assessment framework42. These assessment make Basotho to invest in industrial projects due to low a strong case that there are known sets of laws levels of available technical and business expertise and rules that, if implemented successfully, can and the difficulty of potential local entrepreneurs in reduce barriers to entry and growth for all private raise credit from commercial sources and commits to enterprises. Secondly, they enlighten policy makers pursuing policies designed to encourage investment and program officials to the fact that “one size does in industrial projects by Lesotho nationals. not fit all” – that rules, regulations and policies that are designed to promote economic development in Specific MSME’s strategies identified by the general do not necessarily support entrepreneurial IMP comprise of a review of the MSME sector to activity in the same way that they may protect the determine numbers of enterprises involved, areas of interests of larger corporations and the status quo. activity, numbers employed, levels of remuneration Thirdly, they can point out to stakeholders the areas and business level constraints to build on the in which some government policies or private sector information gathered through the national census support programs fall short of the ideal. Finally, and be modelled on the review carried out under they spark the human competitiveness so as to the Gemini Programme; a 15% price preference to encourage countries to better their scores relative to local companies in public procurement; a Business neighbouring countries. Linkages project in partnership with the private sector; and Private Sector-led business advisory While overly complicated procedures can hinder services40. In the same voice though, the IMP declares business activity, so can the lack of institutions or that the government will not differentiate between regulations that protect property rights, increase local and international investors in the operation of transparency and enable entrepreneurs to make its investment incentive regime except in the most effective use of their assets. When institutions such clearly-defined circumstances41. as courts, collateral registries and credit information bureaus are inefficient or missing, the talented poor The research has unearthed the fact that national level and entrepreneurs who lack connections, collateral research and statistics related to MSMEs is generally and credit histories are most at risk of losing out. not disaggregated according to gender. In the absence So are women, because institutions and regulations of such information, it is not possible to provide a such as credit bureaus and laws on movable collateral clear and current position of women entrepreneurs in support the types of businesses that women typically Lesotho. Consequently, any reference to data is based run—small firms in low-capital-intensive industries on secondary sources and key informant estimates. in both the formal and the informal sector43.
3. ASSESSMENT OF THE The starting point for designing any women’s enterprise development initiative is an analysis of ENABLING ENVIRONMENT existing policies, and the various instruments and FOR WOMEN’S ENTERPRISES programmes in place, along with an assessment of IN LESOTHO their adequacy44.
Several recent efforts, globally, have been undertaken The Kingdom of Lesotho has ratified and domesticated to assess business-enabling environments taking a number of the core labour Conventions most of gender into consideration. These efforts include which impact on gender. The Constitution of Lesotho the International Labour Organization’s Growth- enshrines the principle of non-discrimination45 Oriented Women Entrepreneurs (GOWE) framework, and equality46 of all persons under the law, while the International Finance Corporation’s Gender the Labour Code Order, 199247 also buttresses the and Investment Climate Reform Assessments, principle of non-discrimination in employment.
40 Ministry of Trade and Industry, Cooperative and Marketing (May 2007) Industrialisation Master Plan 2007-2010 p. 90-94 41 Ministry of Trade and Industry, Cooperative and Marketing (May 2007) Industrialisation Master Plan 2007-2010 p. VI 42 http://www.womenable.com/userfiles/downloads/Womenable_Engendering_%20BEE_0810.pdf accessed 27 June 2011 43 http://www.doingbusiness.org/reports/doingbusiness/~/media/FPDKM/Doing%20Business/Documents/Annual-Reports/English/DB11-Chapters/ DB11-ExecSum.pdf accessed 8 April 2011 44 Stevenson L. St-Onge A, Finnegan G (2007) Assessing the enabling environment for women in growth enterprises; An AfDB/ILO Integrated Framework Assessment Guide. Section 3 45 Section 18 46 Section 19
17 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho The said provisions of the Constitution and the management of resources-this includes lack of access Labour Code Order incorporate the contents of to finance and credit, representation in cooperatives the Discrimination (Employment and Occupation) societies, access to information and appropriate Convention, 1958, (No. 111) which Lesotho ratified technologies. on the 27 January, 1998. There is also the Gender and Development Policy, 2003 whose aim is to “ensure The Constitution has made significant inroads in equality of all opportunities between women, men, levelling the ground by outlawing discrimination girls and boys so that development efforts have an and promoting equality of all people before the law. equal impact on all gender”48. The Gender Policy is There is also the Vision 2020 in which the National also aimed at facilitating proper integration of gender Development is subsumed (chapter 5); the Interim issues in development to ensure full participation National Development Framework (INDF), the of women and men in their productive lives. The White Paper and the Poverty Reduction Strategy Legal Capacity of Married Persons Act, 2006 is (PRS). Except for the Vision 2020 the strategies arguably the most progressive law in protecting alluded to herein are all under review since they have women married in community of property from lapsed50. The Vision 2020 embodies a long-term socio- the imbalances of power in the access and control economic development vision and aspirations of the of resources within their marriages. It allows the country while the PRS has the ultimate objective women married in community of property to act of reducing poverty by creating employment as company directors and to “perform any other act through the establishment of a conducive operating which was restricted by any law due to the marital environment that facilitates private sector-led power before the commencement of the Act”49. economic growth. The overarching objective of the Since the Legal Capacity of Married Persons Act INDF is to reduce poverty through the pursuit of has a supremacy clause on matters of gender parity, sustainable private sector led economic growth that it therefore supersedes section 144 (1) (b) of the generate employment through promoting industrial Companies Act which states that a woman married development and SMMEs. Such a compact strategy in community of property may not be a director for economic development calls for the allocation if her husband has not given his written consent of resources aimed at the implementation of the all which must be lodged with the Registrar. The Legal progressive laws and policy with a bearing on gender Capacity of Married Persons Act is therefore clearly and women empowerment. progressive and as it is aimed at combating gender based discrimination. The set back is that even though 3.1. Policy Leadership and Coordination the country has all these forward-looking legislation, this has not necessarily translated into government’s Lesotho is signatory to the ILO’s Decent work enhanced capacity to act to implement meaningfully country programme and as such is bound to put the laws that deal with gender based discrimination, in place an integrated national, sectoral or local and by extension, the establishment of a dedicated employment policies and programmes in her policy focal point for women’s entrepreneurship within the framework. Employers and Workers’ organisations government. The absence of a dedicated focal point and the different government ministries work for women entrepreneurship is a factor that waters together to develop employment policy framework down the country’s plan to combat discrimination which will outline the elements of sectoral and labour as an essential part of promoting a vibrant SMME market policies, including SMME development and sector. productivity, the informal sector and promoting sustainable enterprises. This initiative helps to ensure Several key informants indicated that even though greater success to self employment opportunities the Legal Capacity Act has been passed, shortcomings which are aimed at vulnerable groups such as still exist in the application of this law in the area women, people with disabilities and people living of marriage, inheritance and employment. As a with HIV/AIDS. It also emphasises the importance result gender disparities still persist in education of integration of all vulnerable groups in the area of enrolment and retention rates and social norms are entrepreneurship. Since all the social partners work still characterised by cultural practices that accord together to make develop policies and legislation lower roles and status to women than to men, and that promote SMMEs they may be viewed as leaders that women still lack full access to control over and in policy leadership and coordination.
47 Section 5 48 Section 1.3 49 Section 3 (h) 50 The Poverty Reduction Strategy 2004/2005-2006/2007; The Interim National Development Framework 2009/10-2010/11 and the White Paper.
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 18 Through its various Ministries and departments and At present, Lesotho does not have a dedicated focal specifically the Ministry of Finance, the government point for women’s entrepreneurship within the of Lesotho has the overarching role of developing public sector. There is also little if any evidence of appropriate legislation, policies and an enabling any concrete strategies to address specific challenges environment to promote private and informal sector facing women-owned SMMEs in the country. Given investment and active participation of all vulnerable that Lesotho’s SMME policy is still being crafted, there groups in economic growth and development. The is still a chance to develop an integrated approach Ministry of Finance is responsible for developing ensuring the place of women in the government’s the national policy template and policy formulation SMME and economic growth strategies. process guidelines and also monitors the alignment of sectoral plans and budgets with the Poverty It is recommended that the Government of Reduction Strategy and Vision 2020. According Lesotho establish an Office of Women’s Enterprise to the Budget speech for the year 2011/2012 the Development and that the authority for such an Ministry of Finance has also reviewed studies on office be incorporated within the proposed SMME “obstacles or constraints to the growth of SMMEs”. Policy. This office would be tasked with all the issues This is aimed at the creation of an entrepreneurship pertaining to the development of women enterprise initiative that targets women among others, in development in Lesotho including research, advocacy creating a partial credit guarantee fund to enable efforts on behalf of women SMMEs with other women entrepreneurs to access credit to grow their ministries and departments, negotiation with donors businesses. These initiatives are borne out of the for strategic support in favour of the development realisation that productive and sustainable jobs and growth of women owned enterprises. This, cannot be created in the public sector as such, in turn, would foster an enabling environment government should facilitate and create conditions that will alleviate the barriers women face in their and frameworks that will enable the private sector to SMME activities. This office would also facilitate be an engine of growth and creation of jobs. Seen in linkages with other like-minded organizations, both this context, the government of Lesotho can also be nationally and internationally. The model practice viewed as charting the maze in policy leadership and for this is the Office of Women’s Business Ownership coordination. in the US Small Business Administration, which was put into place by the Women’s Business Ownership Lesotho is a member of the Southern African Act of 1988. This was a landmark event in women’s Development Community (SADC). The SADC’s entrepreneurship development in the United States. principal aim is to coordinate and harmonise the In Ethiopia, for instance the responsibility for the socio-economic policies and plans of its member SMME sector is with the Ministry of Trade and states in order to ensure sustainable economic Industry while in Tanzania it is with the Ministry of development and growth in the region. In so far as Industry and Trade. member states are expected to bring their domestic policies and legislation in line with SADC’s policies, It is recommended also that an inter-ministerial this regional body may, to a limited extent be viewed committee on women’s enterprise be established as a leader in issues of policy and coordination in with the mandate to work across government Lesotho. agency and donor lines to foster the growth and development of women’s businesses. It would also It is submitted that since Lesotho does not have a advocate at all levels of government for responsive specific policy framework for women enterprise change to ensure implementation of the gender development, she relies on the broader national policy equality policy. As a measure to support the work framework enabling human rights, small, micro of such an inter-ministerial committee on women and medium enterprise development and economic enterprise, more systematic research on the state growth. In this vein, the policy framework comprises of women in the SMME sector will be required. of the national constitution, which serves as the As soon as it is feasible, it is recommended that a supreme law of the land and outlines standards for comprehensive study of the state of women in the the legislative framework. The National Development SMME sector be conducted. The results of this study Strategy guides the strategic direction of the country will be useful to underpin advocacy positions to and the national framework for governance while improve the operating conditions of women SMMEs the Poverty Reduction Strategy Action Plan provides and promote growth. In addition, an inventory of the overarching guide for poverty reduction in the initiatives targeted to women should be compiled country. and used to promote best practice approaches.
19 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho The Law Review Commission and the different As such it lays down the national framework for government Ministries in Lesotho have the role of governance and further outlines the structure for the developing legislation and policies and by extension, establishment, function and operation of organs of promote private sector investment and active government. Any laws passed by Parliament, including participation of all people including women and government policies in Lesotho must therefore other vulnerable groups in creating employment and conform to the provisions of the constitution. growing the economy. Unlike Swaziland, Lesotho Section 18 (1) of the Constitution states that no does not have a Public Policy Coordination Unit-a law shall make provision that is discriminatory body that is responsible for developing the national either of itself or in its effect. Section 19 provides standard policy template and formulation of policy that Every person shall be entitled to equality before process guidelines. The effect is that issues of policy the law and to the equal protection of the law. The formulation are dispersed within the different principles of equality of all before the aw and non- government ministries. The Ministry of Finance discrimination are justiciable as they are enshrined and Economic Development is responsible for in the Bill of Rights chapter of the Constitution. economic policy formulation, advice and analysis There is also the chapter on Principles of State Policy and monitoring the alignment of sectoral plans and which covers principles of equality and justice53; just budgets with the INDF and PRS. The Ministry of and favourable conditions of work54; Rehabilitation, Gender Youth Sports and Recreation is responsible training and social settlement of disabled persons55; for ensuring that gender is mainstreamed in all and Economic opportunities56. Section 32 of the sectoral policies. constitution states that the country shall adopt policies designed to provide that (a) protection and In the absence of a policy framework for women assistance is given to all children and young persons enterprise development, reliance is placed on the without any discrimination for reasons of parentage Constitution and the Vision 2020. The constitution or other conditions. is the supreme law of the country and enshrines fundamental rights and freedoms which are The Chapter on Principles of State Policy states in enforceable in courts of law and by extension sets Section 26 (1) that Lesotho shall adopt policies aimed standards for the legislative framework. The Vision at promoting a society based on equality and justice 2020 provides guidance and strategic direction of the for all its citizens regardless of race, colour, sex, country while the now lapsed PRS provided for the language, religion, birth or other status; subsection overarching guide to poverty reduction in Lesotho. (2) provides that in particular, the State shall take appropriate measures in order to promote equality The Charter for Small and Medium Sized of opportunity for the disadvantaged groups in the Enterprises51 is another important document in as society to enable them to participate fully in all far as it sets the tone for the procedure to be followed spheres of public life. Section 30 of the Constitution when procurement is done with government by states that Lesotho shall adopt policies aimed at SMMEs. The Charter outlines the minimum level securing just and favourable conditions of work and of good practice for both the public and private in particular policies directed at achieving: (c) equal sectors. It states that the government is committed opportunity for men and women to be promoted in to comply with all applicable law, both domestic their employment to an appropriate higher level… and international, and especially to comply with the (d) the protection of women who are in employment basic tenet of non-discrimination and in the process during a reasonable period before and after child to apply the law in a fair, open and transparent birth. Section 33 provides the country shall adopt manner52. Put differently, the Charter provides for policies designed to (a) provide for training facilities, measures to promote SMMEs in public procurement. including specialized institutions, public or private; The Gender and Development Policy is a blue print and (b) place disabled persons in employment and for gender mainstreaming into all areas of national encourage employers to admit disabled persons to development in Lesotho. employment. Section 34 states that Lesotho shall adopt policies which encourage its citizens to The constitution of Lesotho is the supreme law. acquire property including land, houses, tools and
51 November, 2006 52 Government of Lesotho (November 2006) The Charter for Small and Medium Sized Enterprises p4 53 Section 26 54 Section 30 55 Section 33 56 Section 34
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 20 equipment; and shall take such other economic overall coordination and implementation of the measures as the State shall consider affordable. Gender policy. This, the ministry will do, among others, through spearheading the development The constitutional provisions on principles of state of a gender and development policy action plan. policies are elaborate if comprehensive. Whilst Another important body aimed at ensuring effective the constitutional provisions speak to the issue implementation of the policy is the establishment of of protecting human rights and also addresses the Gender Equality Commission (GEC). The main economic rights, however cursorily, overall, it function of GEC is to advise the Minister on all provides a guiding framework for the development matters concerning gender and development. of any national policy. The said constitutional provisions are intended to enhance and improve The Gender Policy further alludes to the fact that in specific target groups such as disadvantaged groups Lesotho women have a relatively high literacy rate like the disabled, children and women. Workers are and that many of them are effectively the heads of also catered for. A common thread in the provisions households61. The painful reality however is that these of the Bill of Rights and the chapter on Principles “credentials” do not translate to women occupying of State Policies is the component of equality of all positions of power, leadership and decision-making people before the law. Principles of State policies in all spheres of life. It is urged that this position needs as stated in the constitution shall form part of to change to accommodate participation of women the public policy of Lesotho57. Even though these and people with disabilities in all levels of decision- principles are not enforceable in a court of law, they making as well as in business. This, it is submitted serve as a guide for government and other agencies to would be in line with the basic tenets of democracy work towards achieving progressively, by legislation and human rights. The government of Lesotho has or otherwise, the full realization of these principles.58 undertaken to adopt a rights-based approach which empowers the courts and other institutions to The objective of the Gender and Development Policy promote and protect the rights of women and men. is to consider gender concerns in all national and This also includes the right to decent work. sectoral policies, programmes, budgets and plans in order to attain gender equality in the development The Ministry of Gender has a Gender Unit which has process59. The policy points to strategies to improve an Economic Empowerment Section whose aim is to living conditions of women and men as well as girls mount Projects which deal with the training of men and boys. The policy states that the government shall and women in getting basic business skills as well open avenues for women and men…to equally have as arts skills. Information gathered from Informant access to and control over credit, land and property interviews is to the effect that participants, are mostly in order for them to equally contribute significantly female mainly because the training targets women. to the development process60. In order to realize this The Gender Unit, we were told is in the process of objective, the government undertakes to (a) provide establishing an Apex Body of women which will appropriate economic enhancement mechanisms help coordinated consultation with women from the in the informal sector for the empowerment of Different ten districts in Lesotho. What transpired women, men, girls and boys; (b) ensure that policies, though is that the Economic Empowerment Section programmes and plans on poverty eradication are is, strictly speaking not aimed solely at addressing gender-responsive; (g) review and reform regulatory women enterprise development as its mandate is to obstacles faced by the marginalized women and ensure “equality of all opportunities between women, men, girls and boys in economic development men, girls and boys so that development efforts have programmes that discourage private and individual an equal impact on all gender issues”. The aim of initiatives; (n) put in place gender-sensitive labour the Department of Gender is to “facilitate proper laws to enforce safe work conditions at all times integration of gender issues in development to ensure especially in the industries; (u) develop gender- full involvement, participation and partnership friendly micro-credit schemes and (x) create gender- of women and men, girls and boys in both their friendly credit schemes. The Ministry of Gender, productive lives”62 Sports and Youth Affairs is responsible for the
57 Section 25 of the Constitution 58 Section 25 of the Constitution 59 Paragraph 3.1 p7 of the Gender and Development Policy, 2003 60 Paragraph 5.1 of Gender and Development Policy, p11 62 http://www.lesotho.gov.ls/gender/ visited on 3rd March, 2011
21 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho In the Sixth National Development Plan (1996/97- the operating conditions of women SMMEs and 1998/99), the government of Lesotho acknowledged encourage their growth. the need to address gender disparities in the country. To address this need, the government advocated for 3.1.1 Enabling Aspects of Policy Leadership the empowerment of all people in the design and and Coordination for Women Enterprise implementation of major decisions that have an Development (WED) in Lesotho impact on their lives. This National Development Plan further emphasized on the need for gender The Constitution through Sections 18 and 19 create equality and the need to address all socio-economic an enabling environment through the entrenchment aspects that put women as opposed to men at a of the principle of non-discrimination and providing disadvantaged position. for equality of all persons before the law. Section 18 states that no law shall be discriminatory of itself or The delivery on the legislation and policy objectives in effect and that people shall not be discriminated depends on a vibrant, effective and adequately as a result of application of a law that has a resourced dedicated focal point on women enterprise discriminator tenor. According to section 18 (4) (c) development. Without a vibrant and adequately discrimination in any form is illegal in Lesotho and resourced focal point, there is likelihood that the the constitution makes no guarantee for laws with advocacy work that is crucial to be undertaken discriminatory provisions with the exception of within the ministries responsible for women SMMEs customary law. This implies that any discriminatory will not be carried out. cultural laws and practices will be protected and condoned by the Constitution. Unequal power As stated earlier, Lesotho is a signatory to all core relations that exist between women and men stem labour conventions has domesticated most of these from condoning cultural beliefs and practices which Conventions. The ILO Conventions which have are discriminatory in nature. a gender dimension include the Discrimination (Employment and Occupation) and the Equal Section 19 on the other hand, states that “Every Remuneration Convention which Lesotho ratified person shall be entitled to equality before the law and later domesticated in the Labour Code Order and to the equal protection of the law”. and in the Constitution. The Charter for Small and Medium Sized From the above discussion it can be concluded that Enterprises also creates a conducive if enabling government entrepreneurship development effort environment for SMMEs. The relevant proviso is in Lesotho lacks coordination of programmes and on Government’s Commitments to SMEs at policies, a factor that easily results in duplication page 4 where it states that government welcomes the of effort and resources. This cannot be encouraged opportunity to do business with SMEs and undertakes especially in the hard economic times where to “comply with all applicable law, domestic and governments can ill-afford to waste the meager international, and in particular in relation to resources they have at their disposal. the principle of non discrimination, and aims to apply these rules to all people who tender It is recommended that issues of policy leadership to do work for government in a fair manner”. and coordination would be best driven by an inter- In so far as it seeks to apply the non-discriminatory ministerial committee on women’s enterprise whose principles in dealing with tenders, the Charter can mandate would be to work across government be said to recognize and cater for women and other agency and donor lines to encourage the growth disadvantaged groups. and development of women’s businesses. This committee may also be tasked with advocacy at all The Legal Capacity of Married Persons Act, levels of government for responsive change to ensure 2006 in section 3 (a) (f) and (h) repeals the marital implementation of the gender equality provision power of husbands over their wives and by extension, postulated in the Legal Capacity of Married Persons emancipates married women to enter into contracts, Act. To support the work of the inter ministerial act as company director and generally perform any committee, it would help to have more systematic other act which was restricted by any law due to the research on the state of women in the SMME sector. marital power before the commencement of this Act. It is important to have a study of the state of women Marital power is the control a husband has over the in the SMME sector and that the results of this study total affairs (legal, commercial and assets) of his wife be used to underpin advocacy positions to improve if they are married in community of property. It is
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 22 the power that makes a wife married in community The White Paper alludes to the devastating effects of property a minor in the eyes of the law and her HIV/AIDS will have on economic growth in Lesotho husband, her Guardian. but does not make specific reference of how people Section 7 (5) states “Notwithstanding subsection affected by HIV/AIDS would be given assistance in 1 (c), a spouse married in community of property the SMME sector. This is a disabling factor especially may, without the consent of the other spouse- if the government acknowledges that the number (b) alienate, cede, or pledge of people infected and affected by the HIV scourge (ii) …shares in any other company registered in continues to rise with every passing year. his or her name.
The net effect of the Legal Capacity of Married Persons The SMME Network - Lesotho in its new strategic Act is to do away with the minority status of married direction encompasses Women Enterprise women and to allow them to engage in commercial Development as it seeks to reposition itself into activities without having to get the sanction of their a specialist resource centre providing technical husbands. It will be recalled that gender equity expertise in a variety of areas related to small business among entrepreneurs is usually undermined by the development. It is believed that this new direction special constraints faced by women and this includes and approach will position the Network to play a gaps in the implementation of equitable laws such as much more potent role in enabling various SMME this one. Discriminatory and often negative attitudes development actors to deliver more successfully on and social practices also limit equal participation their SMME development mandates. The intention of men and women in all entrepreneurial activities. of the new strategic direction is to address the weak This law seeks to level the playing field as it were. It coordination among various actors and programmes; remains to be seen if there the will to ensure holistic the lack of critical information on SMMEs to inform implementation of this law exists. the design and implementation of policies and programmes; and the absence of impact assessments of various programmes.63 This in turn is expected to 3.1.2 Aspects Hindering Lesotho Policy address the currently non-gender inclusive approach Leadership and Coordination for Women to SMME programmes, strategies and policies. Enterprise Development (WED) The Ministry of Gender houses the gender and Section 29 (2) (c) of the Constitution provides economic empowerment section, which is under that Lesotho shall adopt policies aimed at resourced and therefore not functioning to its “achieving steady economic...development and optimum level. Except for a few workshops here and full and productive employment under condition there, this section has not done much to push the safeguarding fundamental political and economic agenda of WED much to the detriment of women freedoms to the individual.” It is submitted that entrepreneurs. even though this section falls under the Directives of State Policies and is not enforceable in a court The absence of an SMME Policy is a disabling of law, it still serves as a guide to the authorities in factor in Policy leadership and coordination for the performance of their functions and is aimed at women enterprise development. The same is true of achieving, through legislation and policy, the full the absence of a dedicated focal point on women realisation of this principle. enterprise development. Whilst the Ministry of Gender has the mandate to mainstream gender in all The White Paper provides in paragraph 51 that the government programs, its capacity to effectively carry government aims to create an enabling environment out this mandate is compromised by the fact that it is conducive to the growth and multiplication of under-resourced. In the absence of a well positioned SMMEs in Lesotho. In this vein the government and well resourced focal point on women’s enterprise undertakes to reduce regulatory, policy and legislative development, practical steps towards policy obstacles that inhibit the private sector and raise the implementation within the government ministries domestic costs of doing business in Lesotho. In so far will not be taken. as the White Paper does not make specific reference to women entrepreneurs and WED, it is disabling Lack of gender mainstreaming in most sectoral to the cause of promoting women entrepreneurs. policies was also identified as an issue in much
63 SMME SUPPORT NETWORK-LESOTHO: BUSINESS PLAN 2011 p2
23 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho the same way as the failure by sectoral policy • In his budget speech of the fiscal year implementers to own specific gender commitments 2011/2012 at page 4, the Minister of Finance in provided for in their sector specific policies. This, Lesotho states that one of the goals of government is needless to say is indicative of a broader problem to “create meaningful jobs in and through the private of gender mainstreaming. Gender mainstreaming is sector...” In order to realise this all important goal, seen as a niche subject as opposed to an overarching it is recommended that the government of Lesotho concern and factor in development. should set up a special unit, the equivalent of the Public Policy Coordination Unit in Swaziland. This The absence of coherence in the repeal and Unit would ensure that specific focus is given to amendment of laws that are not in conformity the issue of developing the national policy template with the constitution also result in the ad hoc and that national policy formulation is premised on modernization of laws instead of dealing with such national, regional and international legal instruments amendments in a systematic and holistic way. An to which Lesotho is party. Coordination of policy example is the Legal Capacity of Married Persons Act, within government is important as such it should be 2006 which provides that married women can now given specific focus as it also ensures mainstreaming act as company Directors. The Act does not state that of gender issues and alignment of national priorities section 144 (1) of the Company’s Act is Repealed. in all policies and legislation. It is unlikely that a The latter provision provides that a married woman single Ministry within government would be equal can only become a company director if her husband to the task of mainstreaming government policy. has given written consent to the Registrar. 3.2 Regulatory and Legal Issues 3.1.3 Recommendations The legal and regulatory environment impacts the • Unlike in the case of Swaziland, Lesotho capacity of women to start, formalize and grow viable has established the Law Review Commission whose enterprises. Particularly important are systems of task, among others is to align legislation and policies laws regarding women’s equality, how the regulatory with the constitutional provisions. It has also environment impact on SMMEs and the degree of transpired from the above discussion that while the ease or complexity in registering an enterprise64. Law Review Commission exists for this purpose, The report will now turn to discuss the various legal different Ministries continue to make policies and and regulatory mechanisms in Lesotho. The aim of legislation without reference to the Law Review this discussion is to assess the potential impact that Commission. This is problematic and results in a such laws and policies may have on the growth or disjointed if incoherent duplication of functions. It regression of women enterprises. is recommended that the review of laws and policies should be the exclusive preserve of the Law Review The Gender and Development Policy recognizes the Commission and not government ministries as causal connection between gender inequality and the former, it is assumed has the expertise and the poverty. The Policy states that “gender inequality is resources to research and amend laws and policies both a major cause of poverty and a major impediment accordingly. to sustainable development”. According to the Policy, • It is also recommended that Lesotho should “reducing gender inequality means improving access hasten to craft a specific policy dealing with women to employment and control over credit and other enterprise development than rely on the broader productive resources by the marginalized groups. In policy and legislative framework which may not order to achieve this effectively, poverty eradication bring clarity and focus on the role women play in strategies must address the differences between growing the private sector. women and men, girls and boys in access to control • There is need also to make a SMME Policy- over resources and opportunities”65. The strategy one which will set out the framework for the country’s under the thematic area “Gender and Poverty and SMME sector development. This Policy will serve to Economic Empowerment” include “encouraging identify the critical role of SMMEs in transforming the creation of a development fund to enhance both the rural and urban economy and government’s opportunities of marginalized women and men in role in facilitating access to markets. the informal sector as well as providing appropriate
64 Stevenson L, St-Onge A, Finegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide, ILO 65 Gender and Development Policy, paragraph 4.0 page 9
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 24 economic enhancement mechanisms in the informal relevant Ministry and among stakeholders. sector for the empowerment of women, men, girls and boys”66. The Companies Act 25 of 1967 outlines the procedures and regulations relating to the This Policy creates an enabling environment for registration and formalization of companies in gender related issues in Lesotho. The Policy is Lesotho. This Act does not deal specifically with one of the documents that serves as a roadmap SMMEs as it only confines itself to issues of for the implementation of gender responsive in company registration procedures and clauses on the development of the economy in the country. who qualifies to be a company Director. Section There is now a clear need to revisit the Gender 144 (1) (b) provides that a minor or any other Policy as certain aspects of it have been overtaken person under legal disability, provided that a by events. Feedback from some key informants woman married in community of property may revealed that the Policy is presently under review be a director if her husband gives his written as it still makes reference to laws that have been consent and that consent is lodged with the repealed as if they were still alive and well in the Registrar. This provision has been repealed by statute books. For instance, the Policy still makes section 3 (3) (f) of the Legal Capacity of Married reference to the application of the Land Act, Persons Act, 2006 which removes restrictions 1979 and the Deeds Registry Act, 1967 as well placed on a wife by the husband’s marital power. as women minority status67. The reality, however The section removes the husband’s power to give is that the 1979 Land Act has been replaced by written consent before his wife can be a company the Land Act, 2010 while the Legal Capacity of Director. Since the Legal Capacity of Married Married Persons Act, 2006 repeals the offending Persons Act seeks to effect the constitutional provisions of the Deeds Registry Act as well as principles of non-discrimination and equality, the Common position of subjecting married it may be said that section 144 (1) (b) of the women to their husbands’ marital power. Companies Act has fallen away because it is inconsistent with the Constitution. The high female literacy has not translated into equal participation in development between The Legal Capacity of Married Persons Act also Basotho Women and men, girls and boys. amends the Deeds Registry Act, 1967, a law This unequal participation in development that specifically provided that no land shall be is demonstrated by employment figures registered in the name of a married woman. particularly for decision-making positions68. Several Key Informants alluded to the fact that The Gender and Development Policy states that Lesotho is a patriarchal society where male the “government undertakes to adopt a rights- interests tend to dominate much to the detriment based approach that involves strengthening of women. Consequently, even the composition the ability of courts and other institutions to of Parliament is such that women always form promote and protect the universal rights of the minority and as such are unable to push for women and men, girls and boys, including the more women-friendly laws and policies. rights of adequate information, to organization and decent work”69. The emphasis on a rights- Section 5 of the Employment Code Order, 1992 based approach in protecting and promoting prohibits any form of discrimination between women’s rights implies that legal as well as social employer and employee on the basis of, among shortfalls and other discrepancies that impede others sex and marital status. This is in accordance gender equality will be done away with. It also with the country’s ILO commitments. There is implies that women will be entitled to receive presently a Draft National Employment Policy adequate information, in particular information that is not yet in the public domain as it is still relating to setting up their businesses. be discussed within internal structure in the
66 Pages 11-12 supra 67 See Gender and Development Policy, paragraph 2.2 “ Economic Disparities” page5 68 Page 4 Gender policy 69 See paragraph 5.4 “Gender and Power, Politics and Decision-Making page17
25 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 3.2.1 Enabling Aspects of Legal and Regulatory to trade are largely unknown, confusing, convoluted Issues for WED in Lesotho and replete with bureaucratic red tape. The fact that all these processes are not found in one location as In 1995, Lesotho ratified the Convention on the they are scattered in different Ministries does not Elimination of All Forms of Discrimination Against make the thought of doing business in Lesotho any Women (CEDAW). CEDAW calls for the promotion easier. of gender equality and non-discrimination of women and extension, creates an enabling environment Whilst great strides have been made in the area of for women entrepreneurs. Unlike the Kingdom eradicating discrimination of women through the of Swaziland, Lesotho has made great strides in passing of the Constitution and the Legal Capacity domesticating most of the international conventions of Married Persons Act, a lot remains to be done in that she has ratified. This includes both the ILO bringing awareness to most women entrepreneurs. It core Conventions and CEDAW. The Constitution of is still perceived that even though the legal “shackles” Lesotho, the Land Act, the Legal Capacity of Married have been removed through the repeal of the marital Persons Act as well as the Gender and Development power, in practice most of the women still think and Policy are some of the laws that are a reflection of the behave like they are still living under the Common country’s seriousness in domesticating international law yoke of their husband’s marital power. This is conventions in this respect. All these laws address not to say that the cultural and traditional practices gender imbalances in the country and as such are and beliefs that are discriminatory in nature can also a laudable development. All these laws provide an be automatically done away with as people must be enabling environment for women entrepreneurs to re-socialized to “unlearn” cultural practices that are thrive. discriminatory.
The Legal Capacity of Married Persons Act, 2006 A basic prerequisite for development is the capacity provides an enabling environment in so far as of society to use its own resources to sustain itself. it repeals marital power, a position which, for a The majority of people with disabilities however find long time consigned married women in a state of themselves in a state of underdevelopment due to perpetual minority. With the enactment of this law, the continuous discrimination in accessing business married women can now hold their own in business opportunities. The focus on skills development of without the encumbrance of soliciting consent from people with disabilities should be the deepening of their husbands to enter into contracts and other their specialized capabilities so that they are able to business transactions. access incomes through formal sector jobs and SMEs. The aim should also be to promote continuous The Labour Code Order, 1992 is also an enabling learning and adaptation to the constantly changing legislation because it prohibits any form of environment. discrimination in the employer and employee relations on the basis of, among others, sex and A number of ILO Conventions and their marital status. accompanying recommendations provide clear guidelines and vocational training in the The Companies Act also creates an enabling development of human resources. Convention 159 environment in that it charts the maze about steps recommendation 168 deals with the vocational to follow when one wants to register a company. The rehabilitation and employment of people with Act does not make any specific reference to women disabilities. The ratification and subsequent entrepreneurs. The Act does however provide that integration of these conventions into employment any married woman who wants to act as a Director and human resource development legislation of a company must secure written consent from her could facilitate definite and measurable progress in husband and file same with the Registrar. training, placement and employment of people with disabilities. 3.2.2 Aspects Hindering Legal and Regulatory Issues in WED in Lesotho People with disabilities generally face more challenges than those without disabilities. People Key informant interviews revealed that procedure with disabilities have challenges in accessing premises to register a company, secure a trading licence, and (especially business premises). One key informant get the relevant government Ministries to approve in a commercial bank revealed that there is one business premises before an entrepreneur can begin client who is disabled that she has to service from
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 26 the comfort of his car mainly because the bank is easier in a country where entrepreneurship is already inaccessible to the client because of no alternative perceived as being a legitimate employment activity. route save through staircase. People with disabilities The government of Lesotho in its policies and laws face the challenge of access to information depending considers the MSME sector as an alternative to on the nature of disability. Even as the Constitution employment in the public sector. recognize this group of people as vulnerable, this has not met with any meaningful effort to address the Inculcating an entrepreneurial culture means raising particular needs of this group. The conclusion is that awareness of the importance of doing business as it is one thing to be a person living with disabilities an alternative to waged employment in the public but it is another thing to be a woman living with sector and the private sector. It is therefore important disabilities. to stage campaigns and other activities to help Figure 8. Outline value chain of the sub sector 4: cultivate an interest and positive attitudes towards convention and conference industry entrepreneurship. The militating factor against promoting women as entrepreneurs in Lesotho is 3.2.3 Recommendations the lack of data concerning entrepreneurship in the country. The major objectives behind a strategy of • It is recommended that company registration promoting women’s entrepreneurship include: procedures, procedures of securing a trading licence as well as the approval of business premises should be 1. the promotion of credible role models simplified and published in say-pamphlets to enable as a way of inspiring other women to pursue would be owners of SMMEs to know what is expected entrepreneurship as an employment or career option when one seeks to start a small business in Lesotho. as well as the growth potential of their existing This simplification must also be accompanied by the enterprises, and to recognize the contributions of raising of awareness about such procedures. individual women entrepreneurs; • There is also need for awareness of the new 2. to increase the level of visibility of women laws that have done away with the discrimination of as entrepreneurs and the role their collective and women on the basis of their gender. Such awareness individual enterprises play in the economy; and campaigns would make enable women to know and 3. to create awareness of the barriers faced by claim their rights by way of challenging some of the women entrepreneurs in the process of starting and procedures that are invoked by Financial Institutions growing enterprises and the strategies required in when women entrepreneurs apply for loans to start or overcoming them70. grow their businesses. Some Banks, we were told, still expect women married in community of property to In attempt to enhance the culture of entrepreneurship furnish them with consent to do business from their in Lesotho, the Ministry of Education and Training husbands. This, needless to say, is contrary to the (MOET) has recently made it policy that secondary provisions of the Legal Capacity of Married Persons schools introduce at least one practical subject such Act and the Constitution. as Agriculture and introduce life skills in the primary • It is also recommended that Lesotho should school curriculum. A further evaluation of the ratify the International Conventions dealing with curriculum by the Education Sector Strategic Plan say, the vocational rehabilitation and employment (ESSP) deduced that it comprised of fairly academic of people with disabilities. Such ratification and subjects with minimal practical skills essential for the incorporation of the said Conventions would integration into the employment market. The ESSP facilitate definite and measurable progress in training proposes a review of the basic and secondary education and placement of people with disabilities. curriculum as well as teacher-training curriculum to incorporate technical and vocational elements. In 3.3 Promotion of women as entrepreneurs addition the National University of Lesotho (NUL) offers a one year course in entrepreneurship for The aim of promoting an entrepreneurship is to students majoring in Marketing or Management and motivate and inspire people in particular women, Engineering students (BSc.). The curriculum focuses to pursue entrepreneurship as a viable and feasible on management and venture capital and has been employment option. It is important therefore to deemed to be too congested which may influence the make the support environment more favourable insignificant uptake as an optional course. Further towards the role of women as entrepreneurs. This is the course has not been exhaustively promoted and
70 Stevenson, L “Support for Growth-oriented Women Entrepreneurs in Kenya” p19
27 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho is shared only during the induction period when the The establishment of the Youth Employment full course content is shared with new students. Promotion Programme (YEP) is also one initiative that may be considered as aimed at promotion of The SMME Support Network – Lesotho has introduced entrepreneurship in Lesotho. Considering that the the SMART ENTREPRENEURSHIP CAMPAIGN youth also include young female entrepreneurs, the countrywide in an effort to increase participation initiative may be considered as indirectly promoting of young people in economic development and women entrepreneurs. This initiative began in 2007 investment promotion. The campaign is intended to through the Ministry of Gender and Youth, Sports address the job creation and engagement of young and Recreation. The Ministry was assisted by the talented entrepreneurs in Lesotho. The ultimate goal UNDP, ILO and UNICEF. Its aim is to reduce the is to entice the young and vibrant people into starting level of unemployment among the youth in Lesotho. their own business with the aim of creating wealth Over a period of three years the initiative has seen to for themselves and employment as a contribution to the training of more than 2,000 young people with the national economy71. over 500 businesses established. The private sector has increased its participation in YEP activities In good practice countries, a range of measures is especially in relation to providing sponsorships employed to promote women entrepreneurs. These for promising enterprises, mentoring and support. include, but are not limited to, the production of It is such initiatives that will translate into a well multi-media success profiles of women at various coordinated approach to tackling the challenge of stages of enterprise development, high profile Woman youth unemployment and work towards achieving Entrepreneur of the year awards and recognition the Millennium Development Goals of poverty programmes, video documentaries on the nature reduction, promotion of gender equality and HIV of women’s entrepreneurship, and organization of prevention. regional and national conferences on and for women It is recommended that Lesotho would do well to entrepreneurs. replicate what is done in good practice countries and initiate an annual awards programme to recognize its In Lesotho there is poor access to markets and women entrepreneurs. This may be done in concert marketing information by the SMMEs and this with private sector organizations and associations of is more acute for women entrepreneurs. Women women entrepreneurs, where the Ministry of Gender entrepreneurs’ access to markets should be enhanced would institute an annual awards programme through a number of promotional approaches and to recognize its women entrepreneurs. A call for tools, such as exhibitions, trade fairs, catalogues of nominations could be made at district level and products produced by women, effective use of media finalists honoured at small events prior to a national and websites, as well as through the promotion of awards ceremony where “winners” are announced sub-contracting linkages. and celebrated.
According to the Lesotho SMME News72 a monthly Since there appears to be no evidence of an event, Tourism Maseru Bazaar is held to “uplift the inventory of women entrepreneurs in Lesotho, it is market of the tourism related producers and to give also recommended that an initiative be undertaken them exposure in the form of a Flea Market”73. The to identify the “Top 20” women entrepreneurs in Maseru Bazaar is publicized through the media Lesotho” and to publish their profiles on an annual to enable the public to budget for the purchase of basis. This action would serve to raise the profile of products and support the small businesses. It is women’s entrepreneurial activity in Lesotho as well as products like mohair, skin, beads, crafts, Basotho hats to offer growth examples to other women who would and many others that are sold in this Bazaar. This like to further develop their own enterprises. Profiled event has grown with time as when it was initially women could be asked to participate in speaking started, it had only 45 crafters whose number has engagements, participate in policy discussions, offer now increased to 85. Generally, the exhibitors are mentoring services to other women entrepreneurs, happy as their sales have increased with time and and share their experiences with others. they continue to get exposure and contacts with many tourists who are interested in their products. 3.3.1 Aspects Enabling the promotion of Women as entrepreneurs in Lesotho
71 http://www.informativenews.co.ls/index.php/adverts/2879-smme-support-network-training-campaign accessed 30 March 2011 72 Quarterly Publication, Volume 2 Issue 1, March 2010, page 15 Published by SMME Support Network, Maseru 73 Page 15, supra
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 28 • The Government of Lesotho, through entrepreneurs. Several categories of entrepreneurial its policies perceives entrepreneurship as being a behaviour could be recognised, for instance, an award legitimate employment activity; the introduction of for innovative entrepreneur, growth entrepreneur of practical subjects in primary and secondary education the year etc. A call for nominations could be made as well the introduction of the entrepreneurship on a regional level and finalists honoured at small course at tertiary as the beginning of promoting a events prior to a national awards ceremony where culture of entrepreneurship in Lesotho. “winners” are announced and celebrated. • The Month of the Woman Entrepreneur • It is further recommended that Lesotho (MOWE) would benefit from staging a series of conferences • The establishment of the Youth Employment for women entrepreneurs in each of the regions Promotion Programme (YEP) is also one initiative of the country. Such conferences would focus that may be considered as aimed at promotion of on transferring knowledge and skills, facilitating entrepreneurship in Lesotho. networking and promoting the exchange of experiences among women. 3.3.2 Aspects Hindering the promotion of Women as entrepreneurs in Lesotho 3.4 Access to enterprise training and education
• The Absence of entrepreneurship recognition In most developing countries there is a major need awards, especially targeting women that are initiated to build capacity of women in entrepreneurial and by the Government and Private sector management skills, as well as technical skills74. Small • The absence of an inventory of women business education and training has grown rapidly entrepreneurs in Lesotho, from which to identify in importance as ‘enterprise’ has assumed a key role best practices, reward through awards, and utilise in in the main political initiatives towards economic mentorship programmes, restructuring. This development has, however, been essentially ad hoc and there is now a need to identify 3.3.3 Recommendations more clearly the major forms of enterprise and training education, their target populations and their • In the absence of a comprehensive inventory resource effectiveness.75 of women entrepreneurs in Lesotho coupled with the challenge of breaking the stereotype that comes with Current statistics76 in Lesotho show that 84.8% of being a woman entrepreneur, it is recommended that the total population is literate (definition; age 15 an initiative be undertaken to identify the “Top 10 and over can read and write) and of that 94.5% are women entrepreneurs in Lesotho” and to publish females. Unfortunately, the high female literacy their profiles on an annual basis. This action would has not translated into equal participation in serve to raise the profile of women’s entrepreneurial development between Basotho women and men/girls activity in Lesotho as well as offer growth examples to and boys. This may be attributed to women’s limited other women who would like to further develop their input in policy and the limited encouragement for own enterprises. The “Tope 10 Women Entrepreneurs more women to start their own business. of Lesotho” publication would be distributed widely within educational institutions, government agencies, Whilst the Government of Lesotho’s education policy donor groups, association of women’s, banks etc. is to create a functionally literate society with well- Profiled women could be requested to participate in grounded moral and ethical values; adequate social, speaking engagements and also participate in policy scientific and technical knowledge and skills, the discussions and even offer mentoring services to 2002 white paper on small businesses77 established other women entrepreneurs. that Lesotho education budgets are predominantly • Working with private sector organisations for academic and not vocational education which and associations of women entrepreneurs, the has resulted in a deficiency of vocational training Ministry responsible for SMMEs should institute an institutions. A public expenditure review of the annual awards programme to recognise its women education sector78 ranging from the period 2001/2to
74 Stevenson L, St-Onge A, Finegan G (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide, ILO P26 75 http://isb.sagepub.com/content/7/2/11.short accessed 29 April 2011 76 http://www.indexmundi.com/lesotho/literacy.html accessed 22 February 2011 77 SBP Bandock Consulting (November 2002) Ministry of Trade and industry, cooperatives and marketing: White paper on the development and promotion of small business p. 12 78 Lesotho Public Expenditure Review of the Education Sector, Vol. II, Statistical Appendix (Final draft) Maseru, February 2002 as quoted in the Ministry of education and Training, (2005) Education Sector Strategic Plan 2005-2015 p. 18
29 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 2005/6 shows the technical and vocational training Statistics by Ministry of Education and Training expenditure declining from 4.2% to 3% of the total (MOET)80 (1999-2003) show a slight decrease in education budget. According to the white paper female enrolment into TVET institutions81, from technical and vocational training appears to be 49.07% in 1999 to 45.02%in 2003; during the same supply driven with little evidence that it corresponds period a slight increase is recorded in the number to market demands. of female teachers in the TVET institutions from 41.48% to 47.59%. In addition only two82 of these Following the Gender Audit on the Education Sector institutions offer a course in business studies, yet (2003)79 and drawing from the Education Policy, the entrepreneurship training is not a key component of Government of Lesotho developed the Education the other courses offered by the technical institutions. Sector Strategic Plan (ESSP) 2005-2015, as a long-term This further limits women’s access to training that planning instrument. The ESSP seeks to eliminate would help upgrade their technologies, productivity, gender disparities in primary and secondary education competitiveness and product/service quality. and with a focus on ensuring girls’ and disadvantaged groups full and equal access to good quality basic An analysis of the data presented in table 4.1 below83 education. The ESSP further proposes a review of the (07/08) shows that only 43.8% of the total enrolment basic and secondary education curriculum as well as for that year was female; and 67.5% of that figure teacher-training curriculum to incorporate technical were enrolled in “soft” programmes namely textile and vocational elements. The implementation of the fabrication, home science, dressmaking and ESSP is expected to increase female’s accessibility to secretarial studies. This not only shows a lower intake technical skills training programmes that should in of female students into the technical institutions turn result in upgraded technologies, productivity, but also an even lower intake in programmes with a competitiveness and product/service quality for strong technological component. women venturing into business.
Table 4.1: First year enrolment according to sex 2007/2008 (Source: Ministry of Education & Training, Technical & Vocational training Department)
Course Name S IL TT SE SM B L LP84 BA Total Architecture M N N N N N N 28 N 28 F N N N N N N 6 N 6 Automotive M 14 13 N N N 17 14 N 58 F 0 1 N N N 1 0 N 2 Auto-electric M N N N N N N 8 N 8 F N N N N N N 2 N 2 Course Name S IL TT SE SM B L LP85 BA Total Building M 18 12 N N N 17 40 57 144 F 0 3 N N N 2 0 0 5 Bricklaying M N N N N N N 19 N 19 F N N N N N N 1 N 1 Carpentry & joinery M 10 15 N N N 13 16 4 58 F 2 0 N N N 1 2 0 5 Civil Engineering M N N N N N N 25 N 25 F N N N N N N 5 N 5 Computer systems Eng. M N N N N N N 20 N 20
79 OWN & Associates: Centre for Research and Development (2003) Government of Lesotho/UNICEF: Gender audit on the education sector p viii 80 Ministry of Education and Training (March 2005) Education Sector Strategic Plan 2005-2015, p68 81 Eight TVET institutions namely Bernada; Leloaleng Trade School; Lerotholi Polytechnic; St Elizabeth; St Mary’s home, Thaba-Tseka Technical Institute; and Technical School of Leribe 82 St Elizabeth Technical Institute and Lerotholi Polytechnic 83 Most recent data available from the Ministry of Education and Training, Technical and Vocational Department, Lesotho 84 05/06 figures 85 05/06 figures
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 30 Course Name S IL TT SE SM B L LP BA Total F N N N N N N 10 N 10 Electrical installation M 13 N N N N 18 14 N 45 F 4 N N N N 2 5 N 11 Electrical Electronic Eng. M N N N N N N 26 N 26 F N N N N N N 7 N 7 Fitting & Machining M N N N N N N 14 N 14 F N N N N N N 1 N 1 Leather work M 4 6 N N N N N N 10 F 0 4 N N N N N N 4 Marketing & Sales M N N N N N N 16 N 16 F N N N N N N 18 N 18 Mechanical Engineering M N N N N N N 28 N 28 F N N N N N N 5 N 5 Metal work M N 9 N N N N N N 9 F N 2 N N N N N N 2 Textile Fabrication M N 1 N N N N N N 1 F N 18 N N N N N N 18 Home-Science advanced M N N 5 0 3 N N 0 8 F N N 73 41 42 N N 51 207 Dip. dress-making 86 M N N 1 N N N 0 N 1 F N N 16 N N N 15 N 31 Dip. Business studies M N N 5 N N N 12 N 17 F N N 28 N N N 18 N 46 Secretarial Studies M N N 4 N N N 3 N 7 F N N 28 N N N 28 N 56 Plumbing M N N N N N 16 14 8 38 F N N N N N 3 4 0 7 Panel beating & spraying M N N N N N N 9 N 9 F N N N N N N 1 N 1 Tailoring M N N N N N N 3 N 3 F N N N N N N 12 N 12 Welding M N N N N N N 0 N 0 F N N N N N N 0 N 0 TOTAL ENROLMENT 1054
Legend: S=sex N=course not offered IL: Technical Institute of Leloaleng TT: Thaba tseka Technical Institute SE: St Elizabeth Training Institute SM: St Mary’s Home B: Bernada Home Economic School L: Technical School of Leribe LP: Lerotholi Polytechnic BA: Bishop-Allard Vocational School
86 No 1st yea r enrolment figures were available at the time of the assessment for the year 07/08 therefore 3rd year figures were used
31 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Although the overall mandate to provide education selling and advisory services. Although without a is bestowed upon the Ministry of Education and specific focus on women’s enterprise development, Training (MOET), there are other government agen- BEDCO believes that by virtue of sewing and tapes- cies and private institutions providing certain aspects try being the predominant MSME’s business areas, of enterprise education and training. most of their clients are women. Though this may be the case, their training programmes are not specifi- a) Universities in Lesotho cally designed for women and are broad-based and There are currently two universities in Lesotho and not specific to the business needs according to their both offer entrepreneurship programes. The newly es- various stages of business development (start-up, tablished (2008) Limkokwing University of Creative survival, formalisation, and growth). Further, due to Technology offers a Bachelor of Business in Entrepre- funding limitations, BEDCO is unable to conduct neurship degree; and the National University of Leso- training needs assessments to inform training pro- tho, which offers entrepreneurship under the faculty gramme design. As a result the Corporation has ob- of Social Sciences within the department of Business served that many of their clients remain in the micro Administration. This course examines the nature and and small category and don’t advance to the medium role of entrepreneurship, small businesses, the envi- and large enterprises status. ronment within which small businesses operate, and the techniques for effective management of small c) Ministry of Trade and Industry, businesses as going concerns. The course is optional Cooperatives and Marketing for students majoring in Accounting and compulso- To enable access to entrepreneurial management ry for Marketing and Management majors.87 Accord- and small business training opportunities on a lo- ing to the Head of Department (HOD) of Business cal basis, albeit not specifically targeting women but Administration informal monitoring shows that it is including people with disabilities and youth, the mostly marketing majors that end up starting their GoL under the Ministry of Trade and Industry and own businesses. A further observation shows that it Cooperatives and Marketing (MTICM) offers train- is mostly male students who seemed to be interested ing intended to enhance businesses. The MTICM is in establishing their own business ventures regardless mandated to provide SME programmes to capacitate of what course they were doing and therefore sought entrepreneurs on good business management; grow assistance from the department in developing their commercially viable small and micro enterprises business plans. The HOD believed that as the entre- (SMEs) and strengthen Basotho entrepreneurial, preneurship programme is generally not promoted managerial and technical skills; provide training and and female students not encouraged to participate, mentorship through collaborations with business this could be the reason why the optional intake for development services (BDS) providers and trainers this programme has been insignificant. and provide information on market developments, Statistics from the National University of Lesotho trends and opportunities. During the interviews with (the only university) show that although there are representatives of the various departments(MTICM), more female students (55%) than male students it transpired that one of the major challenges expe- (45%) most female students are enrolled in what rienced by the ministry was the limited capacity to is considered ‘soft’ programmes; females students conduct, collect and generate country wide data on constitute of 66% of those enrolled in the Faculty the relevance and impact of the training provided of education; 55% in the faculty of social sciences from a monitoring and evaluation perspective. There whilst male students dominate faculties of law (52%); is only one trainer and one business development of- science (72%) and Agriculture (66%)88. ficer per district responsible for, in addition to other duties, providing the various training. Some of the b) Basotho Enterprise Development programmes currently implemented include; Company • Entrepreneurship promotion: this pro The Basotho Enterprise Development Corporation gramme is targeted at school leavers from class 7, and (BEDCO)89 as a public enterprise mandated by the is designed to create awareness of business enterprises GoL to facilitate the establishment and development as an income option. of indigenous MSME’s, provides business manage- • Income Generation Activities: The de- ment training including technical training such as partment runs training of trainers workshops tar sewing and carpentry; apprenticeships, as well coun-
87 Interview with Head of Department of Business Administration: Ms KR Hlasa 88 Ministry of Education and Training, Lesotho (March 2005) Education Sector Strategic Plan 2005 -2015 p16 89 A public enterprise of the Ministry of Trade and Industry, Cooperatives and Marketing
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 32 geting Disabled Persons Organisations (DPO’s) and fairs, research and design of management systems. youth in villages Access to the MGS is not preferential to women’s • Export training: these are sensitisation enterprises however according to LEAP of the 69 workshops on market access created by trade pro- companies that have been assisted a greater number tocols and agreements but according to the depart- have been owned by women. The programme also ment the workshops are not designed to encourage monitors the impact of the assistance according to MSME’s export trade. revenue and revenue growth91 .
d) Ministry of Tourism, Environment and f) The SMME Support Network - Lesotho Culture According to the SMME support network - Lesotho, The Ministry of Tourism, Environment and Culture a voluntary membership organisation for training (MTEC) under the Tourism Department responsible providers, in the absence of a Lesotho trainer’s ac- for policy development and regulation, licensing creditation system this network was established to vet and standards, having established that most attrac- and coordinate the activities of training providers. tion and casual sites are situated in rural areas, initi- Organisations register as members and pay an an- ated the special community project. Aimed at creat- nual subscription in order to draw from the pool ing employment in the tourism sector, the project of trainers vetted by the network. The Network en- provides technical support through training on vari- courages member trainers to be accredited by recog- ous business opportunities that can be undertaken nised international institutions and to provide in- by the communities in terms of their potential and ternationally accredited programmes. The Network benefits. Utilising the District liaison office, they are also requires members to conduct training needs currently in the process of decentralising the licens- assessments (TNA) prior to preparing training pro- ing and standards function, which will be effected grammes, but in the absence of a monitoring and once the standards framework is concluded and ap- evaluation unit the Network was unable to produce proved. Although this project is not specifically tar- outcomes of these TNA’s. geting women, it is expected that women at grass-root level shall benefit from it as they are predominantly g) The Millennium Challenge Account – the operators of the hospitality industry. Lesotho (MCA-L) The Millennium Challenge Account – Lesotho Further, the MTEC through its public enterprise, the (MCA-L), under its private sector development Lesotho Tourism Development Corporation (LTDC) compact project, is implementing a gender equal- is mandated by its founding legislation (Tourism Act ity and economic rights programme that provides 2002) to provide vocational training for the tourism training and public awareness on gender equality in sector90. According to the LTDC, 80% of partici- economic rights. The MCA-L recently introduced a pants of the training, which covers pricing, market PEPFAR (Presidents Emergency Plan for AIDS Re- sourcing, craft skills, business planning, basic knowl- lief) supported small grants programme; Among the edge about tourist, are women. provisions of the programme is capacity building for women regarding their economic rights and sup- e) Lesotho Enterprise Assistance port for a small grants initiative for women entre- Programme (LEAP) preneurs. The entrepreneurial skills training is based LEAP was designed to strengthen human and insti- on the ILO start and improve your business (SIYB) tutional capacity of the private businesses, as well curriculum. The programme, which is expected to as their representative organizations. This is done commence July 2011, would be the first within the through provision of financial and technical assis- auspices of the MCA-L to specifically target women tance. The ultimate objective is to build international in training and the provision of finance. competitiveness in private businesses; build the ca- pacity of private business and professional associa- h) WEDGE tions and of chambers to better serve their members; WEDGE Lesotho, targets Growth Orientated Women and support to institutionalize private-public dia- Entrepreneurs (GOWE’s) operating or owning enti- logue. The assistance is provided through a Match- ties that are at least 12 months running, registered in ing Grant Scheme (MGS) under the LEAP program some way and have a minimum turn-over of 50,000 which reimburses 80% of costs to business undertak- LSL per year. With an output to build capacity of ing capacity building in the areas of marketing, trade business groups and associations so that they are en-
90 Tourism Act (2002) Section 5(1)(n) 91 Information on the outcome of the monitoring and evaluation was declared confidential by LEAP
33 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho hanced to represent the needs of women entrepre- growth), with the exception of the Lesotho Enterprise neurs, the project has conducted Training of Trainers Assistance Programme (LEAP), there was no evidence workshops for 23 local and international partici- of consistent training needs assessments conducted pants from associations, NGO’s and parastatal’s. Ten prior to each training course and therefore training (10) local participants have been certified as trainers is mainly generic. Furthermore training and support and 57 women entrepreneurs are trained to date92. in relation to occupational health and safety, social protection, improved working conditions, productiv- i) The Mineworkers Development Agency ity improvement and social responsibility does not The Mineworkers Development Agency (MDA), a for part of enterprise training and development. The development wing of the National Union of Mine- Department of Industrial Relations under the Min- workers (NUM) established in 1987, focuses on the istry of Labour and Employment is mandates to dis- facilitation of critical services, via service providers, seminate information on Labour relations through to ex-workers in the mining, energy and construc- workshops, seminar, radio programmes and publi- tion fields and their dependents and communities. cations. According to the Labour Commissioner94 In 1994 the mandate was reviewed to incorporate very few women end up in court on labour disputes; the ex- mineworker’s widows and orphans (minors) those that do are predominantly on severance pay as beneficiaries of the services. MDA’s current pro- and workman’s compensation due to their limited gramming can be divided into four broad elements knowledge of labour laws and standards. including SMME development and community eco- nomic empowerment 3.4.1 Aspects Enabling Enterprise Education & Training for Women Enterprise In Lesotho the MDA, operates in four (4) namely Development (WED) in Lesotho Mafeteng, Maseru, Qachas-nek and Leribe; providing core services in the areas of training and facilitating • The Tourism Act, 2002 makes provision business linkages. More specifically the MDA targets for the grading and classifying of accommodation Associations and informal groups in their training and tourism related establishments allowing for the which focuses on business skills management and identification of specific gaps to inform targeted en- leadership skills. terprise training and education. As women are pre- dominant operators of this sector95 customised and The curriculum is derived from the ILO “start and targeted training for this sector is expected to benefit improve your business” (SIYB) programme and has women entrepreneurs. been modified to suit their clients. The modifica- • The WEDGE and MCA-L entrepreneurship tions incorporating the one up training have includ- skills training programme targeting women ed simplifying the costing and pricing component as • Although limited and not always specifi- well as enhancing the entrepreneurship development cally targeting women institutions such as WEDGE, module. Although the MDA initial target was ex- MCA-L, MDA and the MTICM provide access to en- mineworkers, without specific promotions the take trepreneurial management and small business train- up of their services has been predominantly by wom- ing opportunities on a local basis. en. The MDA records93 show that 87.6% of the train- • The ESSP identifies increasing equity in the ing participants for the period September – October TVET system by enrolling more women and other 2010 were female. disadvantaged groups, particularly in more technical fields, as one of its strategies96. In discussions with institutions which provide en- • Further, the Technical and Vocational Edu- trepreneurship training it transpired that with the cation and Training Policy, proposes the review of exception of WEDGE Lesotho, established with the TVET governance structure in the form of a semi-au- sole mandate to build the capacity GOWE’s, Insti- tonomous body comprising of Lesotho Skills Agency tutions generally do not develop women entrepre- representative of Government; organised labour; or- neur or people living with disabilities targeted pro- ganised employers; the MSME sector; women; and grammes. The training programmes themselves are special expertise. The inclusion of the MSME sector not categorised according to the various stages of and more specifically women is expected to induce business growth (start-up, survival, formalisation and relevant and responsive input in the curriculum de-
92 Presentation on WEDGE Lesotho progress; Pretoria, 28 January 2011 93 MDA Training report September – October 2010 94 Interview with Labour Commissioner: Mrs Mamohale Matsoso 95 Intervie with the Lesotho Tourism Development Corporation 96 Ministry of Education and Training (March 2005) Education Sector Strategic Plan 2005-2015, p72
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 34 velopment, funding and delivery of the TVET. ( Department of Industrial relations) doesn’t have workshops targeting WE’s nor does business train- 3.4.2 Aspects Hindering Enterprise Education ing incorporate laws and standards on occupational & Training for Women Enterprise health and safety, social protection, improved work- Development (WED) in Lesotho ing conditions, productivity improvement and social responsibility. • Although Entrepreneurship is offered in the curriculum of college and university programmes, 3.4.3 Recommendations there is generally limited promotion of the entrepre- neurship programme. There is also no evidence of • According to a survey conducted in 2008 concerted efforts to recruit women for entrepreneur- SME’s in the tourism sector in general reported a ial training programmes within the National Uni- higher turnover than the other businesses surveyed versity of Lesotho or the Technical and Vocational and were also more likely to have experienced growth Training institutions therefore limiting their ability in the past few years. This is an indication that the to upgrade their technologies, productivity, competi- tourism sector seems a more viable sector for SME tiveness and product/service quality growth and as such there should be concerted efforts • Currently the curriculum in basic and sec- to develop women’s enterprises in this sector. ondary schools plays a very limited role in develop- • The development of industrial activity out- ing and encouraging a culture that recognises and side the textile sub-sector is generally hampered by values entrepreneurship. This should include the the lack of a work force with basic technical and development of vocational training programmes clerical skills or indeed any exposure to the necessary directed towards encouraging and developing entre- disciplines of industrial production. Various schemes preneurial skills requiring an alignment between the have been mooted for addressing this deficiency such national education policy and the TVET policy. as MOET’s Technical & Vocational Education Train- • There is a shortage of entrepreneurial train- ing Policy and the BEDCO proposals that would ing programmes targeted specifically to women in- deal with different aspects of the same problem. cluding women in growth enterprises There is need for a coherent national policy in this • There are no generally needs assessments of area, properly funded and coordinated by a single the entrepreneurial training and business develop- agency99. ment, let alone assessments to establish the needs • Increase stakeholder representation and of women entrepreneurs. Training is generic with participation in the identification of labour gaps distinction of each stage of business growth and and curriculum development development—start-up, survival, formalization and • Develop an accreditation system, to progres- growth. sively achieve the equivalence, harmonization and • The TVET Policy document is still in its draft standardization of the education and training form so although it proposes gender mainstream- systems ing in the governance, development and delivery of • Finalize and facilitate the adoption of the TVET none of these strategies has been implemented. TVET policy in order to create a collaborative struc- This could be reason why women are not equally rep- ture between the MOET, MTICM and the MOF resented among students of vocational skills training through the proposed Lesotho Skills Agency that programmes as the current programmes are not de- will engage with private sector companies to en- signed with their specific needs in mind. courage the establishment of internships; promote • Although the MTICM provides export train- entrepreneurship through publicity campaigns and ing on market access created by trade protocols and incentives (e.g. annual awards for which young entre- agreements but according to the department97 the preneurs can compete, providing both media expo- workshops are not designed to encourage MSME’s sure for finalists and examples of success for aspirant export trade. This limit’s the opportunity of women entrepreneurs); and facilitating forums for knowl- entrepreneur’s in the MSME sector to benefit from edge sharing among SMEs (for example at BEDCO participation in export training programmes sites)100. • The Ministry of labour and employment
97 Interview with the Department of Industry including Chief Industry Development Officers Mrs. Tsireletso Mojela and Mrs. Maphutheho Ranooe 98 SBP (2008) Ministry of Trade and Industry, Cooperatives and Marketing: the state of small enterprises in Lesotho p. 6 99 Ministry o f Trade and Industry, Cooperative and and Marketing ( May 2007) Industrialisation Master Plan 2007 -2010 p 88 100 SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho P11
35 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 3.5 Access to Business Development Services Division. The division is responsible for women’s and business information general economic empowerment including, training for income generating projects at grassroots level – Business Development Services include training, con- skilling in sewing, tie and dye, marketing, and prod- sultancy and advisory services, marketing assistance, uct costing among others. The BDS under this pro- information, technology development and transfer, gram are extended to urban and rural communities and business linkage promotion. The operational free of charge. The effectiveness of the program is, services are those needed for day-to-day operations, however, hampered by budgetary constraints result- such as information and communications, manage- ing in many planned interventions being shelved103. ment of accounts and tax records, and compliance with labour laws and other regulations. Strategic ser- BEDCO provides a range of development programs vices, on the other hand, are used by the enterprise for indigenous SMMEs in general without any spe- to address medium- and long-term issues in order to cial quotas for women entrepreneurs. Programs of- improve the performance of the enterprise, its access fered include basic and advanced training on, inter to markets, and its ability to compete such as iden- alia, business counselling and advisory, marketing, tifying and servicing markets, designing products, formulation of business plans. BEDCO has no drive set up facilities, and seek financing. The market for to promote or target women for train-the-trainers operational services may already exist, since there programs as it is perceived that women constitute the is often articulated demand and willingness to pay majority of trainers already. There are women profes- for these services. In contrast, markets for strategic sional counsellors emerging in the market. services have largely failed to develop, and they are the focus of most donor interventions in BDS. Al- The SMME Support Network, an autonomous though many kinds of BDS in developing countries organization is acclaimed for coordination and add- may not be easily visible, particularly to donors and ing value to various aspects of business development other outsiders, recent research indicates that opera- services for the SMME sector. It provides affiliation tional BDS are already being provided sustainably to and enjoys membership from small, medium and big very small enterprises on a for-profit basis101. In an BDS providers like Institute of Development interview with BEDCO it transpired that BDS are Management (IDM), LNDC, BEDCO, Mine Workers promoted generally to MSME’s without concerted ef- Development Agency (MDA), respectively, and play- forts to target WE’s. In addition, with the exception ers from the financial sector, business associations of the SMME support network – Lesotho that works and the Chamber of Commerce. It is well placed pro- closely with BDS providers, there is no registration vides conducive atmosphere for networking and dis- and accreditation of BDS providers and their service tribution of information, through its quarterly news and as such no monitoring. As a result there a no letter104. records to determine the portion of female BDS pro- viders, nor is there a drive to increase the number of The Lesotho National Federation of Organizations female BDS providers. Coincidentally through ob- of Disabled (LNFOD) women’s forum role, in ad- servation by BEDCO, providers tend to be female dition to advocacy and lobbying, involves facilitat- which they attribute to the generally higher ratio of ing training for its members in the area of business females teaching profession. The teaching force is management including training provided through predominantly female with almost 80% of teachers WEDGE. Although the forum does not yet have being women.102 an articulated strategic plan of action, the executive follows the Forum’s general mandate to mobilise There are a reasonable number of BDS providers in women with disabilities to network, and participate Lesotho offering important basic services and infor- in activities designed to improve their livelihoods. mation to the SMME sector. They include govern- ment ministries, private organizations, NGOs and Although there may be several women BDS providers state owned organizations and institutions. The no- of the sample women entrepreneurs (WE) interviewed tably list includes: during the assessment, only one woman entrepreneur was providing BDS, Motheo Holdings. The firm is a MGYSR coordinates specific women entrepreneurs small BDS provider offering services in training in BDS programs through its Economic Empowerment leadership, teambuilding, career guidance and 101 http://www.ilo.org/public/english/employment/ent/papers/guide.htm accessed 4 March 2011 102 http://www.ilo.org/public/english/dialogue/sector/ap/educat/forums/docs/pretoria-lesotho-report.pdf accessed 6 May 2011 103 Interview with Ms. Motena Letsie, Senior Gender officer. 104 Information obtained from interview Ms Makama Masitha, SMME Support Network Coordinator; Mr. Sekhantso, Manager at Boliba.
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 36 counselling to public and private institutions and through major BDS players, including, BEDCO and the public at large. Dissemination of information to LNDC; other significant players like the CBL, Le- women entrepreneurs is achieved generally through sotho Highlands Development Authority (LHDA), training workshops coordinated, for example, by the field offices of the Trade and Industry ministry; ac- SMME Support Network. The entity is of the view tive participation of civil society organizations like that the MGYSR should engage private companies MDA, LCCI, Lesotho Council of NGOs (LCN) to like them for its outreach training programs as op- redesign their policies, mandates, including BDS to posed to carrying out the activities itself. Motheo es- incorporate the element of recognition and promo- timates that that they have trained 50 women since tion of women. This is an enabling factor which if 2006 when their services commenced, noting that carried through in BDS provision and other spheres business was very slow due to many factors. 10 of will catapult aspiring women entrepreneurs on the these were disabled women and 7 were direct women path of GOWE clients living with HIV/AIDS. 3.5.2 Aspects Hindering Access to Business Devel IDM is a regional BDS under the ownership of the opment Services and Business Information governments of Botswana, Lesotho and Swaziland with a campus in each of the three states. It became a • Lack of BDS and information for Specific member of SMME Support Network since establish- needs of women entrepreneurs as BDS is packaged ment of the latter in 2002.Services provided by IDM generically. notably include information technology specifically • There is lack of a process to identify the for SMMEs, small business development and man- specific development needs of women entrepreneurs agement, quality and productivity management, in within the institutions such as the SMME Support addition to other programs that are common with Network – Lesotho, BEDCO and LNDC. The prof- other BDSs, like business accounting, business plan fered explanation for the neglect of women as sector development, Marketing and customer services man- is that women dominate in numbers as trainers, and agement105 However the BDS provided by IDM are entrepreneurs, and loan applicants, focuses on quan- comparatively on the higher side of the price margin, tity as opposed to quality. There is a need for the which creates a barrier for the majority of women. major BDS providers and credit providers to provide development and financial services respectively, that 3.5.1 Aspects Enabling Access to Business are tailored for the specific needs of women in busi- Development Services and Business ness, in particular, their growth of their business. Information • Lack of Special information dissemination for Disabled women; There are challenges presented SMME Support Network plays an important role, by lack of widespread usage of Braille and sign lan- providing enabling environment for SMME develop- guage to cater for entrepreneurs with disabilities in ment in general. The core functions of the Support general including women. Network include among others, “Cooperation and collaboration among Business Development Service 3.5.3 Recommendations providers, with the view to provide demand-driven, coordinated, value-added services to SMMEs.” • The SMME Support Network-Lesotho, as a single organization in Lesotho playing the centre The Gender Policy provides a basis for strengthening role in facilitating “cooperation and collaboration of capacity for small scale farmers and entrepreneurs among BDS providers with the view to providing through extension services, technical advice for qual- demand-driven, coordinated, value-added services to ity production. SMMEs” should have its core business expanded to include the agenda for aggressive promotion of BDS The government has put in place legal and policy that incorporate specific needs of entrepreneurs in instruments, among them the constitution, the 2002 the category of women and women with disability. White Paper, Gender Policy, which place among The extended core business should be accompanied other groups, women and women with disability with commensurate capacitating of the Network, in high on the agenda for redress from the existing and terms of financial and human resources past imbalances affecting these marginalized groups. • GoL to close the existing gap by according These instruments are building blocks as well as place disabled persons including disabled women entrepre- an obligation on government directly and indirectly, neurs the basic means to communicate and to access 105 Information sourced from SMME Network – Lesotho News Vol. 1 March, 2009 edition.
37 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho information pertinent to business entrepreneurship In 2007, with financial assistance from national and as well as enable them to benefit from BDS provi- international donors, in particular from USAID, sion. they conducted paralegal training in Leribe to peo- • The GoL to domesticate the UN Conven- ple working in communities to equip with skill to tion on the Rights of Persons with Disabilities. provide basic legal counselling, and make referrals Article 21 is of particular importance. This article Other projects they have been involved include the provides for freedom of expression and access to simplification and translation of laws into Sesotho; information and entitles disabled persons to basic production of brochures with information on hu- freedoms, among them, the freedom to give and to man rights which benefited many, including people receive ideas through all forms of communication living with HIV/AIDS; advocating for the on enact- ment of several laws which include Legal Capacity of 3.6 Access to Women Entrepreneurs married persons act, sexual offences act, pensions act Associations and Networks of 1992, and ratification of CEDWA109
Entrepreneurial and business networks can be a WEAs in Lesotho are sporadic and poorly coordi- valuable source of entrepreneurial “know how” for nated. This impression arises from the difficulty to women entrepreneurs and they can help foster the locate them during this assessment. growth and development of their enterprises. Wom- en enterprise associations (WEA) can also be a very a) Women in Business (WIB) is an umbrella powerful voice in representing women entrepreneurs women’s organization with affiliates from 10 districts in national advocacy processes.106 of Lesotho and a membership of 5000. Membership does not include disabled women who it is believed As social norms may discourage women from mixing are represented by their own organization, Lesotho freely with men, participation in women only busi- National Federation for Organization of Disabled ness associations can help women make connections, (LNFOD). Women in Business affiliates include sav- share information, identify business opportunities, ings and credit groups, and economic empowerment generate cross-referrals, and act as support for entre- groups at grassroots. Activities include advocacy ini- preneurs who might otherwise feel isolated. Business tiatives with other organizations such as the WLSA, organizations can also lobby for a more business- the Federation of Women Lawyers, Women’s wing friendly environment for women in general107. of the Lesotho Council of NGOs, and the Chamber of Commerce – Lesotho (CCL). Their collaboration For instance Federation of Lesotho Women Lawyers with such bodies enable the WIB’s input in issues of (FIDA-Lesotho) played a major role in influencing policy. the Government to domesticate the Southern Afri- can Development Community (SADC) protocol on As a member of CCL and an affiliate of Business gender and development which provides for the min- Council of Lesotho, members of this forum receive imum of 30% women representation in positions of invitations and notifications of available training authority and decision making, including parliament from SMME Support Network. Unfortunately as and cabinet. Through its political empowerment of women tend to operate survivalist businesses that re- women project, the Federation encouraged women quire their hands on attendance, they only show up to join the political arena and other decision mak- for projects that provide immediate economic ben- ing bodies. These efforts culminated in the Govern- efits. Therefore there tends to be an under-utilisation ment establishing the Gender portfolio within the of the WIB in issues of advocacy and mobilisation MGYSR, headed by a woman.108 of resources such as technical and financial support.
FIDA Lesotho was formed in 1988 by a group of b) Lesotho Trade Union Congress (LTUC) Basotho women lawyers who were concerned with has 4000 paid up members (subscription) of the 10 the legal situation of women in Lesotho and provide 000 registered members of which of 50% are women. services in the area of human rights based legal advo- The LTUC provides affiliation for worker organiza- cacy and outreach programs. They found the need to tions country wide; and is aimed at attaining inform the society through legal awareness programs. solidarity of workers and representation in policy
106 Stevenson L, St-Onge A, Finegan G (2007Assessing the Enabling Environment for Women in Growth Enterprises: An AFDB/ILO Integrated Framework Assessment Guide (2007) 107 http://siteresources.worldbank.org/INTGENDER/Resources/Gender_PSD_Feb07.pdf accessed 8 April 2011 108 www.eisa.org.za/WEP/Les2002ud24htm accessed 4 April 2011 109 http://pdf.usaid.gov/pdf_docs/PND1361.pdf accessed 4 April 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 38 and young girls with disabilities without educating formulation consultations; wages and advisory bod- their membership on laws relating to protection of ies; and safety and health forums. people with disabilities; or on economic policy so that we can better advocate for access. Although the LTUC has consultative relations with the private sector bodies such as BEDCO and LNDC, “As a result information related to enterprise devel- as they do not sit on their Boards their input in in- opment is not accessible to the members, especially fluence economic policy is limited and therefore not the blind and the deaf; there is never an interpreter as effective as they would like it to be. during economic dialogue so membership participa- tion is limited; even reports on findings of this as- Having amended their constitution to have a wom- sessment will not be presented in a format we can en’s wing which could allocated budgets, the Con- access,” they said. gress established a women’s forum within the LTUC, comprising of affiliate organisation women’s com- Currently to strengthen the income generation activi- mittees. The aim of the wing is to address women ties their members are operating, LNFOD’s women’s specific issues such as welfare (working conditions), wing is considering grouping members according gender rights, and economic empowerment; unfor- to their business sectors to be able to address their tunately this initiative has not yielded much result needs satisfactorily. The challenge is that as a wing of as the structure is weak and is unable to mobilise LNFOD access to funding is very limited; LNFOD resources independently. initially had a women’s desk which enabled access to overall resources but the desk was suspended the According to the President of the LTUC, Women en- and yet donors are sceptical about funding an entity trepreneurs’ participation in WEAs or generic busi- that is not independent as that will compromise the ness associations is characterized by general apathy. funding requirements. As such the Women’s wing is Reasons advanced for this situation include demand- mooting the idea of registering as an independent ing roles played by women entrepreneurs in running body that is affiliated to LNFOD. their businesses concurrently with nurturing fami- lies, leaving them with little time to prioritize asso- d) The women entrepreneurs ciation meetings110 . In interviews with women entrepreneurs it transpired that two of the women were unaware of Women’s Enterprise Associations (WEA’s) be it generally or c) The Lesotho National Federation for in their industry111 as a result they do not partici- Organization of Disabled (LNFOD) has four (4) af- pate in any business association activities. It would filiate disabled persons organisations (DPO’s), name- appear that many women entrepreneurs have little ly the Lesotho National League of Visually Impaired, appreciation of the value that participation in a busi- Lesotho National Association of the Physically Dis- ness association would bring for their enterprises. abled, National Association for the Deaf- Lesotho Alternatively the WEAs and other associations are and Lesotho Society of the Mentally Handicapped. not promoting themselves adequately to women en- trepreneurs. Women in professional industries affili- In order to address issues specific to women, LAN- ate to their professional bodies, such as Lesotho As- FOD established a women’s forum that is represent- sociation of Accountancy (LIA) as a requirement112, ed of the four DPO’s with the main to empower its and Law Society; but none of the professional bodies membership through capacity building, advocacy have a formalised networking forum for their female and mobilisation. The wing serves as a networking members. In an interview with the Managing Direc- forum to share information, provide psycho-social tor of Harvest FM113 it transpired that the radio sta- support, and access to economic empowerment tion, although owned by a woman, does not have programmes. Programmes they have participated a programme specifically promoting women’s en- include the WEDGE training on leadership and hu- trepreneurship although when approached to cover man rights, and the Month of Women Entrepreneurs their events they do so. (MOWE). A limitation identified by the women’s wing is that it tends to focus on symptomatic issues such as access to buildings, employment of women 3.6.1 Aspects Enabling Access to Women’s
110 Opinion given in interview by Secretary General of the Lesotho Congress of Trade Unions . 111 In interview with Fikile Khang of Dream Weddings (subsidiary of Wesive Holdings) and Mapule Maema of Motheo Holdings 112 In interview with Dodoze Masoabi of auditing firm Masoabi/ Khali andAssociates 113 Malichaba Lekhoaba
39 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Enterprise Associations • Government efforts to develop the SMME sector do not recognise women’s enterprises as a • SMME Support Network-Lesotho, WILSA separate sector and therefore national policy does provides a springboard and potential for many not distinguish in efforts to strengthen the business benefits for WEAs members’ information and net- enabling environment for women entrepreneurs, or working needs. to promote more women to start enterprises and im- • Gender Policy, the WED program are cor- prove their performance and growth. nerstones for WEAs and women empowerment in • Although women may form groups to access general finance these formations are not necessarily designed • The establishment of the WEDGE Lesotho to network, learn from each other, and develop co- office and the subsequent establishment of commit- operative business and marketing activities, therefore tee will facilitate the strengthening of WEA and their threatening their sustainability. recognition as an important stakeholder in econom- ic development. 3.6.3 Recommendations • The establishment of the Gender Depart- ment (MGYSR), more specifically under the eco- • Strengthen the capacity of the Economic nomic empowerment unit, will enable the coordina- Empowerment Unit under the Department of Gen- tion of Initiatives that will to help build capacity in der (MGYSR) to coordinate of Initiatives that will WEAs through training on association development, to help build capacity in WEAs through training governance, planning, project management, market- on association development, governance, planning, ing and advocacy project management, marketing and advocacy • The initiative taken by organised labour and • Establish a Women’s Enterprise Develop- Disabled Persons Organisations to establish wom- ment Office and have the authority for such an of- en’s wings of forums is expected to enable increased fice incorporated within the proposed SMME Policy. awareness of women-owned enterprises in their com- The office would liaise with the WEDGE Lesotho munities, and the promotion of the successes and Committee which would function as an inter-minis- contributions of members. This will increase their terial committee. Responsibilities would include capacity to represent the needs of women entrepre- o coordinating and strengthening governance neurs to local, regional and national policy makers of WEAs in the respective sectors and industries; on issues such as access to premises, access to financ- mooting formation of new industry WEAs where the ing and business support, and a favourable regula- vacuum exist tory and legislative environment. o Continuous collection of data relating to the factors that hinder women’s participation in WEAs 3.6.2 Aspects Hindering Access to Women’s programs with a view to input enterprise education Enterprise Associations and training curriculums, as well BDS offerings. To include areas such as advice mentoring on women on • A significant barrier is apathy on the part time management and new multi-tasking capabilities of women entrepreneurs and lack of recognition of which cover the essential parts of their lives, careers the value of participation in business associations in and business sustainability general and WEAs in particular o Coordinate funding directed to WEA inter- • The existence of WEA’s tends to be limited ventions in reach and capacity, therefore limiting their impact o Coordinate lobbying efforts of WEA such as in influencing national policy. the motivating for business premises with alternative • Other barriers include inadequate promo- day care centres that operate on weekends as an ex- tion of WEA’s existence and their services, and lack ample. of creativity to lure and entice women to recognize value of business association. 3.7 Access to business premises • Although the membership’s national asso- ciations of employers and employees (organised la- According to the white paper on the development bour) include women; they do not necessarily have a and promotion of small business (SBP, 2002) perhaps voice as women but rather holistically as members. two-thirds of small businesses in Lesotho are owned
114 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing : White paper on the development and promotion of small business p. 12
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 40 and run by women114 yet there is no research data town dwellers. But it would seem that in Lesotho to establish the size, profile’s and specific business the informal sector, is unaccounted and unrecog- premise needs of women’s enterprises. nized in national economic statistics. Street trade has in the past, been viewed as an underground activity Women often seek business premises close to their that undermines the healthy function of the formal homes rather than in industrial areas as this can economy. This perception has resulted in conflicts enable them to balance their household and repro- with local authorities over licensing, taxation, site of ductive roles with their productive and entrepreneur- operation, sanitation and working conditions118 ial activities115. According to the white paper on the development and promotion of small business116 A study on the informal sector and poverty: the case obtaining land title in Lesotho is a costly and complex of street vendors in Lesotho (Pius T. Tanga) states procedure, with the new allocations from communal that the government has encountered challenges in land being the costliest and most time consuming, their attempt to regulate street vending through the especially in rural areas. The Land Act (2010) on the construction of markets and stalls. Some conclusions allocation of land in rural areas confers the power to drawn from the findings of this study include the allocate and to revoke allocations to the local council fact that street vending is a viable option for many in consultation with the chief with jurisdiction over poor households in which the government is un- the area. For industrial or commercial purposes, the able to properly intervene. Secondly, the inability to application is in the first instance submitted to the acquire a trading license is an obstacle to vendors, District Council comprising of representation from as well as to government and councils, raising the the MTICM; Department of Lands, Surveys and much needed income from street vending. Finally, Physical Planning; and the business community in street vendors face enormous problems, risks and the area. As the Council sits quarterly, the process is costs. One of the recommendations of the aforesaid therefore too long. study is the urgent need for market reforms and oth- er specific framework for street vending in the cities Lesotho has enacted laws that protect and promote and towns of the country. Other recommendations disability rights such as the Buildings Control Act include access to formal capital, better organisation 1995 (Ministry of Local Government) which speci- and linkage to other international street vending as- fies designs of new buildings suitable and accessible sociations and organisations, as well as formal train- to people with disabilities117. Although this may be ing of street vendors by stakeholders.119 the case, in an interview with the Lesotho National Federation for Organization of Disabled (LNFOD) BEDCO, a private enterprise under the MTICM, women’s forum it was established that this law is not provides incubators for business enterprises in the fully complied with; an example of this being the SMME sector without a special preference to women’s location of Nedbank SMME Unit in a building with- enterprises. Although these incubators are intended out wheelchair accessibility. for businesses in the start-up stage, the facilities have become permanent business premises as most ten- Currently the government implementing agents ants remain there for much longer than anticipated. mandated to facilitate the provision of business According to BEDCO, although with no statistical premises are the Basotho Enterprise Development data to support this view, most of their tenants are Corporation (BEDCO), Lesotho National Develop- women’s enterprises (WE’s) and as such they believe ment Corporation (LNDC); the Lesotho Tourism the facilities to be suitable and affordable to WE’s. Development Corporation (LTDC) and the Ministry of Local Government and Chieftaincy (MLGC). The LNDC, a public enterprise charged with the implementation of the country’s industrial develop- The MLGC through the Maseru Municipal Council ment policies with the objective to create sustainable is responsible for the upkeep of the urban area, in- wealth and employment in the areas of processing cluding providing support services to businesses. In and manufacturing; mining; and commercial busi- all the districts in Lesotho, street trade is rampant ness. With a division focusing on property manage- and a source of employment and income for many ment the LNDC develops, maintains and manages
115 Stevenson L, St-Onge A, Finegan G (2007 (2007) Assessing the Enabling Environment for Women in Growth Enterprises: An AfDB/ILO Inte grated Framework Assessment Guide p. 31,section 3.8 116 SBP, Bannock Consulting (November 2002) Ministry of Trade and Industry, Cooperatives and Marketing 117 http://www.crin.org/resources/infoDetail.asp?ID=22179 accessed 07/04/2011 118 www.trc.org.ls/trc_programmes/democracy.../khathang%20tema.doc accessed 6 May 2011 119 http://publications.ossrea.net/index.php?option=com_content&view=article&id=25 accessed 6 May 2011
41 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho its property. The property consists of 8 residential the issues and recommendations raised by this as- units, 3 shopping centres, 9 commercial outlets, 6 sessment on the enabling environment for WED in office blocks and 7 industrial estates on which 138 Lesotho to be incorporated into their plan. factory shells have been built and land is also leased • Lesotho has enacted laws that protect and out to industrialists who want to build their own promote disability rights such as the Buildings Con- factory shells on the estates120. As the LNDC is po- trol Act 1995 (Ministry of Local Government) which sitioned to service large enterprises, none of their specifies designs of new buildings suitable and acces- tenants in the commercial properties comprise of sible to people with disabilities women owned enterprises. According to the • BEDCO, a private enterprise under the representative121 of “Women in Business”, a business MTICM, provides incubators for business enterpris- women’s network, incubators provided by BEDCO es in the SMME sector although without a special are too expensive and are not designed to be ac- preference to women’s enterprises. cessible to women’s needs. “Women in production • Women’s representation in local government need an exhibition area; women in catering need a structures will enable consideration of design needs fully equipped kitchen; and there is no subsidized of WE, and therefore improve access to suitable busi- warehousing and the BEDCO incubators are not de- ness premises signed to address these needs. The LNDC on the oth- • The construction of markets and stalls in er hand has become a competitor, they seem to own city by the Government of Lesotho the whole town and their properties are expensive”. • The establishment of a vendors association in Lesotho (Khatang-Tema Baitšokuli) open to street The LTDC established through an act of and market traders and informal economy workers parliament122 to develop and promote the Lesotho and organised in 10 districts of Lesotho, will enable tourism sector with a focus on indigenous business- the redress of vendors issues including access to suit- es; the Act also confers the power of providing or able business premises (Secure and safe market plac- managing sites and premises and related facilities. es for women operating in the informal economy) Unfortunately there is no evidence as to the extent to through an organised and united voice. which women entrepreneurship in the tourism sector have accessed these sites or benefited from their use. 3.7.2 Aspects Hindering Access to Business Premises for Women Enterprise At local government level, is a three-tier local gov- Development (WED) in Lesotho ernment system consisting of community councils, urban councils, a municipality and district councils. • Although there several public enterprises The local government model has enabled more wom- mandated by the Government of Lesotho to provide en than has ever been the case in Lesotho’s political business premises, their policy is not geared toward history to be elected into public office. The govern- ensuring access to suitable and affordable premises ment has made explicit its policy of women empow- for Women entrepreneurs to rent or buy on order to erment and has since taken steps to implement it. It run their enterprises. Concerns regarding either the has set aside a third of the community councils’ seats suitability in design or price were raised by the Wom- for women. The policy is in line with various inter- en in Business representative (WIB) and LNFOD. national declarations seeking to eliminate all forms • LNDC although mandated to provide fac- of discrimination against women”123. The representa- tory shells, which could enable Women producers’ tion of women at this level is expected to enable the access to up-to-date production premises and tech- better access to business premises suitable for women nologies; is not targeting Basotho women entrepre- entrepreneurs at local level. neurs as they tend not fall with the bracket of their target client. 3.7.1 Aspects Enabling Access to Business • The process of accessing land for industrial Premises for Women Enterprise or commercial purposes, as the Council sits quar- Development (WED) in Lesotho terly, is therefore too long. • Instances of non-compliance with Buildings • The LNDC is currently reviewing its stra- Control Act 1995 (Ministry of Local Government) tegic plan, presenting an opportunity for some of which specifies designs of new buildings suitable and
120 Lesotho National Development Corporation annual report 2008/2009 p. 12 121 Mrs. Mrs Malineo Mots’ephe; President: Women in Business 122 Tourism Act 2002 123 http://www.trc.org.ls/LDP_website/downloads/Lesotho%20local%20government%20paper%20kapa.pdf p 13 accessed 21 March 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 42 accessible to people with disabilities eign direct investment (FDI). In terms of market des- • According to the WIB business incubators tinations only 5% of the total firms in the sector are not designed to accommodate Women entrepre- produce for the domestic market with the remainder neurs needs such as those with children who may servicing the export market. The USA is the market need access to support services in relation to child- destination for most of the manufacturers (66%) fol- care lowed by the RSA being serviced by 27% of the firms in the sector126.The vast majority of businesses sur- 3.7.3 Recommendations veyed in the study on the state of small businesses in Lesotho127 provided goods or services only to the • Market reforms and other specific frame- domestic market, and generally only within the local work for street vending in the cities and towns in area. Only three percent of businesses provided ser- Lesotho. vices or goods to big businesses or the export market. • Monitor compliance of Buildings Control The picture was slightly different among commercial Act 1995 (Ministry of Local Government) which farms, where 20 percent served the South African specifies designs of new buildings suitable and acces- market in addition to local businesses. sible to people with disabilities • Create standards to be adhered when busi- To address these challenges the IMP seeks to revive ness incubators and factory shells that take into con- Lesotho as a significant supplier of regional markets, sideration the needs of women entrepreneurs such as particularly to the Republic of South Africa (RSA). child-care facilities, exhibition area; fully equipped The intention is to promote investment in the pro- kitchen; and subsidized warehousing duction of high-value clothing (both woven and • As tourism is a growing business sector, knitwear) which is required in relatively low volumes dominated by women entrepreneurs, the LTDC with very short delivery periods thus making it dif- needs to strengthen its capacity to deliver on their ficult for it to be supplied by producers in East and mandate to provide tourism sites and premises and South Asia. The possibility of producing the high- related facilities quality fabrics needed for the manufacture of such items, possibly on the basis of imported grey cloth, 3.8 Access to markets will also be considered.
Lesotho is a member of two regional trade agree- The IMP recognises that the domestic private sector ments namely the Southern African Customs Union is made up of formal and informal sectors and is (SACU) and the Southern African Development dominated by micro, small and medium enterprises Community (SADC). There are other arrangements (MSME’s); therefore the IMP prioritises the develop- outside the region which include the agreement with ment and promotion of this sector committing to128: the EU under the Cotonou; and the USA under the African Growth and Opportunity Act (AGOA). • Continued expansion of present pro- grammes for the training in technical and business According to the Lesotho Industrialisation Master skills for potential entrepreneurs; Plan (IMP) 2007 -2010124 the small size of the do- • Promoting the local sourcing of goods and mestic market makes it impossible for it to support services by the larger, internationally oriented com- enterprises which enjoy sufficient economies of scale panies where this offers a commercially viable alter- to be internationally competitive. Further, protecting native to existing arrangements domestic producers against international competi- • Availing credit guarantees to indigenous in- tion, given the country’s commitment to reciprocal vestors whose projects are judged to be commercially free trade arrangements,125 has resulted in a focus on viable to ease the problems of accessing credit; export orientation of the industrial sector. • Giving a 15% preference to local suppliers in government procurement contracts; and Most of the firms (industrial sector) operating in Le- • Increasing confidence in the certain and im- sotho are therefore of foreign origin; all of which partial delivery of justice in commercial cases insofar underlines the fact that this sector is driven by for- as this is seen as a constraint on the availability of
124 http://www.trade.gov.ls/documents/Lesotho_Industrialisation_Master_Plan_May07.pdf accessed 24 February 2011 125 which limit the government’s ability to impose high tariffs or nontariff barriers on imported goods 126 Ministry of Trade and Industry, Marketing and Cooperative (May 2007) Draft Industrialisation Master Plan 2007 -2010, p 7 127 P30 128 Ministry of Trade and Industry, Marketing and Cooperative (May 2007) Draft Industrialisation Master Plan 2007 -2010, p 29-30
43 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho credit. erence, in evaluating tender proposals, to Basotho businesses that demonstrate a majority shareholding According to a study on the state of small enter- of 51%. The MOF has also developed a Charter for prises129 commissioned by the MTICM, Lack of de- Small and medium sized enterprises, which sets out mand (or lack of customers) was identified as the the Government of Lesotho’s (GoL) commitment to biggest challenge facing SMMEs. The prominence creating a fair and open procurement system whilst of this response is indicative of the largely undif- addressing issues of particular concern to MSME’s. ferentiated nature of SMMEs’ product offerings and However, this preference margin is offered broadly to lack of competitiveness in a very small market. Re- MSME’s and does not specify women’s enterprises. sentment of competition from Chinese and Indian- owned businesses emerged as a strong theme. The According to the Industrialisation Master Plan132, study further found that Businesses in more remote A major constraint in securing adequate access to locations (in rural areas of the Mountains and Foot- export markets for suppliers of Lesotho products is hills Zones) were most dissatisfied with their access the inadequate capacity of the Department of Trade, to markets and potential customers –reflecting their MTICM, to carry out policy analysis, make recom- relative isolation from larger urban centres. There are mendations on negotiating positions and represent very limited linkages between small firms and larger the views of the government in international negotia- (often foreign-owned) businesses operating locally, tions.The Department of Trade within the MTICM and this further restricts SMMEs’ potential market comprises of the Internal Trade, External Trade and access. SMMEs suggested that opportunities to access Consumer Welfare sections. The Department’s Ex- government contracts are largely unavailable – their ternal Trade Section plays the lead role in establish- experience is that the GoL prefers to contract with ing trade policy and pursuing these policy objectives larger businesses that are able to deliver in quantities within the various international trade forums. The against short timeframes which are beyond the capac- department also host workshops to sensitise entrepre- ity of most SMEs. neurs on opportunities availed by the various trade policies and agreements, but according to the De- In Lesotho the main players in strengthening the in- partment the workshops are not necessarily targeting vestment and trade capacity of the country are the MSME’s and therefore there are no concerted efforts Ministry of Finance and Development; Ministry to encourage MSME export trade. of Industry and Trade, Cooperatives and Market- ing; Private sector; Lesotho National Development In promoting access to markets, BEDCO facilitates Corporation (LNDC); Lesotho Tourism Develop- participation in trade fairs locally and regionally, ment Corporation (LTDC); and Cooperatives. The such as in Lesotho District shows and the Rand assessment130 established that although some women Easter Show but they do not provide export train- owned enterprises are involved in exporting activi- ing programmes. Although LEAP offers a Matching ties, none of the export development initiatives are Grant specifically targeted to women –owned MSME’s. Ac- Scheme (MGS) which reimburses 80% of costs to cording to the representative of the “Women in Busi- business participating in trade fairs, MSME partici- ness” Association, has not as an institution benefited pation in international fairs, is limited if it at all ex- from export development initiatives but may have ists. As such BEDCO, LNDC and LTDC will display as individual enterprises. Their members involved in wares and products on behalf of the enterprises who export activities produce leather products, Sishwesh- cannot afford to attend. we, aloe Vaseline, tapestries and mohair. The general observation is that women in develop- The Ministry of Finance and Development Planning ing countries feel constrained by the lack of access (MOF) in 2002 began a reform of their procurement to profitable markets, whether locally, regionally system which resulted in a public procurement pol- or internationally; they often lack access to proper icy that enables MSME access to government pro- business premises; training in marketing , trade fair curement opportunities. The public procurement participation, and product quality; and good quality regulations of 2007131 grant a 15% margin of pref- information about markets and market opportuni-
129 SBP Bannock Consulting (October 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho, p 7 130 Assessment of the enabling environment for women’s enterprise development in Lesotho 2011 131 Section 12(1) under Part III: procurement procedure 2007 132 Industrialisation Master Plan p. 73 133 Stevenson L, St-Onge A, Finegan G (2007) Assessing the enabling environment for women in growth enterprises; An AfDB/ILO integrated framework assessment guide section 3.9
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 44 ties133. Lesotho does not have a national standards tion136, trade support institutions do not liaise with body and therefore no national standards have been women’s networks to organise or utilise these forums developed. The Standards and Quality Assurance sec- to share information related to market access. As a tion of the Ministry of Trade and Industry, Coopera- result of the limited interaction and the limited ca- tives and Marketing functions as the focal point for pacity of women owned enterprises to meet produc- standards and quality assurance. Industries in Leso- tion and standards requirements, linkages between tho have traditionally relied on the South African women owned MSME’s are automatically disquali- Bureau of Standards (SABS) for voluntary standards fied from such opportunities. The network suggested facilities and quality assurance schemes. Local ex- that a strengthening of BEDCO to provide training porters have relied on traditional export markets and and business development services, would enable the have developed their standards according to techni- growth of the MSME’s and result their subsequent cal and quality requirements of importing countries progression to recognition by the LNDC and private and firms or based on international standards.134 sector organisation’s; therefore enabling these link- This therefore further inhibits MSME’s ability to ser- ages. vice existing markets. Private sector representation in the country com- The LTDC is responsible for marketing Lesotho as prises of the Association of Lesotho Employers and a preferred tourism destination in order to promote business (ALE) representing large enterprises; and and increase the flow of foreign and domestic tour- the Lesotho Chamber of Commerce and Industry ism. As such it is mandated to promote the efficien- (LCCI) representing the small indigenous compa- cy and international competitiveness of the tourism nies. According to ALE137 although they have initiat- industry; and to assist in the creation of markets ed alliances with the LCCI to provide their members for Lesotho products in Lesotho and elsewhere135. with ALE services this has not materialised. Even According to their Investment Promotions Depart- though the purpose of the alliance was not to facili- ment, under the domestic investment section, one tate linkages between MSME’s and large enterprises of their strategies has been to develop village-based this would have served to strengthen relations which tourism amenities, through the promotion of rural could in turn have resulted in such linkages. home stays. According to the Department, women dominate the operation of bed & breakfast facilities, 3.8.1 Aspects Enabling access to markets guest-houses, and rural home-stays and therefore are the most likely to benefit from this project. A chal- • BEDCO, LNDC and LTDC will display lenge the department identified, in the absence of an wares and products on behalf of the enterprises who efficient regulatory framework, has been the mush- cannot afford to attend international trade fairs; this rooming of unregistered and unlicensed operators in could assist women in MSMEs to identify new mar- the sector and difficulty in identifying specific areas kets or expand existing markets. for development. The LTDC is in the process of de- • The public procurement regulations of veloping an accreditation and standards framework 2007138 grant a 15% margin of preference, in evaluat- in order to create and introduce efficiency and inter- ing tender proposals, to Basotho businesses that dem- national competitiveness more especially in the hos- onstrate a majority shareholding of 51%. Although pitality industry; an intervention that is expected to on preference the regulations are silent on Women- increase international tourism activity. Under their owned MSMEs, this does not close out women from foreign direct investment section, the LTDC intro- accessing government procurement opportunities. duced a networking and linkages programme initiat- ing out-sourcing relations between MSME’s and large 3.8.2 Aspects Hindering access to markets enterprises. The programme is aimed at encouraging large enterprises in the tourism and hospitality sec- • Although the department of External Trade tors to outsource their non-core services including (MTICM) hosts workshops to sensitise entrepreneurs the supply of products. on opportunities availed by the various trade policies and agreements, but according to the Department the According to the “Women in Business” Associa- workshops are not necessarily targeting MSME’s and
134 http://web.ita.doc.gov/tacgi/overseasnew.nsf/alldata/Lesotho accessed 27 February 2011 135 Government of Lesotho, Tourism Act 2002; section 4 (g) (h) 136 Interview with Women in Business President Mrs Malineo Mots’ephe 137 Interview with the ALE Executive Director: Advocate T. Makeka 138 Section 12(1) under Part III: procurement procedure
45 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho therefore there are no concerted efforts to encourage able services/products and capacity among local MSME export trade. MSMEs.
• Businesses in more remote locations (in ru- 3.9 State of research on women entrepreneurs ral areas of the Mountains and Foothills Zones) were and their enterprises most dissatisfied with their access to markets and po- tential customers – reflecting their relative isolation Investing in research is a strategic way to generate from larger urban centres. relevant information to inform policy and plan- • There are very limited linkages between small ning; and to establish how best to reach and support firms and larger (often foreign-owned) businesses op- women entrepreneurs. In many African countries, erating locally, and this further restricts SMEs’ po- Development Partners in the donor community play tential market access. This is evidence of the lack of a major role in funding and commissioning research Efforts to promote linkages between women-owned on women’s and their role in economic develop- enterprises and large firms. ment; As a result few African countries have women • Women entrepreneurs limited awareness of specific research. innovative and supportive incentives and schemes aimed at encouraging exporters, such as LEAP A number of reports on Lesotho have varying views • There is evidence of concerted efforts to sup- regarding the availability of data in the country. port women with disabilities, and women living with Some claim that the country is over studied and as HIV and AIDS, and other disadvantaged groups to such a lot of data is available. Others argue that there establish and operate viable businesses let alone im- are data gaps or where data exist, it is often outdated prove their access to markets. or not accessible141. The Lesotho Bureau of statistics • SMMEs suggested that opportunities to ac- (BOS)142 is mandated to set up a system for national cess government contracts are largely unavailable – official statistics on economic, social, demographic, their experience is that the GoL prefers to contract including human resources, and environmental areas with larger businesses that are able to deliver in quan- in relation to the development needs of Lesotho; as tities against short timeframes which are beyond the well as provide official statistics for purposes of eco- capacity of most SMMEs139. nomic and social planning, research, public informa- tion and international cooperation. The Bureau pro- 3.8.3 Recommendations duces disaggregated national data on the population, and socio-economic factors but this does not include • Explore creative mechanisms to facilitate im- MSME data. According to BOS143 the Lesotho popu- proved access to markets for MSMEs. This should lation and housing census shall in future include a include efforts to encourage and support business chapter on gender which it is expected will provide linkages programmes, which will require effective col- information on the similarities and differences be- laboration between LNDC and BEDCO, Initiatives tween profiles of men and women respectively. The could include140: absence of statistical data to determine the size and o A requirement that deals securing new for- characteristics of women SMME sector operators eign investment include an examination of possibili- and the capacity of the institutions with which they ties for local linkages interact limits the ability of governments to make o Facilitation of improved information flows informed policy measures.144 between large and small business o Forums bringing together large and small The National Strategy for Development of Statis- businesses to discuss procurement issues tics (NSDS) is already being developed in Lesotho, o MCITM facilitate the development of through the direction of BOS. This will act as the MSME databases that can be accessed and used by main framework for developing statistical capacity big businesses, to improve their awareness of avail- among line ministries to enhance coordination of
139 SBP Bannock Consulting (October 2008) Ministry of Trade and Industry, Marketing and Cooperatives: The State of Small Enterprise in Lesotho, p 7 140 SBP Bannock Consulting (October 2008) Ministry of Trade and Industry, Marketing and Cooperatives: The State of Small Enterprise in Lesotho, p 10 141 http://unstats.un.org/unsd/ENVIRONMENT/envpdf/UNSD_UNEP_ECA%20Workshop/Lesotho.pdf accessed 4 March 2011 142 Established by The Lesotho Bureau of Statistics Act 2001 143 Interview with the Director: Bureau of Statistics; Mrs L.M.Lefosa 144 Various Gender-related Obstacles to the Growth of Women’s Enterprises in Africa at http://forums.cozay.com/various-gender-related-obstacles- growth-women-s-enterprises-t2123.html?s=
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 46 activities related to statistical methods of data col- preneurship specifically; they have several published lection, analysis and dissemination. This coordina- reports in gender related issues such as the analysis of tion will also reduce duplication of data collection security of tenure under the customary land tenure activities.145 The process included a statistical capac- system of Lesotho (Mokitimi,N. 2006); Gender and ity audit which found the capacity to do research on urban housing in Mafeteng District; Life Experiences gender dynamics to be wanting; which has resulted of Basotho Women Tenants (Muzvidziwa,V.N. 2003); in the absence on relevant data being forwarded to Gender relations in the Home and Workplace in Le- the BOS for statistical analysis. It is expected that sotho (Dyer,K. 2001); Home gardens in Urban and the involvement and participation of sectoral plan- rural areas of Lesotho (Hopolang,P. 1998); and the ners in the development of the NSDS will service Effects of traditional land transactions on soil ero- create an awareness of the BOS research capabilities sion and land degradation (Leduka,R.C. 1998). and also an understanding of the input requirements of the various government ministries in relation to The Lesotho National Development Corporation gender related data. monitors the macro economic climate, tax regimes, foreign exchange (especially on textile), and employ- Although the various trade support institutions ser- ment statistics in portfolio companies; in order to vicing the MSME sector may collect data related to pick up economic stress indicators. Unfortunately their business; there seems to be lack of coordination the data is not disaggregated according to gender. in enterprise research more so about women entre- The LNDC is currently participating in a study that preneurs in Lesotho. As a result Gender segregated began in November 2010, to evaluate the impact of data was not available from institutions that were foreign direct investment on domestic investment on interviewed; these included Nedbank, Central Bank, sub-Saharan Africa; LNDC, BEDCO, Ministry of Trade and Industry, Corporative and Marketing, Boliba, MDA, among 3.9.1 Aspects Enabling the state of research on others. women entrepreneurs and their enterprises in Lesotho The Lesotho Development Information Center (LDIC) is a partnership initiative of the World Bank • Bureau of Statistics provides a high standard that includes the government, civil society organiza- of analysis and disaggregation of data which can pro- tions and development agencies active in Lesotho. vide lessons to other organizations. Located in Roma at the National University of Leso- • Gender Policy recommends provision of tho, its objective is to promote information sharing data disaggregated by sex in all spheres. and access to development knowledge aimed at im- • The National University of Lesotho based proving the effectiveness of development programs research institute (ISAS) has the capacity to conduct in Lesotho. search on gender dynamics of SMMEs if commis- However, WLSA- Lesotho, a research based organiza- sioned to do so. tion, has conducted a number of studies on women’s social economic rights; including property rights. 3.9.2 Aspect hindering the state of research on Reports from these studies contributed in informing women entrepreneurs and their enterprises government legislative reforms that enhanced the le- in Lesotho gal status of women, including women entrepreneurs. • Non compliance with the existing gender The Institute of Southern African Studies (ISAS), a policy on provision of sex disaggregated data, e.g. multi-disciplinary research institute established by loan profiles financial institutions; registration of Statute 30 on the National University of Lesotho, companies designs and executes research studies for the GoL, de- • There is no recent information on compari- velopment agencies, non-governmental organisations son of growth rate between women enterprises and and community based organisations. In addition the men owned since the 1990 Gemini study Institute functions as a national executing agency for research studies in collaboration with other research 3.9.3 Recommendations institutes in Southern African and internationally; and provides academic and institutional support to • The finalisation, adoption and subsequent researchers from Lesotho and the wider community. adherence to the National Strategy for Development Although their research work does not include entre- of Statistics (NSDS) so as to enhance coordination of
145 http://unstats.un.org/unsd/ENVIRONMENT/envpdf/UNSD_UNEP_ECA%20Workshop/Lesotho.pdf accessed 4 March 2011
47 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho activities related to statistical methods of data collec- create an environment that is conducive to SMME tion, analysis and dissemination. development and growth, and by extension women’s • Coordination of research to avoid duplica- enterprise development. Radical legislative reforms tion of efforts and ensure easier access to existing were found to have been achieved in the domain of published research. immovable property ownership; and on the area of • Establish body, inclusive if BOS to evaluate equality between spouses and the removal of marital research with a view to facilitate dissemination of power of husbands over their wives. These achieve- credible data and information and ensure ments have been attained through the Land Act and • availability of data with a gender dimension the Legal Capacity of Married Persons Act respective- ly. These and other milestones are a good foundation for the creation of an equitable society-a prerequisite 4. Conclusions to shared responsibility for economic development by all citizens. The government of Lesotho (GoL) signed a partner- ship agreement with the ILOs’s WEDGE-SA project The full impact of the liberalized laws is yet to be in 2010. This agreement emphasizes the importance realized through education and appreciation by the of promoting women’s economic empowerment intended beneficiaries of the reforms. This represents in the context of addressing issues that impact on a major role to be played by women’s enterprise as- the development of women’s entrepreneurship in a sociations (WEA’s). This research has established that holistic manner. As a result of focusing on women in Lesotho WEAs did not have strong support in as entrepreneurship, and by extension highlighting it far as numbers of membership were concerned. This as an untapped potential contributor to Lesotho’s weakness of WEAs cascades to other aspects of the economic growth, the country’s economic landscape effectiveness of such organizations and culminates is bound to change for the better. The employment in the impotence of same in the areas of advocacy potential of the SMME sector and their contribu- and bringing awareness to stakeholders of the now tion to poverty reduction can no longer be down- liberalized laws that should make it easier to do busi- played. This has necessitated the need to conduct ness in Lesotho if one is a woman. The existence of research such as this one, which places emphasis on Women’s wings or for a, in addition to the existing the removal of gender stereotypes and discrimina- WEAs, present an opportunity to capacitate these tion, improving women’s access to financial services structures to play a more effective role in driving the as well as the provision of social protection and the required changes in the business environment. This reduction of vulnerability of women’s enterprises would include establishing enterprise development to the ever-changing business environment. The re- programmes within the organized labour structure port postulates that one of the aims of promoting which are currently non-existent. women’s enterprise is not only to enhance women’s contribution to growth and poverty alleviation but Commercial service providers such as credit provid- also to ensure that women themselves benefit from ers are also yet to embrace the changes and to give these developments. It brings to the fore the need to equal services to men and women on an equal as- address issues of women’s equal human rights as well sessment basis. Conversely, SME businesses need to as enabling women in poverty to enjoy this equal- execute their businesses in a professional manner in ity. The importance of creating a participatory and order for them to be able to gain the credibility of consultative environment among stakeholders will financial institutions as many credit facilities have help create an enabling environment for women en- failed due to a poor repayment culture and as a result terprise development. of unfulfilled requirements. There is therefore a need for an overall change of mindset from people who The commissioning of this research by the Ministry do business within the SMME sector. of Gender, Youth, Sports and Recreation (MGYSR) can be viewed as the continuation of the commit- The development of a financial education pro- ment by the Government of Lesotho to identify and gramme, incorporated into the existing SME support isolate the enabling and disabling factors for wom- and training programs provided by business develop- en’s entrepreneurs development for it is only when ment service providers can play an important role these factors are identified that they may addressed in the growth, nurturing and development of the in a comprehensive manner. The report has further SME sector. This integration would have to take into articulated the many positive government initia- account the fact that various critical components, tives that further buttress the GoL’s willingness to currently lacking, in business development services
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 48 such as marketing assistance, information, technol- dency on the GoL as a market in much the same way ogy development and transfer and business linkage as in Swaziland. It is therefore important for the GoL promoting should be enhanced. The same would be to embark on a concerted effort to create market op- true of operational services such as information and portunities in all sectors to avoid this dependency. communications, management of accounts and tax For instance, there is need to develop industrial ac- records as well as compliance with labour laws and tivity outside the textile sub sector which is currently business regulations; strategic services used by the en- hampered by the lack of a work force with basic tech- terprise to address medium and long term issues in nical and clerical skills and indeed any exposure to order to improve the performance of the enterprise, the necessary disciplines of industrial production. its access to markets and its ability to compete. Various schemes for addressing this shortcoming have been debated-these include the MOETs Techni- The study also found that among the factors inhib- cal and Vocational Education Training Policy and iting the development of women entrepreneurship the BEDCO proposals that would deal with differ- were the weak enterprise education and training as ent aspects of the same problem. There is also need well as the business development services. These fac- for properly funded coherent national policy in this tors play a significant role in creating awareness, area, and coordinated by a single agency. skills and support in the development and growth of entrepreneurship. This deficiency however cuts Another potential sector identified by the survey146 across gender as it applies to all SMME businesses. conducted in 2008 and reported to have a higher The finalization and adoption of the TVET policy turnover than the other surveyed businesses is the is anticipated to play a significant role in creating a tourism sector. Characterised by women entrepre- collaborative structure between the MOET, MTICM neur dominance it was said to be more likely to have and the MOF through the proposed Lesotho Skills experienced growth in the past few years. This is an Agency. Creating a framework in which to engage indication that this sector seems a more viable for with private sector companies to encourage the estab- SME growth and as such there should be concerted lishment of internships; promote entrepreneurship efforts to develop women’s enterprises operating in through publicity campaigns and incentives (e.g. an- it. nual awards for which young entrepreneurs can com- pete, providing both media exposure for finalists and In conclusion, it is clear that there is a limitation in examples of success for aspirant entrepreneurs); and the current approach to developing not just women’s facilitating fora for knowledge sharing among SMEs enterprises but SMME’s as a whole. The absence of i.e BEDCO sites. an adopted framework in the form of SME related legislation and policy and a coordinating body to The limited access to markets internally and exter- ensure the integration of SMME’s in national eco- nally, including linkages between small firms and nomic planning and development is an inhibiting larger businesses operating in Lesotho further re- factor. The danger is to have different agencies han- stricts SMEs growth potential market access. Again dling aspects of women’s enterprise development pronouncing the effects of SMMEs limited capacity and SMME development without clear roles, and and credibility is the GoL’s continued preference to objectives guiding the outcomes of their efforts. This contract with larger businesses despite the introduc- is further hampered by the absence of disaggregated tion of public procurement regulations favouring economic data which would inform the development SMMEs. The questionable SMMEs ability to deliver of appropriate policies, strategies and indicators. The in quantities against short time frames, assumed to critical areas to be addressed by strategies in the wake be beyond the capacity of most SMMEs reinforces of appropriate legislation and policies would be the need for customized and responsive enterprise the issue of enterprise education and training; and education and training inclusive of strategic services business development services, as they are a critical to enhance the performance of the enterprise, its ac- component in women identifying their entrepreneur- cess to markets, and its ability to compete. ship, and facilitate the building of relevant skills to establish and grow competitive businesses viewed as The introduction of public procurement regulations credible by financial services and markets. can also be viewed as a double edged sword: on the one hand it presents market opportunities for the SMME sector whilst on the other, it creates a depen- Annex1: Duties and responsibilities of the
146 SBP (2008) Ministry of Trade and Industry, Cooperatives and Marketing: the state of small enterprises in Lesotho p. 6
49 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Consultant d) documents inventorying the MSME support system, including BDS, entrepreneur- The three-phase assignment will be conducted ship education and technical skills training pro- under the direction of the Women’s Entrepre- grammes, micro-finance institutions, women neurship Development and Gender Equality entrepreneurs’ associations, the women’s wings Project based in the MGYSR in Maseru Lesotho of disabled persons’ organizations (DPOs), gov- in concert with national stakeholders such as the ernment MSME offices, etc. National implementing partners will be identi- fied prior to conducting the assignment: Work with national partner organizations to ar- range an interview schedule of key informants, 2.1 Phase 1: Pre-field work including:
2.1.1 Conduct a review of relevant documen- a) Government officials responsible for tation and information of the general environ- MSME development and other relevant ment affecting MSME development in the government departments; country and more specifically, the environment in which women entrepreneurs operate. The in- b) Government small business terests and concerns of women with disabilities, development offices; women living with HIV and AIDS, women from different ethnic origins, refugee women and oth- c) Government ministries or departments er disadvantaged groups will also be taken into responsible for gender and disability consideration. This exercise is to include, but issues; not be limited to, a review of: a) the country’s economic situation (e.g., d) WEAs, DPOs (and their women’s wings) political structure, labour market structure, de- and their members; mographic make-up) e) BDS providers; b) statistical information regarding the MSME sector, including any disaggregation by f) Donors; sex; relevant reports and research documents from the AfDB, the ILO, the United Nations g) Education and training organizations; and the World Bank (e.g., labour market studies, MSME and informal economy reports, reports h) Commercial banks; MFIs; and their as on women’s entrepreneurship, reviews of the sociations; regulatory system affecting MSMEs) i) Employers’ organizations and other key c) Relevant documents relating to the coun- business/trade associations. try’s MSME policy and implementation plans; academic literature on women entrepreneurs or 2.2 Phase 2: Fieldwork: women in MSMEs in the country, including the interests and concerns of women with disabili- 2.2.1 Using both the “Assessing the Enabling ties, women living with HIV and AIDS, women Environment for Women in Growth Enterprises: from different ethnic origins, refugee women and An AfDB/ILO Integrated Framework Assess- other disadvantaged groups; studies or reports ment Guide” (ILO, 2007) and the “Consultants on gender policies and issues in the country (as guide to Assessing the Business Environment well as reports relating to women with disabili- for Women’s Entrepreneurship Development”_ ties, women living with HIV and AIDS, women (Simon White 2008) as a template, map out key from different ethnic origins, refugee women areas of the business environment in the coun- and other socially disadvantaged groups); and try that merit further enquiry, as appropriate, in contributing to an enabling environment for
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 50 growth-oriented women entrepreneurs, includ- decisions. ing for women with disabilities, women living h) Efforts made to improve women’s skills with HIV and AIDS, women from rural and ur- in negotiating finance arrangements ban settings. (See annex 2 for a list of documen- tation that will be supplied to the consultant) 2.3 Phase 3: Report preparation and writing
2.2.1 Consult with key informants involved in Using the frameworks of the AfDB/ILO assess- national policy-making, promotion and support ment guide, and the Consultants Guide pre- of WEs; key actors in trade, investment and eco- pare a comprehensive report detailing a synthesis nomic development, and partner organizations. quantitative and qualitative data from primary This work will be conducted in association with and secondary sources into findings on the ex- pre-identified local partners at the country level. tent to which existing initiatives address the gaps Review the components of the enabling environ- and those which act as barriers to the growth ment (regulatory, financial and non-financial and development of women’s enterprises. Map support) with particular reference to the formal out the key actors in each policy/programme (legal, regulatory, implementation) and infor- area, highlight good practice initiatives under- mal (traditional, cultural, attitudinal) barriers way, and conclude with a set of appropriate rec- and constraints affecting women entrepreneurs ommended actions to address identified gaps at the macro, meso and micro levels, as well as at in each of the following ten core areas of the the stages of start-up, growth and expansion into AfDB/ILO Integrated Framework: exports, etc. a) Policy leadership and coordination 2.2.2 Map out the components of the en- b) Business environment, regulatory, and abling environment that appear to be working legal issues well, and not so well. Use this information to c) Promotion of women’s highlight national “good practices”, and to iden- entrepreneurship tify important gaps in support provision. d) Access to enterprise education and training 2.2.3 Highlighting the gaps in the following e) Access to BDS and information services sections and also giving appropriate recommen- f) Access to women entrepreneurs’ dations to address identified gaps in Accessing associations and networks credit and financial services; g) Access to business premises a) Access to sources of finance for the start- h) Access to markets up of new enterprises. i) The state of research on women in b) Special financing programmes to help MSMEs in the country, including women in women overcome the barriers they face in access- growth enterprises ing credit, such as the lack of collateral. c) Access business finance as individual en- 2.4 Based on the findings of the needs analy- trepreneurs, and not just on a peer, mutual guar- sis in 2 a, b & C, 2 focus groups and secondary antee lending basis. resources. The report must contain specific de- d) Access to finance beyond the microfi- tailed sub-reports on: nance lending limit. e) Multiple sources & types of finance avail- a) Financial Barriers to Women able to meet WEs’ needs at each phase of their Entrepreneurs development & growth. b) Barriers to women entrepreneurs f) Finance available in rural and urban ar- registering their businesses eas. g) Efforts made to ensure women have ac- Examples of previous assessment reports done cess to information about sources and types of in Tanzania, Kenya, Cameroon, Uganda and finance, and the criteria used to make lending Ethiopia and Central Asia are available at _HY-
51 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho PERLINK “http://www.ilo.org/seed”_www.ilo. consultant must be able to produce research re- org/seed_. The ILO and MGYSR have high stan- ports that meet international standards. dards for the quality for published work. The
ANNEX 2: List Of Field Visit Contacts
Category Name Title Affiliation Email Government Director: Ministry Of Gender, Officials Gender Youth,Sports & Recreation Officer: Economic Ministry Of Gender, Empowerment Youth, Sports & Recreation Ms Mamello Ministry of Tourism, Mahloane Environment & Culture Nthabiseng Shale- Director: Training Ministry of Public [email protected] Thlomola and Development Service +266 2232 3735 Mr. Maepe MOET: Technical & Vocational Training Department Mrs. Maphutheho Chief Industry Ministry of Trade and [email protected] Ranooe development officer industry, +266 620 00088 cooperatives and mar- Mrs. Tsireletso Chief Industry keting Mojela development officer Mamohale Matsoso Labour Commissioner Labour Department [email protected] +266 621 12288 Organisations Mrs Malineo President Women In Business [email protected] for Women/ Mots'ephe +266 588 67006 WEA’
Educators & Institute of Southern Researchers African Studies Ms KR Hlasa Head of Department of National University of Business Lesotho Administration: L.M.Lefosa Director Bureau of Statistics [email protected] Disabled per- Lesotho National Fed- sons organ- eration for isations Organisations of Disabled
Microfinance Alter Muchipisa General Manager Maliko Finance Trust projectmanager@ Institutions/ molikotrust.org.ls Cooperatives
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 52 Category Name Title Affiliation Email Mr. Sekhantso Manager Bolida Commercial Central Bank of T.S Makau Section Head; Non- [email protected] Banks Lesotho Export Sector Develop- +266 2231 4281 ment Finance Div. Ntee Bereng Head; Non-banks Su- [email protected]. pervision Div. ls +266 22232041
Nomond Sixishe Bank Examiner; Super- [email protected]. vision Dept ls +266 2231 4281 Fusi Morokole Head Insurance Super- fmorokole@centralbank. vision Division org.ls +266 2223 2027 Nedbank Sebabatso Makhotla Services manager: [email protected] SMME +266 22282100
Tsoelopele Credit and Recovering Lesotho Post Bank [email protected] Monyane Manager +266 5873 0604
MSME & Lebamang Motheo Business Development Mineworkers Develop- [email protected] Business Officer ment Agency +266 2232 4004 Asso- ciations; Private sec- tor organisa- tions Malineo Nkhasi Projects Manager [email protected] +266 2232 4004 David Maphalala Acting Director; En- BEDCO [email protected] terprise development & Promotion Moroesi Kabi Manager; Entrepren- [email protected] ership Training and Development Mokhethi Shelile Head – Domestic LNDC [email protected] Investment Mamello Morojele LTDC + 266 22312238 [email protected]
Employers Advocate Thabo Executive Director Association of Lesotho [email protected] Organisa- Makeka Employers & Business +266 2232 5384 tions
53 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Category Name Title Affiliation Email Workers Or- Martha Ocran Secretary General Lesotho Congress of [email protected] ganisations Trade Unions Donor Limpho Masekese Gender Coordinator MCA-Lesotho [email protected] Groups Maema +266 2231 7017 Lewaneka Leap Assistant Private Sector Compet- [email protected] Ramokoebu itiveness & Economic +266 2231 5100 Diversification Project Ms.Phomotso Programme Coordina- Entrepreneurship Sup- [email protected] Sematlane tor port Programme NGOs Ms Libakiso National Coordinator WLSA [email protected] Matlho +266 630 51492 BDS & Makama Masitha Coordinator SMME Support Net- 266 58882032 smmenet@ Training work leo.co.ls providers Women En- Malichaba Managing Director Harvest FM mlekhoaba@harvestfm. trepreneurs Lekhoaba co.ls +266 2231 3168 Mapule Maema Managing Director Motheo Holdings [email protected]
Dodoze Masoabi Director Masoabo/Khali & As- +266 5802 8646 sociates Fikile Khang Director Dream Weddings [email protected] +266 5904 0018 Puleng McCarthy Finance Director Security Unlimited
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 54 Annex 3: Economic Indicators
General Economic Indicators Data Population 1 876 633 (2006 pop. & Hous- Population growth rate ing Census) GDP in Purchase Power Parity, US$ 0.8 GDP growth rate US$ 3.303 Billion GDP per capita (current prices) 3.0 %. Inflation rate (Average Consumer Price US$ 836.863 %) 3.8 % Government revenue(US$) $968.4 million MSME contribution to GDP Exports (f.o.b.) Imports (f.o.b.) Age structure of the 0-4 202646 population (2006 5-9 211950 Population & Housing 10-14 223785 Census) 15-19 229637 20-24 209937 25 -29 166363 30-34 121857 35-39 94710 40 -44 82540 45-49 73255 50-54 62691 55-59 50094 60-64 38021 65-69 34155 70-74 35675 75-79 18185 80+ 21132 Size of labour force Labour force to population Unemployment rate 25.3% Literacy rate Overall percentage 84.8% (definition; age 15 and over that can read and write) Females 94.5% Agricultural output to GDP Industry out- put to GDP Services out- put to GDP Population below poverty line
55 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho General Economic Indicators Data Household income or consumption ( income disparity measure – percentage of wealth and income held by top 20% and lowest 20% of the population) Employment in Agriculture Employment in Government & Services Employment in Industry & construction Employment in other services MSME Indicators Data Total number of private sector enter- prises Total number of SMEs Number of micro-enterprises Number of small enterprises Number of medium enterprises MSME share of private sector enter- prises MSME per 1000 population Percentage distri- Rural bution of MSMEs: Urban Total employment in MSMEs Average employment in micro-enter- prises Average employment in small-enter- prises MSME employ- Total employment ment as a percent- age of: Total private sec- tor employment Number of women owned enterprises Percentage of women operators of micro-enterprises Percentage of women operators of small enterprises Percentage of women operators of me- dium enterprises Total Share of MSME employment in women owned MSMES
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 56 Annex 4: List of References
Government of Lesotho National Constitution
Government of Lesotho Legal Capacity of Married Persons Act (2006)
Government of Lesotho Public Procurement Regulations (2007)
Government of Lesotho; Financial Institutions Act (1999)
Government of Lesotho; Companies Act (1967)
Government of Lesotho land Act (2010)
Government of Lesotho Education Act (2010)
Government of Lesotho Insurance Act (1976)
Government of Lesotho Tourism Act (2002)
Government of Lesotho (2004) Lesotho Vision 2020,
Government of Lesotho (2003) Gender and Development Policy
Government of Lesotho The Poverty Reduction Strategy 2004/2005-2006/2007
Ministry of Education and Training (March 2005) Education Sector Strategic Plan 2005-2015, p68
Government of Lesotho Interim National Development Framework 2009/10-2010/11;
Parliament of the Kingdom of Lesotho, Budget Speech 2011/2012 Fiscal Year
Ministry of Trade and Industry, Cooperative and Marketing (May 2007) Industrialisation Master Plan 2007- 2010
Interim Poverty Reduction and Growth Strategy Paper (2008/09)
Van Vuuren & Groenewald, 2007:269
Government of Lesotho (2005) Mid-Term Review of the Implementation of the Brussels Programme of Action 2001 -2010 p.7
Mineworker’s Development Agency Training report September – October 2010
Asmahani Aswaddalai “Various Gender-related obstacles to the Growth of Women Enterprises in Africa
Lesotho Review, 10th edition p94
Lesotho Public Expenditure Review of the Education Sector, Vol. II, Statistical Appendix (Final draft) Maseru, February 2002 as quoted in the Ministry of education and Training, (2005) Education Sector Strategic Plan 2005-2015 p. 18
OWN & Associates: Centre for Research and Development (2003) Government of Lesotho/UNICEF: Gender audit on the education sector
57 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Presentation on WEDGE Lesotho progress; Pretoria, 28 January 2011
White S. (2008) Assessing the Business Environment for Women’s Entrepreneurship Development Consul- tants guide, pp 4-5
List of recommended field visit contacts
Quarterly Publication, Volume 1 Issue 1SMME Network – Lesotho News Vol. 1 March, 2009 edition.
Lesotho National Development Corporation annual report 2008/2009 p. 12
Quarterly Publication, Volume 2 Issue 1, March 2010, page 15 Published by SMME Support Network, Mas- eru
Government of Lesotho (November 2006) The Charter for Small and Medium Sized Enterprises
Dr. Mbeti R., Tshabalala M (June 2006) Concept paper: Lesotho Local Development Programme p.3
The Intergrated Framework Diagnostic Trade Integration Study (2003);
The formulation of a PSD Strategy (2004); the Value Chain Analysis of Selected Strategic sectors in Lesotho (Global Development Solutions, 2004);
World Bank Assessment of the Investment Climate; the Growth Options Study (World Bank country Eco- nomic Memorandum);
IMF Article IV; the Capacity Building Plan for the Private Sector in Lesotho (2006);
The Millenium Challenge compact (2007);
Private Sector Competitiveness and Economic Diversification Project (2007)
Agreement between the International Labour Organisations Women’s Entrepreneurship Development and Gender Equality Project –Lesotho (WEDGE- Lesotho) and the Ministry of Gender, Youth, Sports and Recre- ation, Lesotho
Stevenson L, St-Onge A, Finegan G (2007) Assessing the Enabling Environment for Women in Growth En- terprises: An AFDB/ILO Integrated Framework Assessment Guide, ILO
Imani Development (2007) Regional Trade Facilitation Programme: Update survey non-tariff barriers to trade – Lesotho p13
SBP (September 2008) Ministry of Trade and Industry, Cooperatives and Marketing: The State of Small Enterprise in Lesotho
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 58 ANNEX 5: Stakeholder Validation Workshop Participants List
1. ILO: Grania Mackie, Chief Technical Adviser, [email protected] 2. Association of Lesotho Employers: Mrs. F. Makeka, [email protected] 4. Bureau of Statistics: L. M. Lefosa, Director [email protected] 5. Women In Business: Mrs Malineo Mots'ephe , President [email protected] 6. Renaissance Coffee Shop: Puleng Lebitsa, Owner/Bank Director [email protected] 7. Mineworkers Development Agency 8. Lesotho National Federation for Organizations of Disabled: Director 9. Maliko Finance Trust: Alter Muchipisa, General Manager, [email protected] 10. United Nations Development Programme: Patrice Lucid, [email protected] 11. Nedbank: Sebabatso Makhotla, SME Services Manager, [email protected] 12. Lesotho Enterprise Assistance. Programme (LEAP): Teboho Maichu, Leap Assistant, [email protected] 13. Thaba Bosiu Risk: Matokelo Seturumane, Managing Director, [email protected] 14. Business Development Trust: ‘Malinotsi Rafutho, Trainer, [email protected] 15. Ministry of Public Service: Nthabiseng Shale, Thlomola Policy Development, [email protected] 16. Lebamang Motheo Business Development Officer, [email protected] 17. Central Bank Makatleho Shale, Matete Insurance Division, [email protected] 18. BEDCO: ‘Makoroloso Elizabeth Lekhesa, Trainer, [email protected] 19. BEDCO: Koronti Ntsasa, Trainer, [email protected] 20. Harvest FM: Malichaba Lekhoaba, Entrepreneur, [email protected] 21. Business Development Trust: Paseka Ramokoatsi, Trainer, [email protected] 22. Business Development Trust :Mosala Letuka, Trainer, [email protected] 23. Vevents Voeswa Chekwa: Entrepreneur, [email protected] 24. Vevents: Thato Lepete Entrepreneur, [email protected] 25. ‘Mantiti Khabo: Entrepreneur, [email protected] 26. ILO WEDGE-Lesotho: Mahlapane Fana, National Project Coordinator, [email protected] 27. Essence of Woman: Tendai Murahwa, Consultant, [email protected]
59 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Access To Credit And Financial Services For Women’s Enterprise Development In Lesotho
A SUB-REPORT JUNE 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 60 Contents Contents Pg 1. Access To Credit & Financial Services 62 1.1 Policy Leadership & Coordination 63 1.2 Regulatory & Legal Issues 63 1.3 Promoting Access To Credit & Finance 64 1.4 Aspects Enabling Access To Credit & Finance 65 1.4.1 Policy & Legislation 65 1.4.2 Government Support Credit Facilities 66 1.4.3 Financial Institutions 66 1.5 Aspects Hindering Access To Credit & Finance 69 1.6 Recommendations 69 1.7 Conclusions 70
61 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 1. Access to Credit and Financial Services them in order to assert their rights against any per- sistence and remnants of discrimination of the old Women’s lack of assets, due to discriminatory prop- era. Like in the instance of many other development erty and inheritance practices in many African opportunities, disabled women’s access to finance is countries limit women’s access and control over re- extensively limited. The Women’s Forum under the sources, specifically land. Access to credit is essential: Lesotho National Federation of Disabled (LNFOD) the availability of micro-credit has encouraged small- is in process of mobilising for the establishment of scale income-generation, but graduating to small an independent women’s wing of Federation in order and medium-sized entrepreneurship remains fraught to better pursue the aspirations of disabled women with problems.The lack of both start up and working to engage in business. In an interview with the Fed- capital limits the size, type and location of income erations women’s forum, the members decried lack generating activities. In recent decades micro-credit of information on availability of micro-finance that institutions have gained greater prominence in fill- may be available to women with disabilities and due ing in the financial resources gaps to the poor in to lack of collateral they said they do not even at- general and to poor women in particular. While tempt to access finance from financial institutions3 some of the successes micro-credit institutions have gained recognition for over the years, the unmet In a study4 commissioned by the MTICM, access to credit needs of men and women in many parts of finance was a prominent issue for SMMEs. The ex- Africa remains big.1 tent to which the sample (in the study) was primarily comprised of survivalist and very small businesses Access to credit and financial services for SMMEs translated into two thirds of the sample reporting in Lesotho, like in many African countries, still re- that they had never approached a commercial bank mains a challenge and is considered one of the most for finance. Just over half the surveyed businesses significant barriers to entry to business. Generally, a had relied entirely on their own savings or family large proportion of Lesotho’s population have lim- savings in establishing the business and had not ac- ited access to financial services, more so women, with cessed credit at all. The general perception was that about three-quarters of Basotho living in rural areas. bank loans and overdraft facilities were largely in- Access to finance, particularly in these areas, is very accessible to small and micro businesses. Among important for reducing poverty as it facilitates the those businesses that had accessed external finance, availability of inputs, allows for diversification in well over half had relied on family and friends, while products and enhances research and development in two fifths had secured a loan/overdraft from a com- modern farming methods and techniques2. mercial bank. The most commonly mentioned fac- tors making it difficult for SMMEs to access finance As it is highlighted elsewhere in this report, the pervi- from commercial institutions were lack of collateral ous legal minority status of women in Lesotho and and perceptions of high interest rates. However, its enforcement translated into their inability to ac- money lenders provided a source of credit for nine quire and own economic assets such as land, which percent of the sample surveyed, despite interest rates forms a common security for loans required by fi- as high as 25 to 30 percent of the loan (per annum). nancial institutions for credit granting. This state Almost a quarter of businesses surveyed noted that of affairs contributed immensely and exacerbated they were concerned about the level of debt owed by women’s problems in accessing credit in compari- their businesses. son to their male counterparts. Recent legislative re- forms that have been put in place such as the Legal In its effort to address challenges relating to access to capacity of married persons Act will take time to finance the Government of Lesotho enacted a Cen- bring about the desired benefits to women in busi- tral Bank Act to redefine the role the Central Bank ness. This is partly because financial institutions are of Lesotho (CBL). The CBL is currently in the pro- still adjusting to embrace the new dispensation, and cess of reviewing the policy and legal framework for partly because women entrepreneurs in the MSME micro-finance; this has facilitated the establishment category are still to fully understand and appreciate of financial institutions, clearing systems and credit the spectrum of benefits that the new law holds for bureaux5.
1 Asmahani Aswaddalai “Various Gender-related obstacles to the Growth of Women Enterprises in Africa 2 Lesotho Review, 10th edition p94 3 interview with 4 associations of disabled women including the executive of the Women’s Forum 4 SBP Bannock Consulting (October 2008) Ministry of Trade and Industry, Marketing and Cooperatives: The State of Small Enterprise in Lesotho, p 8
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 62 Currently total lending in Lesotho is at M 1,500 mil- and government is closer to information-sharing and lion, with about M 800 million to business enter- consultation, rather than genuine participation and prises. Distribution of lending is highly skewed, as partnership. The level of Non-State Actors (NSA) the top twenty borrowers account for 38% of total policy engagement was defined is uneven, unpredict- lending; and MSME is said to be unlikely to exceed able and unsustained. Constraining factors to bet- M 600 – 700 million, i.e. 5-6% of GDP (2007 data)6 ter dialogue were identified to include both finan- During 2008 the growth in private sector credit re- cial and human resources; lack of expertise; and the flected a continued strong demand in the economy political climate. The ability of NSA to engage in despite higher interest rates and the impact of the Lesotho is further complicated by inconsistent appli- global financial crisis. However, credit extension was cation of policy-making modalities by government, low, standing at 39.4% of private sector deposits, lack of transparency and no clear desire to engage which meant the commercial banks were holding NSAs in policy processes beyond mere consultation large amounts of liquid assets resulting in a strong on the part of Government. demand for government securities7. 1.2 Regulatory & Legal Issues This component of the assessment examines govern- ment policy on SMME financing and the entities Financial institutions in Lesotho are regulated extending finance to private enterprises and women’s through the Financial Institutions Act, 1999. The enterprises. It reviews access to the various types of Act is designed to provide for the authorisation, su- basic finance/business loans that growth oriented pervision, and regulation of financial institutions, women enterprises need which include, among other agents of financial institutions and ancillary finan- categories, start-up finance, overdraft facility, bridg- cial service providers and related matters9. The Act ing finance and working capital. is all encompassing and includes all types of finan- cial institutions. In addition is the Money Lenders 1.1 Policy Leadership & Coordination (Amendment) Act 1993 which accommodates both individuals and companies in money lending and Financial Policy leadership and coordination in Le- the Credit Only Regulation 2010 which draws its sotho is the responsibility of the Ministry of Finance strength from the Financial Institutions Act 1999 and the Central Bank of Lesotho, specifically eco- and caters only for public companies10. nomic policy formulation, advice and analysis; and formulating and implementing monetary policy In 2010, the government of Lesotho, together with its respectively. development partners, continued to work on reform- ing and modernising the financial sector with a view The establishment of the Economic Empowerment to creating a better regulatory and policy environ- Section, in the Gender Department is in the process ment and to expand financial access to entrepreneurs, of establishing an Apex Body of women which will Small Medium and Micro Enterprises (SMMEs) and help coordinated consultation with women from the the poor, particularly in the rural areas. Govern- ten districts in Lesotho. This body would be suitably ment, in partnership with the International Fund for positioned to play the role of influencing national Agricultural Development (IFAD), under the Rural policy, legislation and programmes to consider the Financial Intermediation Programme (RUFIP) con- issues hinder women’s enterprise development, in- tinues to support the Lesotho Postbank and commu- cluding issues of access to finance. nity based Rural Savings and Credit Groups. Major vulnerabilities in the system stem from weakly In the absence of a dedicated focal point for wom- supervised Non-Bank Financial Institutions (NBFIs). en’s entrepreneurship within the public sector, there It is therefore considered important that the opera- is little evidence of women’s enterprises influencing tions of financial institutions are adequately financial policy. According to a report on Regional supervised by the Central Bank of Lesotho (CBL), Development Policy Dialogue (February 2011)8 in with the review of legislation and regulations to en- Lesotho, the level of engagement both with donors sure the removal of loopholes and the protection of
5 Government of Lesotho (2005) Mid-Term Review of the Implementation of the Brussels Programme of Action 2001 -2010 p.7 6 http://www.economistiassociati.com/files/Presentation_NCGM_20100323.pdf accessed 4 march 2011 7 Lesotho Review 2010, 10th Edition p.90 8 Jennifer Tangney Dr. (Feb 2011) Networking and building partnerships for policy influence & monitoring: What can Lesotho Learn and teach? P4 9 Government of Lesotho; Financial Institutions Act 1999 10 Sourced through Ms. Ntee Bereng; Central Bank of Lesotho: Head Non-Banks Supervision Division
63 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho public deposits. The development of a national poli- work and on the formulation of the national policy cy for NBFIs along with revision and adoption of the for financial inclusion. regulatory and supervisory framework for these in- stitutions is ongoing with the support of the World At the Meso level, the programme will contribute to Bank under the FIRST Initiative Project. These in- the strengthening of the supportive meso financial terventions will strengthen existing NBFIs as well as Infrastructure by: encourage the emergence of new players whilst pro- • Strengthening the capacity of the Technical tecting consumers from potential market abuse. Service Providers; • Negotiating and implementing a consumer Prudential regulation of savings and credit coopera- education programme in partnership with the Mi- tives (SACCOs) will also be enhanced by amending crofinance Forum, the Central Bank of Lesotho the Cooperatives Societies Act to prohibit SAC- (CBL), UNICEF, the Ministry of Education and the COs from mobilising deposits from non-members. Coalition of Client Protection; If cooperatives are allowed to take deposits from • Establishing a microfinance resource for the non-members, they will be supervised by the CBL industry, including a sector data base meant to track and subject to the same prudential and anti money progress and performance of financial service provid- laundering requirements as banks. Furthermore, the ers. obsolete legislation governing money lenders, as con- At the Micro level, the programme will contribute tained in the Moneylenders Act of 1993, needs to be to the improvement and acceleration of access to a revamped or repealed. broader range of financial services by: • Assisting potential financial service provid- During 2009 and 2010, the CBL continued to work ers to transform into microfinance deposit taking towards the establishment of a credit bureau, which institutions or launch leading start-ups; is at present – together with the absence of a national • Enhancing transparency and performance identification system – cited by commercial banks as monitoring of key financial service providers. being one of the main obstacles to credit extension. This initiative will go a long way towards helping 1.3 Promotion of Access to credit & financial commercial banks to access information that is cru- services to WED cial in assessing the credit worthiness of a customer. The implementation of the ID card system will be Women owned small and medium enterprises (SMEs) instrumental in facilitating the establishment of a face significant constraints in accessing finance for credit bureau in the country. business start up, growth and expansion. Studies and assessments reveal this happens mainly because Furthermore, the Government of Lesotho11 through Banks fail to realize the market potential of women a joint programme with the United Nations Devel- clients and design products that address their finan- opment Programme (UNDP) and United Nations cial needs; and women fear banks due to the ambigu- Capital Development Fund (UNCDF) intends to ity of their structure, services, and procedures12. address the gaps and bottlenecks that have impeded financial inclusion in Lesotho. These include im- Financial literacy is critical for promoting access to proving the Inclusive Finance Regulatory and Policy finance by creating incentives and environments that Environment by: promote desired financial behaviours such as sav- ing, budgeting, or using credit wisely. Establishing • Providing sound advisory services to Min- Financial Literacy and Credit Counselling Centres istry of Finance and Development Planning to ef- throughout the country which would offer free fi- fectively coordinate and lead the building process of nancial education and counselling to urban and ru- Inclusive Financial Sector, and exercise its leader- ral populations is one of the ways in which create ship; financial literacy. Women’s World Banking’s gender • Supporting the implementation and institu- research findings in Morocco established that women tionalization of the newly created National Micro- are responsible for savings for emergency and budget- finance Forum to increase sector coordination and ing; however, most do not re-invest a lot of capital improve policy dialogue; into their businesses which speaks to the need for • Participating to the technical discussions on financial literacy training designed to empower and the drafting of the microfinance regulatory Frame- improve women’s social status13.
11 http://www.undp.org.ls/poverty/SUFIL.php accessed 22 March 2011 12 http://pdf.usaid.gov/pdf_docs/PNADM758.pdf accessed 20 June 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 64 The Government Partial Credit Guarantee Fund14, of financial institutions on the ground as well the according to the budget speech will be capitalized by level to which their services respond to the needs of government at M50 Million. It will be a joint ven- women’s enterprises. ture between government and commercial banks un- der the supervision of an independent professional 1.4.1 Policy and Legislation board and CEO. It aims to skill SMMEs on business plan preparation prior to them accessing business The governments adoption of the 2002 White paper funding to be guaranteed at 70% of the loan, in a on the Development and promotion of small busi- bid to incentivize commercial banks to extend their ness, gave way to Legislative reforms such as; facilities to the SMME sector. • The 2006 Legal Capacity of Married Persons which now endows women with the capacity to enter Through the Private Sector Competitiveness and into contracts including loan contracts, to become Economic Diversification project, technical assis- company directors, without the consent of their tance will be provided to help the Lesotho National spouses. Development Corporation (LNDC) to design an • Review of the Land Act 2010 which now Enterprise Development Facility (EDF) and to train grants equal title to land to both spouses married in LNDC staff assigned to the EDF on commercial risk community of property. This correction of the past assessment. EDF will provide guarantees in the form discrimination against women with respect to owner- of collateral to SMEs to unlock loanable funds from ship and acquisition of land is further enhanced by commercial banks. the amendment of the Deeds Registry Act15. Prohibi- tion under this law for registration of land under the Commercial banks are being engaged on how best names of women married in community has been to deliver credit and training to small-scale entrepre- done away with. neurs, especially women and the youth. With assis- • A number of financial sector reforms are be- tance from the World Bank, the CBL is looking at ing undertaken that underpin the competitiveness establishing an Enterprise Development Facility in of the private sector by improving access to credit; partnership with commercial banks to provide proj- reducing transaction costs; and increasing the par- ect finance to private enterprises. The Millennium ticipation of women in the economy, thereby con- Challenge Corporation is also making funds avail- tributing to the broader fiscal reform programme16. able to support female entrepreneurs. In 2010, M50 Unfortunately these efforts are still at infancy stage million was set aside to create a Credit Guarantee and therefore their impact cannot be currently Facility to give SMMEs access to credit and training, assessed. with commercial banks willing to participate in this • The Government of Lesotho, through the facility. Vision 2020, identifies the need for adequate and sustainable provision of business services; proper in- 1.4 Aspects enabling access to credit and frastructure; availability of capital and access to mar- finance kets and credit17. More specifically in Matrix 5.8118 the strategic actions include strengthening the finan- Financing initiatives on the ground for SMME’s in cial services sector; and establishing clear roles be- Lesotho are savings and cooperatives; micro-finance tween the private and public sector in the provision institutions; commercial schemes availed by govern- of essential business development services including ment and/or in collaboration with international do- financial resources. None of the indicators though nors. As none of these institutions provide specific measure the impact of these activities on women’s services to women’s enterprises, there is an assump- access to finance and credit. tion that their SMME portfolio products take into • In the budget speech of fiscal year 2011/2012 account the borrowing needs of women. GoL has set aside M50 million for a proposed Gov- ernment Partial Credit Guarantee Fund19 which will Aspects enabling access to credit and finance can be guarantee 70% of loans. This Entrepreneurship ini- categorized according to policy and legislative re- tiative is aimed at young graduates, women and forms; credit facility programmes; and the presence self-employed entrepreneurs. The Minister of Finance
13 http://www.academicjournals.org/ERR/PDF/Pdf%202010/May/kefela.pdf accessed 22 June 2011 14 Budget Speech to Parliament for the Budget Speech to Parliament for the year 2011/2012 Fiscal Year, page 22. 15 Done under Section 18 of the Legal Capacity of Married Persons Act 16 Lesotho Review 2010, 10th edition p. 90 17 Government of Lesotho, Vision 2020, p18 18 Government of Lesotho, Vision 2020, pg 39
65 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho proposes that it be a joint venture between govern- nancial Intermediation Program (RUFIP) with the ment and commercial banks under the supervision extensive involvement of the International Food of an independent professional Board and Chief and Agricultural Development (IFAD). This is a pro- Executive. It aims to skill SMMEs on business plan gramme intended to improve access to financial ser- preparation prior to them accessing business vices by poor rural communities through the capac- funding to be guaranteed at 70% of the loan. ity building of member based financial institutions such as credit cooperatives and associations, rotating 1.4.2 Government supported Credit Facility and accumulative saving; and burial societies. Programmes iii) Lesotho Enterprise Assistance Government supported financing is normally an ex- Programme cellent source of funding for SMME business that Under the Private sector competitiveness project may not normally qualify for a loan in commercial is the Lesotho Enterprise Assistance Programme banks as it is expected to have more reasonable terms (LEAP) which provides a unique model of finan- such as no limit to the amount of capital, and flex- cial assistance for business development services ibility on repayment terms. Their requirements will and training for individual private companies and include a strong business plan which is extremely business associations. Although not specifically tar- detailed on income and expenditure; good personal geting women entrepreneurs, it is focusing on an credit scores as it is believed that if personal bills important capability building niche that facilitates are paid on time then the applicant will be diligent the business confidence of financial institutions. The about repaying; and a willingness by the applicant to funding, comprising of 80% reimbursement or di- invest their money into the business to ensure com- rect payment of the total costs incurred, focuses on mitment to the business. sector specific demand driven training; management systems development; acquisition of marketing tools i) Millennium Challenge Account- such as brochures, flyers, billboards, website design; Lesotho Research; and market sourcing including participa- The Government of Lesotho together with the United tion in trade fairs. States of America entered into a Millennium Chal- lenge Compact for Millennium Challenge Account The net effect of interventions such as those pro- (MCA-Lesotho) assistance to help facilitate poverty vided by LEAP, can directly enhance opportunities reduction through economic growth in Lesotho. A for women entrepreneurs, Growth Oriented Women portion of these funds have been allocated to the Entrepreneurs, in particular, and give their business Lesotho Post bank in order to realise a reliable elec- the needed competitive edge. In an interview with tronic transacting platform targeted at enabling the woman entrepreneur the study established that al- under-banked and un-banked to transact in a secure though LEAP does not specifically target women en- manner; to promote encourage mainstream banking trepreneurs (WE’s) it is programme that can be easily amongst the poor whilst instilling a culture of saving accessed by WE. She too had accessed the program in money; and to enhance service delivery and expand respect of billboards and signage she had put up for access to quality banking. her new business venture (guest houses)20.
The Millennium Challenge Account – Lesotho 1.4.3 Financial Institutions (MCA-L), under the private sector development sec- tion, also recently introduced a PEPFAR (Presidents a) Commercial Banks Emergency Plan for AIDS Relief) supported small Commercial banks in Lesotho comprise of the First grants programme specifically targeting women with- National Bank, Standard Lesotho Bank, and Ned- out the exclusion of men. In preparation for the pro- bank Lesotho, all of which either have a Business grammes roll out, an implementation framework is Banking Unit or SMME Unit without specific servic- being designed to guide the grant requirements and es to women’s enterprises. Therefore none of these the screening and selection process. institutions were able to provide gender specific data ii) Rural Financial Intermediation on the use of their services. Programme In March 2008, The GoL established the Rural Fi-
19 Budget Speech to Parliament for the Budget Speech to Parliament for the year 2011/2012 Fiscal Year, page 22. 20 interview with MD/Finance Director of Security Unlimited, Puleng McCarthy
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 66 Although Nedbank Lesotho has a dedicated SMME facilities to small investors and entrepreneurs living Services Section, their product offering and require- in the rural areas. Maximum lending is up to E1Mil- ments are no different from mainstream banking; so lion. The bank offers loans to individual SMME’s, they do not offer a customised service. Further their including supply finance, and group loans predomi- data is only categorized according to turnover and nantly for rural farming projects. Although not spe- sector and not according to gender as in some com- cifically focusing on women’s enterprises, since their panies shareholders/directors are mixed. According lending facilities commenced in October 2010 the to the Services Manager21 they cater for small busi- four entities that have been awarded start up loans nesses with a turnover of 1 Million Maloti per year. are women’s enterprises. The amount of a loan authorised or granted to a client/business is assessed mainly on the capacity of ii. Lesotho National Development that client to repay the funds without defaulting and Corporation, a public enterprise facilitating domes- records of such loans reflect only loans currently be- tic and foreign direct investment (FDI) provides de- ing repaid.Her view was that “Clients/businesses nor- velopment finance in the form of a partial develop- mally come up with great ideas for business but they ment credit guarantee scheme for selected prioritized fail to do their research effectively when applying for sectors. The Scheme is administered through the finance from the bank; they only have one mindset commercial banks. With minimum lending amounts that they have a brilliant business idea and that the of M500 000, the scheme cannot be accessed by in- business will thrive ignoring the fact that there are digenous business due to the requirements and as barriers/challenges that a new business faces in its such seem to benefit foreign investors only. initial stages hence hamper or hassle in repaying monthly instalments of loans they have committed c) Micro Finance Institutions (MFI) themselves to honour”. A microfinance institution (MFI) is an organiza- tion that provides financial services to the poor and The fact that Nedbank offers the same services as this very broad definition includes a wide range of those in mainstream banking is a strong indication providers that vary in their legal structure, mission, of their limited knowledge or understanding of the and methodology. However, all share the common needs of the SMME market inclusive of marginalised characteristic of providing financial services to cli- groups. As a result both the services and facilities are ents who are poorer and more vulnerable than tradi- not cognisant of the specific needs of this market tional bank clients. Formal providers are sometimes they seek to grow; an observation by the assessment defined as those that are subject not only to general was the unsuitability of business premises for dis- laws but also to specific banking regulation and su- abled persons as the SMME section is located in the pervision (development banks, savings and postal basement of a building and therefore is inaccessible banks, commercial banks, and non-bank financial to wheelchair confined clients. Currently with only intermediaries). Formal providers may also be any one wheelchair confined client, the Service Manager registered legal organizations offering any kind of fi- serves him outside. nancial services. Semiformal providers are registered entities subject to general and commercial laws but According to the Services Manager the purpose of are not under bank regulation and supervision (fi- establishing a SMME Section was to provide dedi- nancial NGOs, credit unions and cooperatives). In- cated banking services to the SMME in a focussed formal providers are non-registered groups such as and comfortable setting and that has not necessarily rotating savings and credit associations (ROSCAs) resulted in customised products. The Services Man- and self-help groups22 . ager identified the major issues affecting financial access to be SMMEs failure to keep proper financial This broad definition and in the absence of an en- accounting systems; their inability to invest profits capsulating supervisory framework can lead to mush- in investment accounts as a saving mechanism and rooming of non-regulating financial services result- to reinvest profits in business growth activities. ing in an unprotected consumer. In Lesotho the Central Bank of Lesotho has engaged consultants to b) Development Finance develop a Non Bank Financial Institutions (NBFI) i. The Lesotho Post Bank, a wholly govern- policy and regulatory framework. This instrument ment owned Bank, contributes towards rural finan- has a provision on how MFIs will be supervised and cial intermediation through the provision of banking regulated and will act as a forerunner to the MFIs
21 Interview with Ms. Sebabatso Makhotla, Services Manager: SMME Services Section 22 http://www.cgap.org/p/site/c/template.rc/1.26.1308/ accessed 17 March 2011
67 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho regulatory framework. Although still in its draft the and oversight of their operation is carried out by NBFI Policy establishes that the Financial Institu- the Ministry of Trade and Industry, Cooperatives tions Act will be revised to enable the instrument to and Marketing (MTICM) with no involvement by cover a wide range of institutions. This is expected to the Central Bank, thus limiting the extent of super- enable the consolidation and coordination of the di- vision. The authorities are considering converting verse laws dealing with financial institutions in Leso- large SACCOs into commercial banks and placing tho. The proposed revision will create four (4) types them under the supervision of the Central Bank. A of financial institutions namely banks; credit plus number of unlicensed deposit-taking entities also op- institutions; credit only institutions and ancillary in- erate in Lesotho. These vehicles attract sizable depos- stitutions, and provides for institutions to graduate its from the public by offering above-market interest from one type of institution to another23. rates, thus raising concerns amongst the authorities on whether these institutions will be able to meet Currently MFI’s in Lesotho comprise of entities pro- their growing liabilities – currently amounting to viding development micro finance such as the Mo- about 8% of GDP. Lesotho, along with Namibia liko Finance Trust and money lending services such and Swaziland, is a member of the Common Mar- as Blue Financial services, Bayport Finance, Mam- ket Arrangement (CMA) of Southern Africa, which moth, and JP Finance. effectively integrates these countries’ financial and capital markets with those of South Africa.24 Although there are no MFIs specifically providing financial services to women entrepreneurs Moliko The Boliba Saving and Credit Co-operative was es- Finance Trust (MFT) with 892 subscribing members, tablished by 50 Basotho former Lesotho Bank em- 85% of which are female, is a predominately female ployees, to offer credit finance and related services to servicing organisation. According to a statistical sum- the unbanked masses (e.g. bridging finance for rural mary provided by MFT, they have disbursed loans based school feeding schemes). However, Boliba is amounting to M1 653 013.00 to 880 clients since mainly accessible to the urban and peri-urban based inceptions; with 79% of their clients being female. businesses leaving a gap for the rural folk. Anoth- Established in 2008 as a minimalist micro-finance er limitation is that their services are membership institution and a subsidiary of the Mineworkers De- based and therefore not available, to all who may velopment Agency working in mine sending com- need them. With all these initiatives there is a dearth munities, loan access requires clients to be organised of dedication to businesses owned by women and into groups. A further disaggregation of their client women with disabilities. profiles shows that over 50% of their clientele is within the 31-35 age bracket with the least in the 18- In interview with the manager of Boliba25 it was es- 20 age bracket. tablished that the institution does not specifically consider concerns of women, including women with Credit officers in these institutions are not exposed disabilities, neither did they keep records segregated to any gender sensitizing training and BDS providers by gender. Through observation Boliba believes that are not systematically linked to MFIs, as such there women formed a large majority of their members and is no sharing of information that is broadly related clients, who included small businesses, small farmers, to their SMME or women entrepreneur clients which street vendors, civil servants and any other custom- would inform the provision of customised services. ers dissatisfied with services of banks. He could not The MFIs do not generate or retain portfolio data provide figures or amounts of loans granted to wom- disaggregated by gender. Gender related information en and stated that it would be cumbersome exercise shortcomings are common across MFIs, commercial which would require time to go through mixed re- financial institutions, BDS’s and government depart- cords to compile and provide such figures. The man- ments. ager could not be pressed further on this issue as he and his colleague complained that they were weary d) Savings and credits Cooperatives of several consultants who constantly visited the in- stitution and subjected them to similar requests for The last few years have seen a rapid growth of Sav- information and left without any feedback on the ings and Credits Cooperatives (SACCOs) in Lesotho, outcome of the studies they contributed to.
23 Sourced through Alter Muchipisi ( Moliko Trust General Manager) 24 http://www.mfw4a.org/lesotho/lesotho-financial-sector-profile.html accessed 4 March 2011 25 Bolida Manager, Mr Sekhantso
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 68 1.5 Aspects Hindering Access to Credit and In addition to the limited information dissemina- Financial Services tion is the limited research on the SMME and wom- en’s enterprises to unleash the economic and social The reforms currently being enforced by the Gov- impact of women’s entrepreneurship. This limits the ernment of Lesotho in the financial services sector, full understanding of why some government sup- inclusive of reforms enabling women’s access to land ported schemes fail in order to adequately inform and their ability to make economic decisions, are their review. An example are schemes such as the ex- expected to improve access to credit and finance. port financing scheme and loan guarantee scheme, Unfortunately the reform of law and its impact can- previously offered by the Central Bank of Lesotho; not be viewed in isolation from culture and tradition according to the CBL both failed due to the lim- which influences the application or enforcement of ited capabilities of the small business and exporters that law. which were too low to fulfil the requirements of the schemes. Where some research has been conducted The absence of financial education programmes and on the SMME sector, the absence of disaggregated fora to enable dialogue between financial services portfolio data by financial institutions hinders prop- providers and women’s enterprises to facilitate their er assessment on progress made in addressing inac- adjustment to the new dispensation is a limitation in cessibility of finance to women businesses. itself. Law reform cannot create understanding and The Centre for Women’s Business Research identi- appreciation of the spectrum of benefits that the new fies the four key traits needed to access traditional law holds for women in order to assert their rights bank financing namely credit, collateral, character, against any persistence and remnants of discrimina- and capacity. In other words, women’s enterprises tion of the old era. would need have a good credit rating; a track record in business and good references; business assets they The supply of gender sensitive business development can pledge against the loan; and the capacity to use services linked to finance is inadequate. According the loan to generate more business income. The real- to the World Bank (2007e: f) to promote female en- ity is there are few, if at all, women owned businesses trepreneurs, gender sensitive business development in Lesotho which can present such credentials to a services such as training, financial literacy and credit financial institution and in the absence of institu- counselling, support to development of business tions with a mission of funding women-owned busi- plans and availability of business incubators catering nesses, they cannot access finance. The high interest to women are required. Poor business management, rate pricing for loans offered by banks such as Ned- financial and bookkeeping practices by SMMEs, in- bank Lesotho and Lesotho Post bank and the 100% cluding women run enterprises, continue to create security requirements present accessibility challenges a bias by banks against lending to SMMEs. There is for many women owned SMMEs. This is further per- a related shortcoming on the part of the banks for petuated by the lack of developed risk management lack of initiative to link up with Business Develop- practices by credit providers; hence they resort to pro- ment Services providers for coordinated assistance of hibitive high interest rate pricing, stringent security SMMEs in this regard. and high deposit down payments as pre-conditions for lending. While microfinance is clearly a promising instru- ment for mobilising micro-scale entrepreneurs, it is 1.6 Recommendations still difficult for women to graduate to the next level and access loans from commercial bank. • Borrow from Jordan Business and Profes- sional Women’s initiative and facilitate forums for Whilst on the one hand is the challenge of women business women and financial institutions aimed at entrepreneurs limited business development knowl- bridging the gap between businesswomen and banks. edge and financial literacy; on the other is the inad- The banks will be encouraged to use this opportunity equate dissemination of information on credit and to establish booths and provide promotional materi- finance initiatives, which constitutes a setback for als and interact with women during these awareness women to recognize and utilize these opportunities. and training events. These forums can also be used For instance, although the national budget for the deliberate and discuss the law reforms designed to 2010/2011 fiscal year shows an allocation of M50 enable access to finance million towards a proposed Government Partial • Establish Financial Literacy and Credit Credit Guarantee Fund; this fund was not utilised. Counselling Centres throughout the country and in- corporate in existing SMME support and training
69 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho programs, such as in the content provided by busi- a mandate to promote equality, among other respon- ness development services provider (BDSs) with the sibilities, it is anticipated that the historically disad- following content: vantaged position of women, including those with o Types of funding (including equity disabilities should be addressed. The ministries role finance) and credit products; in promoting gender-mainstreaming is equally criti- o Sources of funding, and in cal in the reforms for improving access to credit and particular sources of funding for start-up finance for MSME’s and in the development and capital; upgrading small scale women enterprises to Growth- o Requirements from FIs to access products Oriented Women Entrepreneurs. More specifically and services; the Department of Economic Empowerment, under o Other types of financial products, such as the Ministry of Gender is mandated to play a greater savings options for businesses (e.g. money role in providing business, craft and life skills train- market for business), transactional products ing, combined with gender awareness. This places (e.g. business credit cards, CFC accounts for the Department in a strategic position to partner international trade); leasing; and or collaborate with credit and finance institutions commercial property; with a view to lobby for increased awareness on WE’s o Risk management, including insuring stock credit and finance needs, therefore enabling better and business premises, and assuring the life monitoring and targeting of WE clients. of the SME owner/manager; Lessons can be learnt from the Government initia- o Formalizing a business (different legal struc tives that have been discontinued or suspended. Such tures, pros and cons, how to go about it), as the schemes previously administered by the CBL and the impact on financing options and and the Basotho Enterprise Development Corpora- requirements; and tion (BEDCO) that were abandoned midstream due o Tax requirements and implications. to inefficiencies27. • Facilitate the increase in supply of gender- sensitive business development opportunities and The CBL previously offered an export financing increase and diversify access to finance, including scheme and loan guarantee scheme; both schemes microfinance for women failed because the capabilities of the small business • Microfinance has clearly proven to be an ef- and exporters were too low to fulfil the requirements fective tool in facilitating women’s access to credit. of the schemes. The CBL is in the process of investi- Supporting development of new financial products, gating the relevance and requirements of introducing such as longer term loans, could assist women in ex- trade finance to replace the comprehensive export panding their businesses. financing scheme. • Create incentives for commercial banks to offer credit to women graduating from micro-finance Under BEDCO were three schemes namely the BED- schemes. CO loan scheme and the Ministry of Finance scheme • Financial institutions should introduce sim- both of which had a poor recovery rate as clients felt plified borrowing and collateral requirements and that as these were government funds they were meant extend savings and insurance products; to be grants; as well as a Guarantee Fund (through • Investigate accessibility to the IFC’s Women the United Nation Capital Development Fund – in Business (WIN) program which helps banks prof- UNCDF) which in the absence of the relevant sys- itably and sustainably serve businesses run by wom- tems framework could not be adequately monitored en. IFC provides financing for on-lending to women and therefore had to be suspended. entrepreneurs, as well as advisory services to enhance our client commercial banks’ ability to address the Among the products that were previously exported needs of the women’s market and provide the most under the defunct schemes were crafts and pottery, appropriate products and services for this clientele26. which industries are traditionally dominated by women in Lesotho like elsewhere in Africa. 1.7 Conclusions According to the CBL28, in the pipeline is a pro- gramme to educate the producers on quality control With the advent of the Ministry of Gender which has mechanisms for the products as well as address the
26 http://www.ifc.org/ifcext/globalfm.nsf/Content/Women+in+Banking accessed 22 June 2011 27 In separate interview with BEDCO and CBL respectively. 28 Interview with CBL including Head of Non-Banks Supervision Division: Ntee Bereng; Bank Examiner: Nomonde Sixishe; Head of Insurance Supervision Division: Fusi Morokole; Section Head, Non-Export sector Development Finance Division: T.S. Makau
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 70 issue of sustainable volumes to meet export require- of the envisaged re-launch of revamped export credit ments. The relevant organs, with lessons learnt from facilities and the enhanced production and export past failures will ensure efficient administration of systems when they are introduced. the redesigned finance scheme. As is the case with many other programmes there is no specific refer- ence to focus on promotion of women exporters. However women who as stated, predominantly take part in crafts and pottery business should be in a position to seize this great opportunity and be part
71 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho Access To Business Registration & Licensing For Women’s Enter- prise Development In Lesotho
A SUB-REPORT JUNE 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 72 Contents Contents Pg 1. Access To Business Registration & Licensing 75 1.1 Policy Leadership & Coordination 76 1.2 Regulatory & Legal Issues 77 1.3 Promoting Access To Business Registration & Licensing 77 1.4 Aspects Enabling Access To Registration & Licensing 78 1.4.1 Government Initiatives 78 1.5 Aspects Hindering Access To Registration & Licensing 78 1.5.1 Registration & Licensing Procedures 79 1.5.2 Information & Promotion 79 1.6 Recommendations 79 1.7 Conclusions 80
73 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 1. Access to Business Registration and invest and create productive employment. At the Licensing same time, a high degree of informality implies that public revenues from corporate, income and value- There are often good reasons for government to reg- added tax are lost and only few employees are cov- ulate markets and businesses, including addressing ered by basic social and health standards2. Efficient market failures. Licensing is a commonly used and business regulatory environments should be designed prescriptive type of regulation which affects speci- to create a necessary balance that promotes and in- fied businesses and occupations by regulating entry centivizes business registration and licensing whilst into markets and conduct within markets. Licenses enabling the regulation of businesses. — which sometimes include use of permits, certifica- tion and notifications — typically impose on busi- The business environment in Lesotho is presently nesses a range of conditions, obligations and rights. characterized by a weak legal and administrative As a form of regulation it has a number of important framework, as well as high costs of doing business. advantages, such as excluding businesses from enter- These constraints affect the local and foreign busi- ing markets where they might generate health, safety, nesses alike3. It takes 40 days to complete the 7 proce- security or environmental risks. However, licensing dures for starting a business at an approximate cost is also often misused and/or poorly administered, of LSL21004. According to the study on the state of generating significant and unnecessary costs and small businesses in Lesotho Forty-two percent of re- risks for developing countries1. spondents said they did not know enough about reg- ulations to comment on whether they find particular Policymakers and the public at large in developing government regulations troublesome or difficult to countries as well as donor representatives are eager comply with. By the same token, as and when busi- to understand what factors in the business enabling ness growth occurs in the SMME sector, regulatory environment promote or hinder the creation of new issues are likely to become more prominent unless firms. In many government-led policy initiatives and they are addressed proactively5 donor-funded programs special attention is devoted to the role of regulatory and administrative barriers According to the 2011 Doing business report Leso- to business registration and licensing. tho ranking for “starting a business” has declined from 134 in 2010 to 1406 as other countries sim- In general, the costs of strict entry regulations out- plified registration formalities (seal, publication, weigh their benefits. Most importantly, they have a notarization, inspection); Introduced or improved perverse effect on the very people they are (allegedly) online procedures; cut or simplified post registration meant to protect. The rich and well-connected may procedures (tax registration, social security registra- be able to avoid cumbersome entry regulations, or tion, licensing); created or improved one-stop shop; may even be protected by them. By contrast, the poor or abolished or reduced minimum capital require- are hardest hit. They are either discouraged to set up ment7. Lesotho’s overall Ease of Doing Business businesses by the lack of information, prohibitively ranking therefore declined from 123 (2009)8 to 137 high costs and time-consuming registration proce- (2010) and 138 (2011), from reflecting lower scores dures, or they deliberately remain in the informal for 8 indicators9. sector and forgo business opportunities in order to stay “invisible” from the public sector. In the infor- The complexity of business registration and licens- mal sector their access to credit and other financial ing is further exacerbated by the limited access to products, business development services, commercial information on these procedures which should form dispute settlement mechanisms, and government part of the services provided by business develop- procurement is restricted. These bottlenecks further ment services. The Study (State of small businesses restrict the potential of informal enterprises to grow, in Lesotho) established that business owners utilise
1 http://www.ifc.org/ifcext/fias.nsf/AttachmentsByTitle/BRG_Toolsimproveexistingreg_OtherFramework/$FILE/LicensingPolicyFramework.pdf (Policy Framework paper on business licensing reform and simplification – 2009) accessed 26 June 2011 2 http://www2.gtz.de/dokumente/bib/07-1027.pdf (Streamlining business registration and licensing procedures 2006) accessed 25 June 2011 3 http://www.psc.org.ls/documents/PSC_Progress_Report_4FW.pdf accessed 31 March 2011 4 http://www.doingbusiness.org/data/exploreeconomies/lesotho?topic=starting-a-business#starting-a-business accessed 11 April 2011 5 SBP, (October 2008) Ministry of Trade and Industry, Marketing and Cooperatives: The State of Small Enterprise in Lesotho, p 40 6 http://www.doingbusiness.org/data/exploreeconomies/lesotho?topic=starting-a-business accessed 11 April 2011 7 http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/annual-reports/english/db11-fullreport.pdf accessed 11 April 2011 8 www.wto.org/english/tratop_e/tpr_e/s222-02_e.doc accessed 11 April 2011 9 http://rru.worldbank.org/BESnapshots/Lesotho/default.aspx accessed 11 April 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 74 family, friends and other business owners for ad- especially at local level; unfortunately according to vice on starting or running a business among SMEs. the 2006 Concept paper on the Lesotho Local Only 14 percent of the sample had received advice Development Programme11 the main outstanding is- or support from government bodies (including Min- sues in decentralisation include limited drive for the istry of Trade and Industry, Cooperatives and Mar- process; lack of guidelines, procedures and capacity keting, Lesotho National Development Corporation for the local government due in part to the unstruc- and Basotho Enterprise Development Corporation). tured decentralisation process. There is one business Well over half the sample said that they had never development officer per district responsible for a accessed Business Development Services (BDS). This range of duties. under-utilisation of BDS, or the limited prominence of the availability and importance of such services is To determine whether women and men have the likely to affect access to information on the proce- same capacity to act and access the business envi- dures and benefits of formalizing their Enterprises. ronment this sub-report reviews policy, regulation and government initiated programmes designed to If overall access to such services is limited, then it enhance women’s ability to interact with government can be concluded that such access is further limited institutions or conduct official transactions relating for marginalised groups such as women and people to business registration and licensing. This is based living with disabilities, especially those requiring spe- on the premise that if services and resources exist cially prepared material such as Braille or sign but women face impediments to using them, they language. do little to enhance women’s economic participa- tion. In summary the sub-report identifies the bod- According to the Study on the state of small busi- ies responsible for business registration and licensing nesses in Lesotho10. Just over half the businesses sam- and assesses the mechanisms in place to reach out to pled reported that they were registered with the Le- women entrepreneurs. sotho Revenue Authority. Tax registration increased with business size – almost 90 percent of medium 1.1 Policy Leadership & Coordination sized businesses were registered for tax, compared to 40 percent of micro-businesses. Fifty percent of busi- Public/private policy dialogue is important to en- nesses had a trade license from the MTICM – but sure that policies take into account the needs of the only 84 percent of these said they were registered for private sector. Female members of the private sector tax (even though tax clearance is a requirement for may face different legal, regulatory and other con- the license). A further 20 percent had various other straints in the business environment. It is therefore licenses, which are issued by a variety of government important that representatives of women entrepre- bodies dependent on the sector in which the business neurs regularly meet with policymakers to ensure operates. Thirty percent of the sample stated that that women’s perspectives are taken into account at they had no official license or permit. The Southern the design stage of strategies and policies. Lowland had the highest level of tax registration (58 percent), and the Foothills the lowest (38 percent). To support coherent policy implementation, it is This distribution corresponds closely with the pro- useful to designate a single body responsible for portions of businesses holding some form of license co-ordinating and streamlining efforts related to per zone, with the exception of the Senqu River Val- women’s enterprise development. In Lesotho, policy ley, which has the fourth lowest level of tax registra- formulation relating to enterprise development, in- tion, despite having the highest proportions of busi- cluding business registration and licensing, is housed nesses with some form of licensing. In all other zones within the Ministry of Trade and Industry, Coop- the proportion of tax registered businesses is about eratives and Marketing whilst the issues of women’s 20 percent lower than the proportion of businesses economic and political empowerment are housed reporting some form of license. within the Department of Gender under the Minis- try of Gender, Youth and Sport and Recreation. This The decentralisation process in Lesotho, largely limits women’s enterprises input in the design stage guided by the Concept Note approved by Cabinet of strategies, policies and procedures relating to busi- in 2004, should in effect address the challenges ex- ness registration and licensing issues. perienced in registration and licensing of businesses
10 SBP (October 2008) Ministry of Trade and Industry, Marketing and Cooperatives: The State of Small Enterprise in Lesotho, p 27 11 Mbeti R. Dr, Tshabalala M (June 2006) Concept paper: Lesotho Local Development Programme p.3
75 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho The broader policy framework addressing enterprise may be a director if her husband gives his written development is the Private Sector Development consent and that consent is lodged with the Regis- Strategy; the Industrialisation Master Plan; and the trar. This provision has been repealed by section 3 SMME policy which is still in its draft. None of (3) (f) of the Legal Capacity of Married Persons Act, these documents makes reference to women as a tar- 2006 which removes restrictions placed on a wife by get group in terms of defining medium-term targets the husband’s marital power. The section removes for the proportion of enterprises owned and led by the husband’s power to give written consent before women. his wife can be a company Director. Since the Legal Capacity of Married Persons Act seeks to effect the There is a need to involve the inclusion of women as constitutional principles of non-discrimination and a target group in national development plans and en- equality, it may be said that section 144 (1) (b) of the terprise policy frameworks, in order to not be a sepa- Companies Act has fallen away because it is inconsis- rate document focusing only on women’s enterprise tent with the Constitution. development, but may instead involve the inclusion of women as a target group in national development 1.3 Promoting business registration and plans or enterprise policy frameworks to ensure that licensing women’s perspectives are taken into account in the Government’s promotion of women as entrepreneurs policy making process. can contribute to a positive shift in societal percep- tions about the role of women in the economy, and 1.2 Regulatory & Legal Issues provide role models who encourage women to con- sider entrepreneurship as an option. This in itself The current legal framework regulating both trade would encourage the formalisation, and therefore and industrial licensing regimes in Lesotho is the registration of women’s businesses. Trading Enterprises Order of 1993; the Trading En- terprises Regulations of 1999 and the Industrial Li- In the absence of an SMME promotion agency and censing Act of 1969 read with the Pioneer Industries Women’s Enterprise Development unit within the Encouragement Act of 1969 as well as the Compa- government structure, there is limited coordinated nies Act of 1967. provision of targeted support to women entrepre- neurs. “Targeted support” can signify a committed The Trading Enterprises Order was passed with the intention to reach out to women entrepreneurs and aim of regulating trade licensing and to reserve cer- equally concerted efforts to promote women entre- tain business activities for Basotho entrepreneurs. It preneurship by encouraging the formalisation of establishes the Trading Enterprises Board and the women’s businesses. Local Licensing Board. The Order stipulates licence fees, conditions under which a licence may be sus- There is no doubt that survey-based research on pended or cancelled, duration of licences, renewal women entrepreneurs can contribute to an improved of licences, penalties for failing to display trading understanding of their characteristics and challenges, licences and for violating the provisions of the Order and serve as a tool to promote women’s achievements generally and it also provides for the appeals proce- as entrepreneur and in promotional programme de- dure. Section 34 of the Order empowers the Minister velopment and implementation. The absence of on of Trade and Industry to regulate trading enterprises the enterprise sector data—especially on the charac- and reserve certain business activities for nationals teristics of women-led enterprises impedes upon the of Lesotho12. Government’s ability to develop promotional pro- grammes, targeting women entrepreneurs, which can The Companies Act 25 of 1967 outlines the proce- be linked to education and awareness programmes dures and regulations relating to the registration and on business registration and licensing. formalization of companies in Lesotho. This Act does not deal specifically with SMMEs as it only con- Although Entrepreneurial and business networks can fines itself to issues of company registration proce- be a valuable source of entrepreneurial “know how” dures and clauses on who qualifies to be a company for women entrepreneurs by playing a significant Director. Section 144 (1) (b) provides that a minor role in facilitating the registration and formalisa- or any other person under legal disability, provided tion of businesses; in Lesotho there is no evidence that a woman married in community of property of formal or informal relationships between the gov-
12 http://www.psc.org.ls/documents/WB9_TRADE_AND_INDUSTRIAL_LICENSING_REGIME_IN_LESOTHOQ.pdf accessed 8 April 2011
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 76 ernment agent BDS providers and women’s entrepre- improve registration and licensing procedures. neur associations (WEA’s) to enable this. In an inter- view with the Women in Business (business network) 1.4.1 Government Initiatives it transpired that women’s business networks have One of the major milestones in the creation of an no Board representation in public enterprises such enabling business environment is the reform of as the LNDC and BEDCO and therefore their input registration and licensing which is expected to im- is limited. prove the ease of doing business in Lesotho, in rela- tion to time and cost. A new Industrial Licensing Bill The limited knowledge of business registration and will shortly be presented to parliament and changes licensing procedures and the tedious procedures are proposed to the Trading Enterprises Regulations, themselves serve as barrier to the formalisation of in each case with the aim of eliminating steps which businesses. To improve the business environment, are not essential to the licensing process, so reducing the Government of Lesotho initiated the Private Sec- delays and making the whole procedure transparent. tor Competitiveness and Economic Diversification A new Companies Bill, to replace the existing 1967 project13 which is aimed at improving the efficiency Act, is also in the final stages of the parliamentary of the public sector. The project is intended to create process. an enabling environment for the private sector to develop, as well as expand market access by undertak- Other endeavours are the development of a legal and ing company registration reforms and streamlining regulatory framework for the leasing industry in Le- the industrial and trading licensing regimes amongst sotho. The project will fund drafting, for adoption other activities. The project’s focus is on reducing the and promulgation, a Leasing Act consistent with the cost of doing business by improving the legal and corresponding Act in South Africa, which will indi- regulatory framework, increasing economic diversi- cate the rights, duties and obligations of participants fication through skills development, and providing including those related to the adjudication of cases. support for small, micro and medium enterprises Further, the project will fund technical assistance to (SMME). In addition, it will help identify areas of design a tax regime applicable to the leasing industry. comparative advantage and support. The Legal Capacity of Married Persons Act, 2006 In 2008 the Trade and Investment Facilitation Centre which removes restrictions placed on a wife by the (TIFC) commonly known as “One Stop Shop” (OSS) husband’s marital power, repeals Section 144 (1) (b) was established in the Ministry of Trade and Indus- of the Companies Act which provides that a minor try, Cooperatives and Marketing, with the support or any other person under legal disability; and a of DfID. The centre is intended to bring together the woman married in community of property may be a functions of approval of trading and manufacturing director if her husband gives his written consent and licenses, import and export issuance, residency visas that consent is lodged with the Registrar. and work permits. The TIFC is already facilitating the issuance of manufacturing and trading licenses, 1.5 Aspects hindering access to licensing and and processing import permits and export visas. registration of businesses
1.4 Aspects Enabling access business registration Many unregistered and unlicensed SMME’s are and licensing barred from markets and services and from partici- pating in potentially useful business support pro- Inherently more productive enterprises are more grams. However, they choose not to register or get likely to be registered and also have better access to a license nonetheless because those benefits have less markets and services, which may helped raise their weight in their view than the costs that come with productivity. registration or being licensed. The main cost items Therefore, reducing such regulatory barriers to reg- include potential tax liabilities, licensing and regis- istration and licensing could be a significant com- tration fees, and anticipated compliance costs of la- ponent of formalizing women’s enterprises and the bour laws and other aspects of business regulation. SMME sector as a whole. Aspects enabling women’s For women’s enterprises additional deterrents are enterprises access to business registration and li- brought on by their lack of knowledge and experi- censing need to respond to the needs of women’s ence in dealing with business formalization process- enterprises specifically the Governments’ efforts to es, as well as the way their businesses are operated to
13 http://www.centralbank.org.ls/publications/Econo%20Review%20March%2007.pdf accessed 31 March 2011
77 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho allow for them to undertake their household duties. The limited strategic relationships between govern- In order to create an enabling business environment ment agencies mandated to develop enterprises and for women’s enterprises it is therefore imperative to women’s entrepreneur associations (WEA’s) further effectively address hindering factors as viewed by the present a missed opportunity to promote the busi- by them. Summarily hindering aspects can be catego- ness registration and licensing. ries according to the registration and licensing proce- The current policy approach which views SMME sec- dures and the limited information and promotion of tor generically results in potential segments being the benefits of registration and licensing ignored in government efforts to address challenges in registration and licensing. For instance, although 1.5.1 Registration and Licensing procedure Disabled Persons Organisations have established women’s wings, their ability to venture significantly Although a major milestone in that it signifies ac- in enterprises is still limited and so is their capacity knowledgement of the challenges in business registra- to participate in facilitating their members to register tion and licensing, an observation by the study on and formalize their enterprises. the state of small business though, was that while the one stop shop (OSS) has made the process of obtain- 1.6 Recommendations ing trade licenses somewhat easier, it remains a ‘han- dling centre.’ Authority still rests higher up in the • Policy Leadership and Coordination MTICM, and any issues that arise in the licensing o To support coherent policy implementation, process still have to be referred to the Ministry. In it is useful to designate a single body responsible addition the respondents felt that small businesses in for co-ordinating and streamlining efforts related theory could manage the process without contracting to women’s enterprise development. Addressing all lawyers, the drafting of the memorandum is a techni- these and a multitude of other gender disadvantages cal process. They also noted that if the business tried requires a strong institutional framework that has the to register without the help of lawyers, the business requisite analytical and advocacy skills and resources. owner himself would need to go and purchase the This could be a Women’s Enterprise Development necessary legal documents and go to different offices Unit within the Ministry of Trade and Industry, to have things verified, which would be a cumber- Cooperatives and Marketing which would ensure some process14 integration women’s enterprises issues in enterprise policy and development. Registration still a cumbersome and costly process; It o To ensure that future policies and regulation takes 40 days to complete the 8 procedures for start- take issues of reducing the cost of doing business to ing a business at an approximate cost of LSL2100. facilitate women’s entry into business, some coun- While the centre (One Stop Shop) is housed in and tries are conducting regulatory impact assessments coordinated by the Ministry of Trade and Industry, with specific emphasis on gender aspects on a pilot Cooperatives and Marketing (MTICM), officials basis from a range of representatives of relevant govern- ment agencies comprise of its staff complement. • Registration and Licensing Facilities Thus, rather than being an arm of the ministry, it o Review the setting up of a “One-Stop-Shop” is a collation of many agencies, each of which are to promote an efficient regulatory and administra- represented on the centre’s steering committee. This tive environment, with a recommendation that the makes management of the centre difficult, as each four major institutions the Department of Trade, staff member is paid for and accountable to their the Lesotho Revenue Authority (LRA), the Depart- own functions. ment of Immigration, the Department of Company Registration and other utility service providers, to be 1.5.2 Information on registration and licensing housed under one roof to promote business competi- tiveness. The absence of an SMME promotion agency and o Establish women’s enterprise window/desk Women’s Enterprise Development unit within within the one stop shop to provide targeted support the government structure, limits the development to registering women entrepreneurs and implementation of targeted promotional pro- grammes that would also enable awareness of reg- istration and licensing procedures and its benefits.
14 SBP(October 2008) Ministry of Trade and Industry, Marketing and Cooperatives :The State of Small Enterprise in Lesotho, p 41
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 78 • Registration and Licensing Procedures 1.7 Conclusions o Review forms and, after consultation with the stakeholders, design a rationalised system of doc- The Government of Lesotho entered into a five year umentation and identify synergies with existing data Financing Agreement with the World Bank (IDA) in sources elsewhere in government. 2007, to fund the Private Sector Competitiveness and o Develop a draft Client User Guide for each Economic trade related process as well as a draft Operations Diversification Project (PSCP). The current reform Manual as a template for staff development plans15. of the business registration and licensing under the o Minimise administrative inefficiencies as- PSCP intends to implement recommendations from sociated with customs procedures and issuing of the Private Sector Development strategy (2005)17. licenses and permits. It is recommended that busi- The result of this programme has been the establish- ness licensing processes be restructured to focus more ment of the One Stop Shops which brings together a strongly on information gathering rather than fee- streamlined and integrated suite of services for busi- generation. nesses and investors. Services include Trading and Manufacturing Licences, and Import and Export Is- • Promoting business registration and suances18. licensing amongst women’s enterprises o Conduct targeted promotional and advertis- The experiences of the Philippines and Vietnam ing campaigns to educate women on the procedures show that donor support to streamlining business and benefits of registering and licensing their busi- registration and licensing procedures can yield high nesses returns. To maintain the necessary momentum for o An alternative to the current One Stop Shop regulatory and administrative reforms and to fend model is for the centre to have its own staff, either as off populism from pressure groups, donors have to a part of the MTICM or as a semi-autonomy govern- engage on a long-term basis and to support all stages ment agency, to which government agencies devolve of the reform process. In the past, donors too often their regulatory functions. While the centre is cur- went for the “easy option” that is using ever more so- rently donor funded (through supported provided by phisticated diagnostic tools to identify the priorities DFID and the World Bank), the ministry intends to of reforms. By contrast the more intricate and con- employ a centre director and develop an operational tentious design, implementation and monitoring of budget that will give it the same status as a the reforms was left to the national counterpart’s. In department16. addition this experience highlights the importance • Information gathering/Data collection of donor harmonization and alignment in order to o Improve information on SMEs. Different increase the leverage as well as the outreach of the government departments and sector specific agencies legislative and administrative reforms to streamline with a responsibility for business licensing should business registration and licensing procedures19. It is collate and share information on numbers and types important for the reform of the registration and li- of SMMEs in different sectors, to generate a more censing procedures to be seen as a long term process holistic picture of SMME activity in the country. and ensure the relevant support and resources and o Data collection and research are fundamen- allocated to it. tal for ensuring that policies and programmes ade- quately respond to the needs of women’s enterprises. In Lesotho there is need to pay specific attention to Baseline data also provides a means to monitor the women’s needs and that women be targeted in pro- impact of support measures over time. posals for mainstream regulatory frameworks as they o Survey-based research can both compen- form a majority of businesses in the SMME sector. sate for the lack of detailed statistics and provide a What is also significant in Lesotho is that the impli- qualitative picture of the needs of private enterprises. cations of gender inequalities in access to property Beyond this, data collection and research specific to and resources are not considered, and where they are, women entrepreneurs allows a better understanding they are treated as an issue to be addressed through of their specific challenges and needs, where they other-but unspecified-measures. Such a state of af- exist. fairs limits resources for investment as well as result
15 Imani Development (2007) Regional Trade Facilitation Programme: Update survey non-tariff barriers to trade – Lesotho p13 16 http://www.saideas.com/node/30 accessed 16 May 2011 17 http://www.centralbank.org.ls/publications/05_05_Economic_Review.htm accessed 25 June 2011 18 http://www.psc.org.ls/documents/PSC_Progress_Report_4FW.pdf accessed 25 June 2011 19 http://www2.gtz.de/dokumente/bib/07-1027.pdf (Streamlining business registration and licensing procedures 2006 p17) accessed 25 June 2011
79 An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho in unequal access to any SMME support which is tion of the formalisation women’s enterprises to dependent on business registration and access to fi- change societal perceptions about the role of women nancial services. in the economy, and provide role models who en- Culture and traditions also play a role in undermin- courage women to consider entrepreneurship as an ing the economic value of investing in women’s option. enterprise development, requiring targeted promo-
An Assessment Of The Enabling Environment For Women’s Enterprises In Lesotho 80 As part of the WEDGE-Lesotho Project research was commissioned and written by consultants to assist the project team in implementation of the project between 2009 and 2012. This report reflects a snapshot of the enabling environment for women entrepreneurs in Lesotho with the aim of furthering the knowledge base on women entrepreneurs. This research can be utilized by policy makers and business development service providers to better understand the operational and legislative environment for women entrepreneurs in Lesotho.
The responsibility for the opinions expressed in these pieces of research rests solely with the author and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them.