- As gvt moves to bolster private sector
- Amid new US tariffs that have upended economy
- While World Bank urges private sector led growth
Seithati Motṧoeneng
Prime Minister Sam Matekane has announced a M400 million loan scheme for Basotho entrepreneurs as his government seeks to bolster the private sector and spur local economic growth amid the global economic turmoil spawned by US President Donald Trump’s chaotic tariffs that have upended world trade.
The Prime Minister made the announcement during the third leg of the Lesotho Public Private Dialogue (PPD) at the Victory Hall yesterday. He urged Basotho entrepreneurs to take charge of the country’s economic future amid the headwinds plaguing the global economy.
The PPD, which is chaired by Mr Matekane, is meant to institutionalise and strengthen collaboration between the public and private sectors to boost trade and investment and improve Lesotho’s competitiveness.
Mr Matekane’s announcement came in the wake of a World Bank report that exhorts his government to embrace sustainable private sector led economic growth to alleviate poverty and high unemployment.
The measure also follows Mr Trump’s whooping 50 percent tariffs that threaten to destroy Lesotho’s textiles sector with the loss of more than 12 000 jobs or even more.
Tariff Pause
As the global economic crisis worsened and world stock markets tanked in the wake of Mr Trump’s chaotic tariffs, the US President announced a 90-day pause of his reciprocal tariffs against dozens of America’s trade allies last night.
The measure brings much needed relief for Lesotho which had been hit with the 50 percent hike, comprising of a 40 percent reciprocal tariff, which was supposed to have been effected yesterday and a 10 percent baseline tariff, Mr Trump imposed on all global imports into his country.
This means Lesotho will now have to pay only the 10 percent base tariff at this stage pending Mr Trump’s decisions after the 90-day period. Still the omens remain bleak for Lesotho. Even the 10 percent level could harm the country’s textile sector which had already been on the decline long before Mr Trump’s destructive actions. The textiles sector, which employed 53 000 people at its peak, is now down to only 31 000, a figure that could still drastically reduce after Mr Trump’s actions effectively annulled the African Growth and Opportunity Act (AGOA) under which Lesotho and other qualifying countries had exported duty free into the US for a quarter of a century.
Jump Start
Amid these challenges, Mr Matekane has announced his latest measure to assist local businesses access to capital to diversify and grow.
“This is a pivotal moment for our nation,” Mr Matekane said yesterday.
“We must confront our challenges head-on and not wait for external salvation. The responsibility to rejuvenate our nation rests squarely on our shoulders.”
Premier Matekane emphasized that Lesotho now stands at a crossroads, facing global economic uncertainties, trade shocks, and persistently high unemployment.
To address these challenges, the government is pursuing different strategies. It will confirm that Lesotho will only apply the 7.5 percent Southern African Customs Union (SACU) tariff rate on US goods. It will not implement any reciprocal tariffs.
The M400 million in loans, Mr Matekane said, would be distributed through various banks to make them widely accessible to entrepreneurs seeking capital.
He said this investment is intended to help the private sector drive economic rejuvenation, reducing the government’s burden as the primary employer.
At the launch of its ‘Lesotho Economic Update Report’ on Monday, the World Bank urged Lesotho to invest more in the private sector, which other experts in attendance said had been neglected for a long time.
Investing in the sector would ease the burden of the government being the primary employer, which had led to a bloated public sector wage bill that impedes the country’s development.
Mr Matekane emphasized the government’s efforts to support Lesotho’s economic diversification.
He said the government was engaging with US policymakers to secure transitional tariff relief and the reinstatement of development aid, while also addressing investment obstacles, particularly in the hospitality and energy sectors.
Additionally, Mr Matekane stressed the need for greater integrity, agility, and efficiency among public officials to effectively meet the needs of the private sector.
Call to Action
As Lesotho looks to diversify its economy beyond textiles into sectors like automotive, renewable energy, and agro processing, Mr Matekane said his call to action signified a renewed commitment to fostering resilience and innovation within the country’s entrepreneurial landscape.
“This investment marks a pivotal step towards empowering local entrepreneurs and ensuring the sustainable growth of Lesotho’s economy, as the government and private sector align to navigate through these trying times,” he said.
However, private sector representatives expressed concerns over hindrance to accessing government funds.
‘Malitliou Morojele, a member of the Chamber of Commerce and Industry (CCI), said the government had previously announced the allocation of M50 million for private sector development, but entrepreneurs struggled to access these funds.
She also criticized the lack of “democratic representation” within the CCI and the Private Sector Foundation of Lesotho (PSFL), which the government relied on for private sector input.
Similarly, Mohau Sello, a fast food entrepreneur, said that even when the government claimed to have allocated funds for the private sector, banks were often unaware of these programs, making it difficult for entrepreneurs to access the funding they qualified for.
Mr Sello called for more clarity and transparency from the government on the requirements and policies for accessing such funding.
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