Several studies haves revealed a number of challenges facing business development in
Lesotho, among these studies are; The Private Sector Capacity Building Action Plan done in April 2006 by the Ministry of Finance and Development Planning; The State of Small Enterprises in Lesotho done in September 2008 by Ministry of Trade and Industry, Cooperatives and Marketing, etc.
This article set to review the findings of these two studies, starting with “The Privates Sector Capacity Building Action Plan”. In the next article focus will be on the latter.
According to the study, the demand survey interviewed 85 firms in six sectors which were pre-selected based on their growth potential. The institutional review covered 44 different
organizations and associations providing business development services, facilitation services, or support to their members.
According to the demand survey, “The Lesotho private sector is small and largely dominated by micro and small firms, at least 85% of the firms in the country. This presents a situation where the market for services is very thin and, to a large extent, the private
sector firms do not fully appreciate their needs for capacity building.” The study further notes that service provider capacity is limited to a few service providers in Lesotho and
these are largely still emerging and offer limited services.
The services on offer are not very differentiated, tend to be generic and not customized to the unique market segment needs of the private sector firms in Lesotho. The other finding
is that “Firms have variable, but generally weak demand of services . ” While they are
presently consuming some traditional business services, such as finance and accounting, they consume few services that address the major constraints cited by the firms as
blockage points to their growth and development .
This highlights the low solvent demand for services and the weak supply of appropriate
services. The study further notes that the private sector has limited absorptive capacity for skills development. Firm learning is incremental; firms must understand what they need before they can absorb it, then must apply it before acquiring new skills. This takes time.
In order to address some of the challenges facing the private sector the study notes that the Government of Lesotho is providing low end service provision and facilitation: The GoL is working both as a service provider and facilitator through institutions such as BEDCO and others. While these institutions do not seem to be displacing private sector service
providers, the orientation of the government service provision and facilitation is towards a supply push with no relationship to growth of the firms in given sectors, or return at the
firm level from the investment in capacity.
The findings of these demand survey do not end here, in the next issues we shall continue to review more of its findings. These will cover, state of private sector organizations;
government and private sector dialogue; market opportunities; and skills and growth constraints.