- Please click here to download the MAP Lesotho roadmap presentation (PDF, 1.59MB)
- Please click here to download the complete MAP Lesotho diagnostic report (PDF, 9.28MB)
- Please click here to download the MAP Lesotho synthesis report (PDF, 1.31MB)
- Please click here to download the MAP Lesotho qualitative report (PDF, 2.95MB)
The findings and recommendations were derived from a demand, supply and regulatory analysis based on the methodology developed by Cenfri, FinMark Trust and UNCDF as part of the global MAP initiative. The demand-side analysis draws from quantitative data provided by the Lesotho FinScope Consumer Survey 2011 and primary qualitative research.
Financial inclusion is already included in the Financial Sector Development Strategy and the National Strategic Development Plan in Lesotho. MAP complements and builds on these initiatives, highlighting the policy imperatives which will provide the largest potential welfare gains to households in Lesotho and aligning stakeholders around an implementation roadmap.
MAP departs from the traditional supply-side diagnostic focus by putting the demand-side at the core of the analysis. This it does by unpacking needs, behaviour and usage of financial services, both formal and informal, across various segments of the adult population. This enables policymakers to disaggregate and focus their financial inclusion policies to better meet the needs of the adult population and achieve broader public policy objectives. In the Lesotho, the following six target markets emerged:
- The salaried workers consist of adults that are formally employed with a regular monthly salary; this includes those employed in the private sector as well as the public sector.
- Private dependents consist of adults and young people that receive income from spouses, parents, guardians or other household members. These include those who receive money from migrants working in South Africa and other countries.
- Government dependents represent adults that reported receiving a government pension or grant as their main income source. Specifically, this included those that receive child or foster care grants, disability grants and old age pensions, with the latter being the biggest sub-group.
- The small business owners include all adults who are self-employed or own and operate an enterprise as their main source of income. This would include street vendors or hawkers.
- The piece job workers consist of adults that rely on low-wage jobs, that is, piecework or casual labour.
- The farmers represent adults that rely on income from agricultural related activities, mainly small-scale farmers, but also including adults that rent out livestock or equipment for farming purposes.
In addition to the in-country segments, an important seventh segment was identified, namely Lesotho migrant workers working largely in South Africa. They are a significant group of adults, likely the single largest segment, and a significant source of income for their relatives at home.
The MAP findings show that these target groups already have high levels of financial access in Lesotho. This is supported by the FinScope Consumer Survey which shows Lesotho as the country with the highest level of financial inclusion across all 15 African countries in which it has been conducted. Furthermore, the findings suggest that the adult population in Lesotho is broadly served, meaning that the majority of adults with access to financial services use more than one type of financial service (e.g. credit and savings) from both formal and informal mechanisms. Thus the focus in Lesotho is not on extending the number of people who are financially included, but rather on increasing and improving the services offered with the view to alleviate poverty and support economic growth. Within this context, three broad priorities emerge:
- Directly improve household welfare through efficiency gains and risk mitigation. This strategy has three prongs: lowering transaction costs and enhancing the range of low-cost savings options; facilitating low-cost domestic and cross-border remittances (a particularly important priority given the importance of migration to the Lesotho economy) ; and enhancing risk mitigation beyond funeral cover.
- Targeting specific sub-sets of SMMEs and farmers. Whilst the majority of SMMEs and farmers are considered low income and are subsistence in nature, there still remain opportunities for enterprises with the potential to grow if appropriately served by credit and other financial services to improve their efficiencies and risk management. Identifying those SMMEs and farmers with the potential for growth and then delivering tailored products through targeted value chain channels may boost economic growth and employment generation, even if at a small scale.
- Increase financial sector intermediation to support investment and growth. Improving the incentives for individuals to save in banks will increase the level of deposits available for lending by the banks. This may become increasingly important as demand for credit continues to rise.