The Challenge

The Kingdom of Lesotho ranks 158 out of 187 countries in the 2012 Human Development Index. Despite significant economic progress from 2006 to 2008, and a per-capita income of USD 1,970 in 2008, about half of the population lives below the international poverty line of US$1.25 a day. The country is vulnerable to severe droughts and other natural disasters, HIV/AIDS, limited resources, high unemployment, and heavy dependence on the South African economy.

In 2011, the Government of Lesotho, along with UKAID funded a FinScope survey of financial inclusion in the country. This showed that financial exclusion is greatest in rural areas, and that whilst similar proportions of men and women used formal financial products, women were more likely than men to access informal products. It also noted that much of the use of formal financial products is driven by demand for funeral insurance.

Lesotho has recognised that there are a great many barriers to financial inclusion in the country, amongst which is a lack of financial education. It is therefore participating in a Joint Programme with UNCDF and UNDP to ensure that interventions are developed to target each of the barriers faced.

How We Are Helping?

UNCDF is working on a 3 year joint programme alongside with the Government and UNDP to stimulate financial service providers to offer pro-poor products as well as facilitating access to financial services for women. The joint programme of UNCDF and UNDP to Support Financial Inclusion in Lesotho (SUFIL) aims to stimulate financial service providers to offer pro-poor products. Working at macro, meso and micro levels, the programme will also facilitate access to financial services for women. UNCDF is also supporting the Ministry of Finance on the formulation of a national strategy that will combine financial education and consumer protection with financial inclusion.

In the area of local development finance, UNCDF provides support to the Government through the Lesotho Local Development Programme (LLDP), which aims to support decentralization at central and local government levels. Initiatives geared toward sustainable public expenditure management and local development financing are being piloted in three districts, with a view to reforming local development financing systems across the country.

In Detail