Lesotho Competitiveness and Financial Inclusion Project: Integrating a Gender Equality Lens

Lesotho is highly vulnerable to frequent and severe weather events, particularly droughts and floods. These can have strong adverse impacts on vulnerable MSMEs. In 2020-2021, Lesotho declared two states of emergency that had impacted MSMEs. The first was declared for the COVID-19 pandemic, which brought economic activity to a near standstill, and the second was for heavy rains that caused many parts of
the country to flood. The Government of Lesotho introduced measures to support MSMEs, but this put significant pressure on the fiscal position of the country. Lesotho does not have a DRF strategy and relies on budget reallocations, borrowing, and humanitarian aid for financing disaster response. As a result, MSMEs are very vulnerable to shocks as they don’t have access to pre-arranged financial protection.

The Competitiveness and Financial Inclusion (CAFI) project (P175783) aims to increase access to business support services and financial products for micro, small and medium enterprises (MSMEs), and entrepreneurs, especially women and youth. Specific disaster risk financing (DRF) activities under the project strengthen the financial resilience of MSMEs to climatic and pandemic shocks. The importance
of strengthening access to finance and financial resilience for women-owned MSMEs (WMSMEs) is a central theme of the project, including within its DRF activities.

This brief focuses on gender considerations and actions implemented under DRF-related activities within the project.