A vibrant industrial sector that includes growing small and medium-sized enterprises is a boon to any economy. By increasing output and incomes, providing jobs for unskilled labourers, and improving prospects for efficiency and technological development, growing small firms offer both immediate and long-term benefits. These words by McCormick et aI, (1997) say it all. The theme of this study is growth, development and promotion of industry through small, medium and micro enterprises (SMMEs). SMMEs are cherished because of their resilience to economic setbacks, their flexibility, innovative capability and above all, their labour-intensive character. Lesotho is currently faced with a major problem of joblessness (i.e. a huge number of labour force is unemployed). The formal sector, (i.e. public sector or government, private sector and parastatals) is unable to absorb these multitudes of unemployed labour. Moreover, this sector accounts for only 44 percent of employment in the country while the rest must be absorbed in the informal sector. The industrial sector is very small if not nonexistent. Henceforth it has been recognised that SMMEs' sector can make a huge· contribution to Lesotho's economy through employment and income generation. Most importantly SMMEs' sector is regarded as a stepping-stone to the industrial sector of the country. With agricultural production steadily declining and continuing mine workers retrenchments, the informal sector becomes the employment of last resort. In addition, Lesotho being an economy that is in the mist of restructuring and privatising, entrepreneurship through SMMEs offers an alternative route to employment and growth. This study is therefore concerned mainly with small-scale manufacturing enterprises. The primary aim is to discover the income and employment generation effects ofthese entities. Other aspects to be explored include value addition potential and demand effects of SMMEs. The study has discovered that SMMEs' sector forms an important employer and income source in the country. Most entrepreneurs depend on the income earned from their enterprises as the main source of income to support more than two dependants. Monthly average income generated by most enterprises ranges from 1000 to 10000 Maluti. However there are some exceptional businesses that make more than 20000 Maluti per month. These enterprises have a potential to expand and increase their value addition and since demand for their products is high, there exists better prospects for employment and income generation. Small-scale sector was responsible for about 12 to 20 percent of industry in the country before the 1990's. Currently it accounts for 66 percent of industry. The difference proves the importance of having this sector in the economy. Employment in small-scale sector makes up to 20 percent of total labour force. Small-scale manufacturing sector (SMMEs) in Lesotho compnses the following categories: (1) Sewing and Knitting (2) Metal and Leather works (3) Woodworks (4) Handicrafts and Pottery (5) Weaving and Tapestry (6) Electronics (7) Food Processing (8) Candle and Toiletries making. Most SMMEs in the manufacturing sub-sector are in the activities of sewing and knitting followed by woodworks and leather works. Concentration of activity depends on the level of entry barriersl . Sewing and knitting is headed mostly by women entrepreneurs. There are numerous problems facing SMMEs and their performance is thus retarded. The most frequently cited problem is tinance and working capital. This is followed by the market problem though most business owners pointed out that their products are highly demanded. Lack of finance, especially loan financing makes it difficult for the enterprises to expand or grow into prominent business ventures. I EntIy barriers here maily concerns the costs of starting the particular enterprise. The Government objectives towards SMMEs sector as stated in the Sixth 5-year National Development Plan are: • To provide incentives for SMMEs development and growth • To assist them in acquisition of better management and technical skills 8 To identify growth sub-sectors of SMMEs in order to secure donors and other means offinance for them • To strengthen the capacity of support institutions which assist SMMEs in acquisition ofloans and in marketing plus capacity building through management training. However, none of these plans has ever been effectively implemented. What is lacking is devising appropriate tools that will enable government to carry out its plans. The following strategies are henceforth proposed in the study: 1. To actively support skills and management training programmes, especially because the government can secure funds in the form ofgrants or soft loans. 2. To co-ordinate with support institutions so as to establish linkages between government and these institutions and with small-scale and large-scale firms. 3. To expand the share of small-scale products in the market through publicity, market and financial support. Most importantly, government must accept tenders from SMMEs or make exclusive purchases from SMMEs. 4. To enforce a policy that lists products reserved for production by small-scale sector only. 5. To improve productivity and enhance quality through establishment of ISO 9000 quality standards. 6. To Promote specialisation in production and export-oriented SMMEs 7. To transfer technology through the media, for example, T.V programs and published materials such as newsletters and magazines. 8. To increase provision of well-serviced industrial sites, appropriate for the needs of SMMEs. . / Thesis (M.Com.)-University of Natal, 2000.

Thesis (MDF (Development Finance))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: Small and Medium Enterprises (SMEs) are regarded as core drivers of private sector development in many countries. By their nature, SMEs encounter enormous problems, ranging from usage of appropriate technology, access to raw materials, lack of skills, etc. However, access to finance is frequently cited as the most prominent problem facing the SMEs. Access to finance is defined as the easiness to access credit from financial institutions and the costs associated with accessing credit from such institutions. This study focuses on credit guarantee schemes as one of financial instruments commonly used to encourage banks to provide credit to small businesses and first time borrowers. Specifically, we review the performance of the two schemes initiated by the Government of Lesotho through assistance of the donor community. The first scheme (Comprehensive Export Finance Scheme) was administered by the Central Bank of Lesotho through Lesotho National Development Cooperation between 1988 and 1996. The second scheme (Facility for small-scale financing scheme) was funded by United Nation Capital Development Fund, United Nations Development Programme and Lesotho Government. The latter was operated by Basotho Enterprise Development Corporation (BEDCO), Women in Business and Lesotho Council of Non Governmental Organisations (NGOs) between 1992 and 1997. We analyse the performance of these schemes in relation to their diversification and outreach objectives. We also compare these schemes in terms of the design features and operational issues as per global best practices. Further, some of the factors that affected effectiveness of the two schemes under consideration and the overall financial intermediation process in Lesotho are outlined. One of the findings of this study is that generally the two schemes failed to achieve the intended objectives as a result of a number of problems. Apart from the deficiencies of the scheme itself, problems in the business and financial sector affected the performance of these schemes. A striking common feature of these schemes is that they concentrated in few sectors. We also observed a general negligence by the banks in relation to screening and monitoring as a result of low risk exposure. In retaliation of poor due diligence by the banks, and a resultant high default rate by borrowers, guarantors repudiated claims and this led to the eventual erosion of the credibility of the schemes, and ultimate deterioration of guarantor lender relationships. From the findings, we have concluded that the schemes should be designed and be operated according to global best practices. For example, risk exposure should be shared in such a way that all the three parties, that is guarantor, lenders and borrowers, are exposed to some degree of risk. At the same time, where defaults occur, we recommend a speedy processing of claims by the guarantor, and that loan loss recovery activities are continued even when claims have been paid. We also make some recommendation in respect of the financial sector and business sector respectively. For the financial sector the recommendations include the establishment of credit bureaus and a National Identification System so that financial institutions can isolate good clients and price products accordingly. In respect of the business sector, key recommendations include the improvement of basic infrastructure, decentralisation of key support services to the districts, linking smaller entrepreneurs with large foreign firms, and increasing vocational and technical training in Lesotho. / AFRIKAANSE OPSOMMING: Kleinsake word in baie lande as die vernaamste dryfkrag van groei in die privaatsektor beskou. Vanwee hulle aard ondervind kleinsake egter 'n wye reeks probleme, wat strek van die benutting van gepaste tegnologiee en die toegang tot natuurlike hulpbronne tot die beskikbaarheid van die regte vaardighede. Toegang tot finansiering word dikwels as die mees belangrike probleem van klein sake beskou. Dit word gesien as die toeganklikheid van finansiele instellings vir krediet aan kleinsake en die koste van sodanige finansiering. Hierdie studie plaas die klem op kredietwaarborgskemas as een van die finansiele instsrumente om banke aan te moedig om krediet aan kleinsake en sakebeginners toe te staan. Binne die konteks van Lesotho kyk ons na twee sodanige skemas, geinisieer deur die regering van Lesotho, in samewerking met buitelandse donateurs. Die eerste skema (die "Comprehensive Export Finance Scheme") is gedurende die jare 1988 en 1996 deur die Central Bank of Lesotho geadministreer, in samewerking met die Lesotho National Development Corporation. Die tweede skema (die "Faculty for Small-Scale financing") is geborg deur die UN Capital Development Fund, die UNDP en die regering van Lesotho. Dit is geadministreer deur die Basotho Enterprise Development Corporation (BEDCO), "Women in Business" en die Lesotho Council of NGOs en was aktief gedurende die jare 1992 en 1997. Die studie ontleed die werking van kredietwetskemas met die oog veral op hul dekkingswydte en trefkrag. Daar word ook gekyk na die aard en operasionele besonderhede van die skemas, teen die agtergrond van wereldwye praktyke. Ten derde word gekyk hoe die skemas ingepas het by die breer finansiele proses van Lesotho. Die studie toon dat albei skemas, vanwee 'n hele reeks faktore, in hul oogmerke gefaal het. Afgesien van 'n reeks tekortkominge van die twee skemas self het probleme in die sakemilieu en die finansiele sektor hul werking nadelig beinvloed. Een van die tekortkominge van die skemas was 'n te eng fokus op slegs enkele sektore. Daar was ook 'n gebrek aan deeglike voorondersoeke en monitereing, o.a. as gevolg van 'n lae risikoblootstelling aan die kant van die banke. Een van die gevolge van die beperkte aandag van banke en die hoe mislukkingskoers van kleinsake was 'n toenemende onbereidwilligheid van die skemas om eise te erken. Dit weer het die geloofwaardigheid van die skemas in gevaar gestel en verhoudings tussen die uitleners (banke) en waarborgvoorsieners vertroebel. Die ondersoeke kom tot die slotsom dat die skemas volgens die beginsels van internasionale skemas van die soort hersien behoort te word. Dit sluit in die behoorlike deling van risikos (tussen lener, uitlener en waarborgverskaffer). Dit behoort ook 'n spoediger afhandeling van eise in te sluit. Die studie maak ook enkele voorstelle gerig op die wyer finansiele en sakesektor van Lesotho, soos bv. die noodsaaklikheid van "kredietburo's" en 'n nasionale identifikasiestelsel. Op 'n nog wyer vlak word verwys na die belangrikheid van 'n beter kommunikasie-infrastsruktuur, die desentralisasie van ondersteuningsdienste, nouer skakeling tussen klein sake en groter ondernemings asook beter tegniese- en sakeopleiding.

Dissertation submitted in fulfilment of the requirements for the degree Master of Technology: Business Administration in Entrepreneurship in the Faculty of Business at the Cape Peninsula University of Technology 2013 / Tourism is a fast growing industry and has the potential for poverty alleviation for rural persons. Butha-Buthe, being in a rural area of Lesotho, has magnificent scenery of mountains, attractions to be visited, and adventure activities to be done. However, tourism in Butha-Buthe is under-developed, and it is very important to identify tourism’s potential in this area and explore how SMMEs could contribute in the development of tourism. Therefore the objective of this study is to examine the economic role of small, medium and micro enterprises in the development of tourism in Butha-Buthe. Challenges faced by the SMMEs include lack of resources such as poor infrastructure poor roads, transportation, and a lack of network-communication. Other challenges would be poor business skills in regards to employment and management which leads to business failure. To accomplish the study objective, questionnaires were distributed to local entrepreneurs in Butha-Buthe, local communities, local government and other stake-holders in the district. In addition, a mixed method of research was carefully and logically planned and then implemented. A survey questionnaire was used to obtain the views of the different stakeholders. The questionnaires were collected and data analysed which allowed the researcher to draw conclusions and propose a range of recommendations based on the findings, to assist in the development of tourism in Butha-Buthe. The findings revealed that there is huge potential of tourism development in Butha-Buthe through the SMME sector, but that there are still challenges faced by SMMEs in this district, despite the economic contribution they make. However, through the support of the government and private sectors these challenges should be dealt with.