Contacts: In Washington : Agata Pawlowska (202-473-4727)
apawlowska@worldbank.org In Maseru: Charles Annor-Frempong (+266-22-21-7000)
cannorfrempong@worldbank.org WASHINGTON , March 21, 2007 – The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit* of US$8.1 million, of which US$4.2 is a grant, to support the Government of Lesotho’s private sector competitiveness and economic diversification program. The World Bank project will contribute to the Government’s poverty reduction and economic growth strategy by helping to create the necessary conditions to improve private sector competitiveness, growth, and job creation. The Private Sector Competitiveness and Economic Diversification Project will be co-financed by the Government of Lesotho. The total estimated cost of the project is US$10.1 million, of which IDA will fund US$8.1 million and the Lesotho Government US$2.0 million. “The government of Lesotho recognizes the importance of the private sector to the economic growth of the country. The project will target firm-level as well as economy-wide obstacles. It will focus on reducing the cost of doing business by improving the legal and regulatory framework, increasing economic diversification through skills development, and providing support for micro, small and medium enterprises. In addition, the project will help identify and support activities that encourage regional integration efforts and identify Lesotho 's areas of comparative advantage,” according to Agata Pawlowska, World Bank Task Team Leader for this project. The key objective of the Private Sector Competitiveness and Economic Diversification Project is to facilitate increased participation of the private sector in the economy by creating conditions for improving its productivity and competitiveness. This goal will be achieved by: · improving the business environment and reducing the costs of doing business, including improving access to finance; · strengthening the linkages and integration of the Lesotho economy with the regional economy, especially with South Africa; and · strengthening support for technical and business management skills thereby improving productivity at the firm level. The Private Sector Competitiveness and Economic Diversification Project integrates activities which support enterprise needs, including a matching grant fund, pilot schemes in tourism and horticulture, and skills development program for the garment industry. The project, particularly components relating to improving the business environment and access to finance, support the poverty reduction strategy dialogue and implementation of agreed upon policy measures. The project is also in line with the Africa Action Plan to encourage development through private sector growth. The project benefited from inputs from the private sector, civil society and academia, which contributed during the 2005 PSD Forum and workshops organized as part of project preparation, supported by a Japanese PHRD grant of close to US$1 million. Finally, the project was prepared in consultation and with contributions from other donors, particularly, DFID, MCC and GTZ. *The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.35 percent and a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.
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