COUNTRY HIGHLIGHTS LESOTHO 2016 The World Bank Group conducted face-to-face interviews with top managers and business owners of 150 enterprises in Lesotho from June 2016 through August 2016. The Enterprise Survey (ES) sample is representative of Lesotho’s formal private sector. The ES covers several aspects of business environment along with measures of firm performance. Below are the main highlights from the survey. Firms in Lesotho had negative labor productivity growth Similar to the average for Sub-Saharan African firms 16 0 Annual labor productivity growth (“AFR30”), firms in Lesotho experienced negative (%) 12 -2 annual labor productivity growth in 2016. Annual labor productivity growth rate declined from 0.5% 8 -4 between 2006 and 2008 to negative 3.5% between Percentage Percentage 2013 and 2015. Annual employment growth, 4 -6 remains positive, but has declined substantially to 4% from 12% in 2009. Smaller firms are less 2016 LESOTHO ENTERPRISE SURVEY 0 -8 productive than large firms. Both small (5-20 Annual labor Annual employees) and medium (20-99 employees) firms productivity employment -4 growth (%) growth (%) -10 experienced negative labor productivity growth rate (-1.8% and -9.8%, respectively) while labor -8 -12 productivity growth rate for large (more than 100 Small(5-20) Medium(20-99) employees) firms was -0.2%. Lesotho2016 Lesotho2009 AFR30 Large(100+) Females are more integrated in the business community in Lesotho 40 40 Women are more likely to manage firms in Lesotho than elsewhere in the region. Of the country’s firms, 30 30 36% have a female top manager, a dramatic increase Percentage Percentage from 2009 (22%), and more than double the 20 20 regional average (16%). Likewise, majority female ownership has increased to 25% from 16% in 2009, 10 10 and is higher than its regional comparators at 13%. By sector, manufacturing firms in Lesotho are more 0 0 likely to be managed by females than services firms. Percent of firms Percent of firms Percent of firms with a female with a female top with majority top manager While 36 percent of manufacturing firms are manager female ownership managed by females, only 25 percent of services Manufacturing Services firms have female top managers. Lesotho2016 Lesotho2009 AFR30 Large firms in Lesotho are less likely to invest in training 60 60 The incidence of training, or the percentage of firms that offer formal training to their employees, has declined but is comparable to the regional averages. 40 40 Percentage Percentage Over time, the incidence of training in Lesotho has declined from 42% in 2009 to only 31% in 2016. 20 20 Medium firms are more likely to invest in training for their employees than other firms. Fifty-one 0 0 percent of medium sized firms and offer training Percent of firms offering formal Percent of firms offering formal training compared to only 24% of large firms and 27% training percent of small firms. Small(5-20) Medium(20-99) Lesotho2016 Lesotho2009 AFR30 Large(100+) Wait times to obtain licenses and permits have improved 100 12 Obtaining construction permits as well as operating licenses is dramatically quicker than in 2009. The wait times to obtain construction permits and operating 75 8 licenses were 6 and 2 days respectively; compared Percentage with 80 and 17 days in 2009. Further, senior Days 50 management of Lesotho’s private businesses spend 4 relatively little time dealing with government 25 regulations and obtaining licenses (“time tax”); 3% in 2016 compared to 6% in 2009. Lesotho similarly 0 0 outperforms the regional averages of 51 days, 22 days Days to obtain Days to obtain Senior management time spent and 9% for permit wait time, license wait time and construction-related operating license in dealing with requirements of permit government regulation(%) the “time tax”. Lesotho2016 Lesotho2009 AFR30 Investment financing by banks has improved In Lesotho, the incidence of bank financing (the 60 percentage of firms using bank financing) has 2016 LESOTHO ENTERPRISE SURVEY increased since 2009 and is more than twice its 40 Percentage regional comparators. In 2016, 52% of investments were financed by banks compared to 33% in 2009, 20 significantly above the regional average (21%). However, while more firms are using bank financing 0 the intensity of bank financing (proportion of Percent of firms using banks to Proportion of investments financed by investment financed by banks) has slightly declined, finance investments banks (%) 19% in 2016 compared to 23% in 2009 but it is still Lesotho2016 Lesotho2009 AFR30 above the regional average (10%). Political instability, tax rates and informal competitors are the biggest obstacles to firm operation Among 15 areas of the business environment, firms Political instability Tax rates in Lesotho are most likely to rate political instability Informal competitors as the biggest obstacle to their daily operations (35% Access to finance of firms), followed by tax rates and informal Crime, theft and disorder competitors. Only a small percentage of firms see Access to land Electricity corruption, regulations, permits, or other Corruption bureaucratic issues as the biggest obstacle. The Tax administration political environment in Lesotho was quite Customs & trade regulations Transport tumultuous leading up to the Enterprise Survey Labor regulations conducted in 2016, with the collapse of the coalition Poorly educated workers Lesotho2016 government and snap elections held in February Licensing and permits Lesotho2009 Courts 2015. In 2009, firms were most likely to identify 0% 10% 20% 30% 40% access to finance, corruption, or tax rates as the single Percentage of firms biggest obstacle to running their businesses. The Enterprise Analysis Unit is a joint World Bank and IFC team of economists, survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of September 11, 2017