Competitiveness and Financial Inclusion Project (CAFI)

The Competitiveness and Financial Inclusion Project (CAFI) is a strategic intervention by the Government of Lesotho aimed at boosting the sustainable participation of the private sector in the national economy. Its intervention strategy is based on a dual pillar: improve competitiveness, local businesses and broaden financial inclusion to traditionally excluded population segments, including micro, small and medium-sized enterprises (MSMEs), women, and young entrepreneurs. The program addresses regulatory bottlenecks (G2B reforms) and gaps in access to finance and non-financial support services, while strengthening the country's financial resilience to climate and health shocks.

• Increase access to financial services: Target MSMEs and entrepreneurs, particularly women and youth, by facilitating access to formal financial products, including loans, insurance, and digital payment services.
• Strengthen the business support ecosystem: Build the capacity of local Business Support Organizations (BSOs) and establish business incubation hubs to provide non-financial services (training, mentoring, technical assistance) to entrepreneurs.
• Improve the business environment and competitiveness: Support regulatory reforms to streamline government-to-business (G2B) processes, enhance transparency, and reduce the costs and time involved in starting and running a business.
• Enhance financial resilience to shocks: Establish Disaster Risk Financing (DRF) mechanisms for MSMEs to ensure their survival and rapid recovery from climate or pandemic shocks.