The Government of the Kingdom of Lesotho through the Ministry of Trade, Industry, Business Development, and Tourism in collaboration with the United Nations Economic Commission for Africa (UNECA) Sub Regional Office for Southern Africa (SRO-SA) and the United Nations system in Lesotho, convened a two-day Regional Policy Dialogue (RPD) to explore the sustainability of MSMEs in Southern Africa through leveraging local content policies and Frameworks.
The RPD is attended by policymakers and experts from the 10 out of 11 member States of the SRO-SA drawn mainly from relevant government ministries, departments and agencies on Industry and Trade, Non-governmental Organizations, and development agencies.
The dialogue was aimed to assess the alignment and harmonization of regional and national local content policies (LPC) and frameworks in Southern Africa; interrogate the policy and regulatory requirements on regional value chains in terms of enablers and barriers in supporting MSMEs’ active involvement along the value chains. The main objective, was for regional member states and other stakeholders to share their experiences on utilizing local content policies and frameworks in supporting development.
Each country has different resource endowments, sets of skills in their local suppliers and labor force, infrastructure, and investment environments. According to the Intergovernmental Forum, Resource-rich countries face a daunting challenge: how to ensure that billions from mining investment, supports livelihoods and economic security amid inevitable commodity price cycles and other economic disruptions. It states local content policies can serve as part of a government’s approach to ensure that investments play their role in achieving the country’s national development objectives.
Countries around the world are aiming to grow their economies, implying the demand for corresponding policies. Local content policies cover a broad array of approaches. The government works with policy-makers and stakeholders to ensure different sectors provide inclusive, gender-equitable, and sustainable socio-economic development for government, companies, and citizens alike.
Minister of Trade and Industry, Business Development and Tourism, Hon. Mokhethi Shelile said the Symposium came at a time when it is most crucial- when the region, is facing challenges in the integration processes, and on the achievement of aims and objectives highlighted in strategies like the Sustainable Development Goals (SDG 8 and 9) respectively; as to promote inclusive and sustainable economic growth and decent work for all; and to build resilient infrastructure, promote inclusive and sustainable industrialization and to foster Innovation.
“We recognize with regret the slow pace of global economic recovery and the need to address the vulnerable informal job sector, which lacks social protection. In this regard, our mission is clear: to achieve inclusive and sustainable economic growth, foster resilient value chains, and to promote technology transfer and innovation”, he said. Coming to MSMEs, the strategic approach to MSMEs development must focus on enhancing their survival rates through tailored training programs, facilitating access to information, improving financial accessibility, creating a favorable fiscal policy environment, and assisting in the adoption of modern technology.
Officiating at the meeting, the Ministry of Trade and Industry, Business Development and Tourism, Principal Secretary Pokello Mahlomola, highlighted that the strategic approach to Micro, Small, and Medium Enterprises (MSMEs) development must focus on enhancing their survival rates through; tailored training programs, facilitating access to information, improving financial accessibility, creating favourable fiscal policy environments, and assisting in the adoption of modern technology.
He further extended gratitude to UNECA for its continuous support to the Government of the Kingdom of Lesotho in various recent interventions including; the National Industrial Policy Review, the drafting of the National Minerals and Mining Policy, the Response to the COVID-19 pandemic, the Ratification of the Agreement establishing the African Continental Free Trade Area (AfCFTA), Development of the National Spatial Framework on Gender Issues, and on the Measurement of GDP of the City of Maseru.
Speaking at the event, Ms. Olayinka Bandele, Chief, of Inclusive Industrialization UNECA, said that LCPs and Frameworks offer opportunities in support of the development of domestic MSMEs. She noted that globally, an increasing number of countries have introduced or reinforced LCPs to stimulate the use of local factors of production, such as labor, capital, and supplies of goods and services, to create value in the domestic economy hence expand the industrial sector and linkages.
She noted that a study by the World Bank in 2023 found that LCPs can increase access to finance for MSMEs by up to 20% and that earlier in 2021 the International Labour Organization reported that local content policies can improve the skills of MSMEs by 15%. She further noted that in another study, the African Development Bank observed that, local content policies can increase access to markets for MSMEs by up to 10% while the United Nations Industrial Development Organization in 2019 found that local content policies can promote the development of local industries and supply chains by up to 5%”.
She further emphasized that a focus on delivering a successful local content policy and its supporting regulatory framework has the potential to support the following economic development aims: export diversification; import substitution; an improved national forex position and therefore debt sustainability.
“When delivered at scale; LCPs create an enabling environment for private sector development; value chain development and mapping into GVCs; gender economic empowerment; improved productive capacity; and improved export readiness of participating MSMEs” she added. Ms. Bandele observed that while the LCP is not a panacea for all ills of the economy, however, it is a proven robust strategy when deployed effectively. “At UNECA SRO SA, we are keen to support countries in Southern Africa to transform their economies through the benefits that accrue from the utilization of LCPs and Frameworks”.
When presenting an overview of the Conceptual Framework on LCPs, UNECA Consultant, Professor Albert Makochekanwa, noted that local content policies that do not result in the expected level of procurement from local manufacturers undermine the industrialization process and job creation.
He said without active interventions to address the constraints on low levels of local content, domestic producers will be disadvantaged and will not have the opportunity to improve their capabilities and capacity. He also declared that, with clear procurement timelines and standards and assurance of domestic demand, local producers would be in a position to increase, improve, and modify their capacities and capabilities to match specifications and compete more effectively.
In conclusion, Hon. Moleko said, “Allow me to register my heartfelt gratitude to UNECA for their continuous support to the Government of the Kingdom of Lesotho, in interventions such as; The National Industrial Policy Review, National Minerals and Mining Policy, Response to the COVID-19 Pandemic, Ratification of the Agreement establishing the African Continental Free Trade Area – AfCFTA, to name but a few.”