With support from the European Union in Lesotho (EU), Regional Value Chains Lesotho (RVCL+) project, implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), is tackling high youth unemployment and economic vulnerability by focusing on developing regional value chains. Key industries like agro-processing and light manufacturing, including indigenous herbs and feather products, offer new opportunities for Lesotho to diversify its economy and integrate into regional and global markets.

Through the EU-SADC Economic Partnership Agreement (EPA), Lesotho gains preferential access to European markets and is able to diversify its exports from diamonds and textiles. By expanding regional value chains, particularly with South Africa and other neighbouring countries, Lesotho can unlock broader market opportunities, promoting sustainable economic growth and job creation.

Why link Lesotho to global markets through value chains?

• Boosting economic diversification: Addressing Lesotho's heavy reliance on low-skilled industries by promoting key sectors like agriculture, horticulture, and manufacturing to drive innovation and sustainable growth.
• Enhancing Micro- Small, and Medium-sized Enterprises (MSME) competitiveness: Strengthening value chains to better integrate MSMEs into regional and global markets, expanding their opportunities for growth and employment creation, especially for youth.
• Advancing technological adoption: Encouraging the uptake of modern technologies and digitalisation to improve productivity, add value to products, and create a competitive edge in international trade.
• Improving infrastructure and skills: Addressing gaps in infrastructure and technical training to support value chain development and make Lesotho’s businesses more competitive in both regional and global markets.
• Supporting sustainable economic growth: Aligning with national strategies, such as the NSDP II and the SADC Industrialisation Strategy, to foster inclusive and sustainable development through the integration of regional and global value chains.
• Fostering regional and global trade: Leveraging trade agreements and regional integration to expand Lesotho's export base and attract foreign investment, positioning the country as a more attractive market for global partnerships.
• Gender and social inclusion: Promoting the economic empowerment of women and marginalised groups through targeted value chain support, aligned with Lesotho's gender equality commitments and the EU Gender Action Plan (GAP) III.

How?

To enhance Lesotho’s value chains and economic integration, the EU, in collaboration with key stakeholders, has designed a multi-faceted approach. This effort aims to strengthen the Ministry of Trade, Industry and Business Development, MSMEs, and the private sector, while supporting regional value chains in alignment with the SADC Economic Partnership Agreement (EPA). Below are the targeted areas of the Regional Value Chains Lesotho (RVCL+):

• Capacity-building: Empowering public sector partners and MSMEs to effectively utilise trade agreements, particularly the EPA, through technical expertise, awareness programs, and skill development for managing value chains.
• Private sector development: Promoting the creation of a conducive environment for private sector growth by building partnerships with business alliances, intermediary organisations, and laboratories to foster industrial and agro-processing value chains in the region.
• Women and youth empowerment: Providing tailored support to women and youth entrepreneurs through capacity development initiatives, focusing on industrial upgrading, branding, marketing, and the adoption of climate-smart and environmentally sustainable practices in value chain processes.
• Innovation and market linkages: Encouraging the adoption of new technology and digital services to enhance MSME productivity and management. Matchmaking services will connect businesses with regional and international markets, facilitating greater export opportunities.
• Stakeholder engagement: Organising advocacy trainings and public-private dialogue to address obstacles and policy issues, promoting collaboration for long-term economic sustainability.

Background

The European Union (EU), in partnership with the German Federal Ministry for Economic Cooperation and Development (BMZ), is playing a pivotal role in fostering economic growth and global market integration in Lesotho. Through the "Lesotho Economic Growth, Job Creation, and EPA Implementation Support Programme," also known as “Regional Value Chains Lesotho (RVCL+)”, the EU is providing financial and technical support to enhance Lesotho’s trade capabilities. This initiative focuses on developing value chains in agro-processing and light industry, aligning with Lesotho’s National Strategic Development Plan (NSDP) II and the broader EU-SADC Economic Partnership Agreement (EPA).

By improving the business environment and supporting MSMEs, the programme is designed to help Lesotho participate more effectively in regional and global markets, fostering inclusive development and advancing key Sustainable Development Goals (SDGs).

With a total budget of EUR 6,950,000 – of which the EU is contributing EUR 6,000,000 (LSL 114 million) – the programme will run from October 2023 to September 2026, aiming to strengthen Lesotho's capacity to seize trading opportunities and drive sustainable growth.