With only 13 percent of adults accessing credit, from the formal banks, most Basotho are excluded from the formal credit system. Informal money lenders mostly serve salaried workers, and interest rates are comparably high at around 60-80 percent per annum. Further, SMMEs are also largely excluded from access to credit, due to various technical capacity constraints and risk aversion within the banking sector. While 41% of SMME are bank-served, only 2% access credit and insurance services, and less than 2% use mobile money to transact. Access to finance is thus seen as a major constraint to employment creation and income generation especially in the rural areas, where there are limited options.

Increasing financial inclusion and access to credit are two of the top priorities in the National Strategic Development Plan (NSDP) and the Financial Sector Development Strategy (FSDS). The Government of Lesotho’s (GOL) Vision 2020 and the NSDP aim at strengthening the financial services sector in Lesotho in order to contribute to the economic and social development in Lesotho. The Vision 2020 document sets out broad objectives for various sectors in the country.

The Lesotho ‘Scaling Inclusion through Mobile Money (Lesotho SIMM) project is aimed at advancing access to formal and semi financial services for the poor through provision of a coordinated support | for development of an inclusive ecosystem for mobile financial services. This will enable increased access to formal and semiformal financial services, and contribute to improvement of the national indicators on employment creation, as it will open opportunities for small investments and improve economic outlooks within the communities. It seeks to mobilise adoption of mobile money for improved access to finance, household and business financial management, through innovations and financial solutions based on mobile technology. This is further expected to improve interaction of the unbanked with formal financial services, specifically banks, thereby improving options for access to savings, credit and insurance through a formal channel.