Exploring stakeholders' perspectives on the conduciveness of the Lesotho SME business environment

Abstract

The primary objective of this study was to investigate the government policy constraints to a conducive business environment, as well as policies and regulations affecting small and medium enterprises (SMEs) in Lesotho. SMEs play a vital role in the country's economic development and require a conducive business environment to thrive. A conducive business environment is characterised by government policies that support existing businesses, foster the development of new firms, facilitate the creation of jobs and simplify the formalisation and registration of businesses. This study was conducted in four Lesotho districts with the highest number of SMEs: Maseru, Berea, Leribe and Mafeteng. A phenomenological strategy was employed in this qualitative study to explore stakeholders' perspectives on the impact of government policies. A combination of semi-structured interviews and document analysis was used to collect data from 46 participants and Atlas.ti was used for thematic data analysis. The research population included formal and informal SMEs and key stakeholders such as the Department of Small Business, Tax authorities and business associations. The findings revealed that broad-based government policies regarding business registration and licensing, financing and taxation have a negative influence on the business environment for SMEs in Lesotho. The study concluded that government policies have a significant and positive impact on the business environment for SMEs' development and growth. However, the Lesotho business environment for SMEs is not conducive and a more balanced policy approach and reforms in areas of taxation, monetary policy and business registration and licensing are recommended for sustainable SME sector development and growth. This study provides the first content specific qualitative analysis by investigating the stakeholder perspective of the impact of government policies on the SME business environment in Lesotho. It underscores the gap between the intentions of the government policies and the perceived impact.