Unleashing Private Sector Job Creation: Challenges and Opportunities for Lesotho

Lesotho’s public sector led growth and employment model has struggled to develop a flourishing labor market, and recent external shocks have made developing job-rich growth an even more urgent priority. The primary challenge is a lack of labor demand due to a small, undiversified private sector and steep barriers to firm growth. Nonetheless, labor supply issues, including skills mismatches also compound the challenge. Addressing this issue will require a concerted effort on multiple policy fronts; combining public-sector reform, business-environment reform, expanding financial access for firms, better skills matching, and careful macroeconomic management.