Stakeholder perspectives of factors contributing to the conduciveness of the business environment of small and medium-sized enterprises in Lesotho

Abstract

Background: The business environment for small and medium-sized enterprises (SMEs) in Lesotho faces several challenges, such as weak regulatory frameworks and inconsistent policy implementation. Approximately 85% of imports come from South Africa, creating a significant trade imbalance. This trade deficit hinders local business growth and makes it challenging for SMEs to thrive.
Aim: The study intended to investigate stakeholders’ perceptions of how government policies affect the business environment for SMEs in Lesotho.
Setting: The study was conducted in Lesotho and focuses on SMEs in Maseru, Leribe, Berea and Mafeteng districts.
Methods: This qualitative study used a phenomenological approach to explore how government policies affect the business environment for SMEs in Lesotho. Data were collected through semi-structured interviews and document analysis from 46 participants across various stakeholder groups and thematically analysed by using ATLAS.ti
Results: The findings indicated that broad-based policies, including those related to licensing, taxation and financing, continue to hinder the development and formalisation of SMEs in Lesotho.
Conclusion: The study concluded that government policies and regulations play a pivotal role in shaping a business environment conducive to SMEs.
Contribution: This study contributes to the academic understanding of SME development by exploring stakeholder perspectives of the impact of government policies on SMEs in Lesotho. It reveals how policy implementation issues influence SME practices and identifies contextual factors affecting their success, such as a lack of incentives. It connects the literature on the effectiveness of regulations and empirical findings, thereby offering practical and theoretical guidance in developing SME-tailored support strategies.