MASERU — Pressure is mounting on the government to account for a widely publicised M400 million facility said to be earmarked for youth businesses, after Revolution for Prosperity (RFP) Member of Parliament Thabo Maretlane demanded clarity on its whereabouts in Parliament.
Maretlane’s intervention has reignited a debate that Lesotho Tribune has previously examined in detail, raising fundamental questions about whether the fund, as presented to the public, ever truly existed.
Maretlane challenged the government to explain what has become of the M400 million, which had been communicated as a targeted intervention to unlock financing for young entrepreneurs.
A Fund That May Not Exist
Prior reporting by this publication paints a very different picture from the one initially presented to Basotho.
Investigations by Lesotho Tribune established that the so-called M400 million youth fund is not a standalone pool of capital accessible to young entrepreneurs. What exists instead is a partial credit guarantee scheme, a financial instrument that operates very differently from what was implied in public messaging.
Rather than the government directly disbursing funds to youth-owned businesses, the scheme works by guaranteeing a portion of loans issued by commercial banks, thereby reducing the risk borne by lenders. This distinction is critical. Under a credit guarantee model, beneficiaries must still qualify for a bank loan, submit a business plan, meet standard lending criteria, and repay the loan in full. The government, in essence, does not provide cash. It acts as a backstop in the event of default.
Repackaging Old Instruments?
Evidence suggests this mechanism is not new. Lesotho has operated versions of a Partial Credit Guarantee Fund for over a decade, aimed at addressing the persistent challenge of collateral requirements for small businesses. More recent iterations have been scaled up significantly, with government-backed guarantees reportedly reaching between M350 million and M400 million, channelled through financial institutions to support small and medium enterprises.
This raises a troubling possibility: that an existing financial instrument was rebranded or communicated in a way that suggested the creation of a new, dedicated youth fund, when in reality no such fund exists in the conventional sense.
Parliament Demands Clarity
Maretlane’s parliamentary question strikes at the heart of transparency and public accountability. If the M400 million was never a direct financing facility, several questions follow. Why was it presented as a fund specifically earmarked for youth businesses? How many young entrepreneurs have actually accessed financing through the scheme? What proportion of the guaranteed lending has reached youth-owned enterprises? And is the government deliberately conflating guarantees with actual disbursed funding?
These are not merely technical questions. They go to the core of how economic policy is communicated, and whether Basotho are being misled about the opportunities available to them.
The Illusion of Access
For many young Basotho, access to finance remains one of the most significant barriers to entrepreneurship. The announcement of a M400 million fund created a powerful perception: that capital was readily available, that youth empowerment was a genuine priority, and that government was shifting its support toward enterprise development.
But if access still depends on conventional bank lending requirements, the reality may be far more restrictive than the promise. Credit guarantee schemes, while useful, do not eliminate risk for borrowers. They redistribute part of the risk between banks and the state. For entrepreneurs without collateral, stable income or a credit history, the barrier to entry often remains unchanged.
A Question of Political Messaging
The controversy now unfolding reflects a broader problem in Lesotho’s policy environment: the gap between policy instruments and political messaging. Announcing a M400 million youth fund carries significant political weight. It signals ambition, commitment and responsiveness to youth unemployment. But if that announcement rests on a technical reinterpretation of an existing facility, it risks eroding public trust.
Maretlane’s intervention may therefore prove to be more than a routine parliamentary query. It could compel the government to clarify the true nature of the facility, provide data on beneficiaries, and reconcile its public statements with actual policy design.
The Bigger Picture
What is ultimately at stake is not just M400 million. It is the credibility of economic policy communication in Lesotho. When financial instruments are repackaged without clear explanation, the result is a cycle of inflated expectations, limited real access and growing public frustration.
For a country grappling with youth unemployment and sluggish private sector growth, the gap between promise and reality is not merely inconvenient. It is economically dangerous.
As Parliament awaits answers, one thing is clear: the question is no longer just where the money is. It is whether it was ever there in the first place.
