Are banks reaching rural farmers, informal traders and youth entrepreneurs, or are inclusion wins still skimming the surface?
Key takeaways
• Access has expanded fast, largely via mobile money, but productive credit for MSMEs remains scarce.
• Youth and informal entrepreneurs are visible in the economy yet under-served by formal finance.
• Governance frameworks have strengthened on paper, now the test is transparent practice, measurable outcomes and board diversity disclosure.
I) Access vs. usage: inclusion’s two-speed track
Lesotho’s new National Financial Inclusion Strategy II (2024–2028) confirms headline progress: overall financial inclusion rose to 91 percent by 2021, driven mainly by mobile money. The strategy now pivots to harder problems such as MSME credit, smallholder insurance and usage that improves livelihoods.
Fresh MSME data underline the gap between access and meaningful finance. Only 34 percent of MSME owners are “banked,” while 66 percent use mobile money. Most start or run their businesses with personal savings or family help, and 79 percent do not borrow at all. This is inclusion for transactions, not for growth.
II) Marginalized segments: who is still left behind?
Rural farmers
NFIS II makes farmers a priority and calls for targeted products, risk-sharing and climate-smart insurance. This is explicit recognition that rural producers remain under-served by bank credit. Lesotho PostBank has begun positioning products for agriculture, but system-level mechanisms such as guarantees and parametric cover are what the strategy says must scale between 2024 and 2028.
Informal traders
Informality is the norm for MSMEs. Most are micro or single-person businesses, many outside Maseru’s formal ecosystem. These firms rely on savings and mobile wallets, not bank overdrafts or working-capital lines, limiting resilience and growth potential.
Youth entrepreneurs
A full 33 percent of MSMEs are youth-owned, yet younger owners report thinner capital buffers and lower borrowing. NFIS II highlights youth inclusion as a policy priority, but delivery will hinge on simpler KYC, starter credit with risk-sharing, and financial education that is tied to actual products.
III) What banks are doing (and not yet doing)
• Low-cost accounts: Standard Lesotho Bank’s Bothebelele M0.00 offers a no-minimum opening balance and entry-level features, signalling affordability moves in the mass market. The bank also markets a suite of savings options for low-income clients.
• Digital rails for traders: SLB’s Unayo platform targets micro-merchants and community payments, aiming to onboard the informal economy with simplified KYC and agent-led sign-ups. It is a promising bridge, but impact will depend on credit plug-ins, not payments alone.
• Rural and agri focus: Lesotho PostBank explicitly markets agriculture finance, aligning to NFIS II’s farmer agenda and to its public-interest mandate.
These are meaningful steps on the social pillar of ESG, yet none by themselves close the credit gap MSMEs and smallholders face.
IV) Governance: frameworks up, disclosures patchy
Consumer protection architecture
Lesotho enacted the Financial Consumer Protection Act, 2022, giving the Central Bank of Lesotho clear powers on market conduct, data protection duties for providers, and disclosure rules. The Financial Consumer Protection (Disclosure of Credit Information) Regulations, 2023, followed, tightening credit-disclosure standards. The Central Bank also runs a formal complaints channel through its Financial Consumer Protection Division.
On practice, SLB’s 2023 ESG report details complaint handling, anti-fraud, AML/CFT, whistleblowing and conflict-of-interest policies aligned to the Mohlomi Corporate Governance Code, the national soft-law benchmark launched in 2021. That is encouraging, but customer-outcome data and independent redress statistics remain limited in the public domain.
Board diversity and transparency
Public profiles show Lesotho PostBank chaired by Adv. Mampe Matela-Mphana, with a visibly mixed board. FNB Lesotho publicly lists its directors. What is still uncommon across banks is consistent, quantified disclosure on board gender mix, independence, tenure and succession pipelines, the kind of metrics investors now expect under the governance pillar of ESG.
V) Are banks serving the marginalized or are gains still exclusive?
Progress:
• Transactional access is broad and affordable options exist, especially via mobile money and low-fee accounts. Complaints channels and market-conduct rules are in place.
Gaps:
• Credit for productivity is the missing piece. MSMEs and farmers largely finance themselves, formal borrowing is the exception not the rule. Youth-owned firms enter but struggle to scale. Board-level ESG reporting is improving but uneven, especially on diversity and consumer-outcome metrics.
Bottom line: Lesotho’s inclusion story has moved from “can people transact?” to “can enterprises grow?” Banks have laid rails and improved governance frameworks. The next ESG test is whether those rails carry risk-sharing credit and fit-for-purpose insurance to the last mile, youth, rural farmers and informal traders, with transparent results.
VI) What to watch (2024–2028)
• NFIS II delivery: New credit-guarantee tools, agri-insurance pilots and MSME scoring models that reduce collateral barriers.
• Bank disclosures: Annual, comparable board-diversity and complaint-resolution metrics, published alongside ESG reports and pricing schedules.
• Product evolution: Low-cost accounts like Bothebelele and digital wallets like Unayo linked to micro-working-capital with transparent pricing and fair-use safeguards.
