Palesa Moloinyane and Karabo Ramathe
The Government of Lesotho has earmarked M459 million from the 2025/26 national budget to support youth empowerment and job creation initiatives, Minister of Information, Communication, Science, Technology and Innovation, Nthati Moorosi, announced this week.
This allocation represents two percent of the country’s total government expenditure.
Moorosi said the decision was taken at a Cabinet meeting held on July 8, 2025, where ministers approved the reallocation of funds to finance targeted programmes aimed at equipping young Basotho with skills, creating employment opportunities, and fostering entrepreneurship.
The announcement follows the government’s formal declaration of a national state of disaster over the country’s soaring youth unemployment and widespread job losses.
The declaration was made official through a Government Gazette published on July 7, 2025, and signed by Acting Prime Minister Nthomeng Majara. The state of disaster, issued under the Disaster Management Act of 1997, will remain in effect until June 30, 2027.
Prime Minister Sam Matekane had already signalled this shift in government priorities during the National Youth Dialogue on June 18, where he declared youth unemployment a national emergency. This declaration came in response to sustained pressure from a coalition of youth organisations, which in April called on the government to treat the crisis as a disaster.
The disaster designation allows government to bypass standard procedures and roll out emergency interventions such as the M400 million earmarked to support youth-led enterprises, a waiver of business registration fees, and a new procurement policy reserving 40 percent of public contracts for youth, women, and people with disabilities.
When presenting the 2025/26 budget, Minister of Finance and Development Planning Dr. Retšelisitsoe Matlanyane said findings from the 2024 Labour Force Survey painted a grim picture, calling for urgent intervention.
Of the 760,230 Basotho aged 15 to 35, approximately 145,087 are unemployed.
“Nearly 39 percent of our youth actively looking for work are unable to secure a job. This situation represents more than just numbers, it reflects postponed aspirations, unfulfilled potential, and uncertain futures,” she said.
She noted the crisis is even more severe for young women. While the overall youth unemployment rate stands at 38.9 percent, young women face a higher rate of 40.8 percent, compared to 37.1 percent for their male counterparts.
Although this is not the first youth-targeted financial intervention, previous allocations have delivered limited outcomes.
Matlanyane also acknowledged that lack of access to finance remains a chronic challenge for entrepreneurs and small businesses, particularly for women and youth. She cited stringent collateral requirements and risk-averse banking practices as key barriers to credit access.
To address this, she said the government planned to allocate M400 million toward the newly created Inclusive Growth Fund (IGF), a venture-capital-style financing vehicle designed to expand credit access, promote entrepreneurship, and drive inclusive growth.
“A defining feature of the IGF is its strong commitment to financing women- and youth-led enterprises, ensuring these historically marginalised groups gain meaningful access to capital,” Matlanyane said.
The fund will also be accessible to other eligible businesses seeking to scale up operations, invest in productive assets, or enter new markets. By bridging financing gaps and enhancing liquidity, it is expected to stimulate business development, accelerate job creation, and foster a more inclusive financial ecosystem.
Matlanyane added that the IGF will partner with commercial banks to create a sustainable financial model that expands credit without placing undue pressure on public finances.
“The IGF represents a transformative policy shift aimed at building a more equitable and dynamic economy,” she said. “It will begin operations this year, in partnership with all commercial banks, once operational modalities and agreements are finalised. It also lays the groundwork for a future development bank.”
Summary
- Moorosi said the decision was taken at a Cabinet meeting held on July 8, 2025, where ministers approved the reallocation of funds to finance targeted programmes aimed at equipping young Basotho with skills, creating employment opportunities, and fostering entrepreneurship.
- This declaration came in response to sustained pressure from a coalition of youth organisations, which in April called on the government to treat the crisis as a disaster.
- The disaster designation allows government to bypass standard procedures and roll out emergency interventions such as the M400 million earmarked to support youth-led enterprises, a waiver of business registration fees, and a new procurement policy reserving 40 percent of public contracts for youth, women, and people with disabilities.
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