SMEs AS VEHICLE FOR PROMOTING YOUTH EMPLOYMENT: BEDCO CASE STUDY

Abstract

Youth unemployment is one of the major challenges in many countries in the world and much more acute in Lesotho in particular. The focus is on the Basotho Enterprise Development Corporation (BEDCO) as a case study which is mandated with promoting employment creation and economic growth through the establishment and development of SMEs. The study assessed the extent to which the government of Lesotho through BEDCO curbs youth unemployment through SME development. In particular, the study examined the contribution of BEDCO in terms of facilitating creation of new businesses and the expansion of the existing small businesses as part of employment generation, especially for the youth. The research results indicate that the contribution of BEDCO to SME development and thereby employment creation for the youth, leaves much to be desired. BEDCO has a minimal impact in terms of developing business skills of entrepreneurs to start new businesses and to enable them to manage their finances and effectively market their businesses once established. As a result, the businesses fail to grow and graduate to higher levels in order to have a multiplier effect in terms of generating even more employment opportunities. Despite being in operation for a several years, the businesses on the sample were largely stagnant and not graduating. In fact some of them were even registering negative employment growth. This was, among others, mainly due to the poor industry conditions, small and saturated markets, lack of proper and demand-driven training in general and financial management and marketing, inadequate follow-up support from BEDCO, as well as lack of financial support to facilitate and stimulate business growth.