## Unleashing Private Sector Job Creation: Challenges and Opportunities for Lesotho

_Selected Issues Papers, October 14, 2025_

## Source details

**Canonical URL:** [Unleashing Private Sector Job Creation: Challenges and Opportunities for Lesotho](https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/14/unleashing-private-sector-job-creation-challenges-and-opportunities-for-lesotho-571227)

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## Bibliographic details
- Authors: Athene Laws, Ann-Alice Ticha
- Published: October 14, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229027540.018

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### Key findings
- Lesotho’s public sector led growth and employment model has struggled to develop a flourishing labor market.
- Recent external shocks have made developing job-rich growth an even more urgent priority.
- The primary challenge is a lack of labor demand due to:
  - a small, undiversified private sector, and
  - steep barriers to firm growth.
- Labor supply issues also compound the challenge, including skills mismatches.
- Addressing the problem requires concerted effort across multiple policy fronts combining:
  - public-sector reform,
  - business-environment reform,
  - expanding financial access for firms,
  - better skills matching, and
  - careful macroeconomic management.

### Policy recommendations and priorities
- Public-sector reform to rebalance the employment and growth model away from public-sector–led dynamics.
- Business-environment reform to lower barriers to firm growth and diversify the private sector.
- Expand financial access for firms to support entrepreneurship and scaling of businesses.
- Improve skills matching between labor supply and private-sector demand.
- Maintain careful macroeconomic management to support a transition toward job-rich private-sector growth.

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/14/unleashing-private-sector-job-creation-challenges-and-opportunities-for-lesotho-571227_