What are we funding?
GRANT AMOUNT | ENDORSEMENT DATE | ACTIVITIES | INSTRUMENTS SUPPORTED | WB PROJECT |
US$8.5 million | April 15, 2022 | Creating a US$4 million MSME resilience window within one of the government’s existing contingency funds. A new macro/sovereign insurance product will backstop the contingency fund to ensure it has adequate financial capacity during severe climate events. |
| Lesotho Competitiveness and Financial Inclusion Project (P175783) US$ 45 M (approved on June 24, 2022) |
- Before engaging with GSFF, Lesotho relied on budget reallocations, borrowing, and humanitarian aid for financing disaster response, making it difficult for the government to manage its increasing climate and disaster risks, especially drought. In addition, Lesotho’s largely informal workforce remains particularly vulnerable to the long-lasting impact of such disasters; most are not connected to the official systems through which government support is provided.
- A US$8.5 million GSFF grant funds two new DRF instruments, allowing Lesotho to use a risk-layering approach to manage its climate shock risks and protect MSMEs, a key sector of its economy. The grant supplements US$45 million in World Bank IDA lending for a broader financial inclusion project.
- The government is working with the World Bank and GSFF to develop both a resilience fund window within an existing contingency fund, which will provide emergency grants to eligible MSMEs, and a macro/ sovereign insurance product. Once in place, the instruments will provide financial protection for an estimated 20,000 MSMEs.
- The GSFF grant also supports the country’s first national DRF strategy and improves disbursement mechanisms for emergency payouts.