Disaster Risk Financing (DRF)
Proposed Preparedness Equipment Support and Minor Works for MSME Climate Resilience Building
Background
The Competitiveness and Financial Inclusion (CAFI) Project supports the Government of Lesotho’s efforts to strengthen MSME competitiveness, expand financial inclusion, and improve enterprise resilience to climate and economic shocks.
Under Subcomponent 1.3 – Strengthening the Resilience of MSMEs to Climatic Shocks and Disasters, the project assists enterprises in building resilience against climate-induced disasters and shocks through preparedness and adaptation investments.
The programme focuses on MSMEs that generate high social and economic returns, including:
- Job creation.
- Fiscal contributions.
- Export potential.
- Technological upgrading.
- Alignment with the National Strategic Development Plan (NSDP II) Extended.
To ensure sustainability, the programme will be implemented as a matching grant scheme through the Lesotho Enterprise Assistance Program (LEAP) platform, which has an established mandate, operational capacity, and experience in firm-level support.
The programme supports enterprises across all sectors, with priority given to sectors that drive economic growth as outlined in the NSDP II Extended.
Support Areas
The programme supports measures that improve the resilience of MSMEs before climate-induced disasters and shocks, including:
- Droughts.
- Floods.
- Storms.
- Heat stress.
- Heavy snowfall.
- Water shortages.
- Input disruptions.
- Market interruptions.
Support is provided through two complementary windows:
- MSME preparedness measures, including procurement of resilience-building equipment.
- MSME post-shock response measures.
The first window strengthens knowledge, systems, and preparedness, while the second finances practical investments that reduce vulnerability and improve business continuity.
Across all sectors, the grant supports:
- Risk mitigation investments.
- Climate-resilient equipment.
- Minor works to reduce exposure.
- Early warning communication tools and connectivity improvements.
- Quality improvement measures that reduce spoilage and operational losses.
Eligibility Criteria
As the programme is implemented as a matching grant scheme, applicants are required to contribute 20% of the total project cost, while the CAFI Project contributes 80%.
Eligible enterprises must:
- Be formally registered with the relevant authorities.
- Be located in an area where climate-related shocks are likely to occur.
- Clearly demonstrate how anticipated shocks are likely to affect business operations.
- Have a valid Tax Clearance Certificate.
- Provide financial statements.
Application Process
Applicants must register for the Disaster Risk Financing (DRF) programme through the LEAP Portal available on the CAFI website.
After registration:
- Applicants will access and complete the online application.
- Each application will be assessed individually for eligibility.
- Applicants will be able to track the status of their application from submission to final approval.
- Successful applicants must pay 20% of the total approved cost and submit proof of payment to CAFI.
- Upon receiving proof of payment, CAFI will pay the remaining 80% directly to the supplier.
Supported Resilience-Building Equipment
Agriculture
Supported equipment includes:
- Shade nets.
- Hail nets.
- Windbreaks (e.g. Chinese Poplar trees).
- Basic irrigation equipment, including small-scale and drip irrigation systems.
- Water harvesting systems.
- Water storage tanks.
- Climate-resilient greenhouse improvements.
- On-farm drainage.
- Erosion control measures.
- Generators, solar-powered boreholes and accessories, or pumping systems where technically justified and within the approved budget.
Agro-Processing
Supported equipment includes:
- Moisture control systems.
- Hermetic storage.
- Micro-scale cold room upgrades.
- Backup solar solutions for small processing operations.
- Hygienic flooring and drainage improvements.
- Insulated storage.
- Weather-protected loading areas.
- Efficient water-use systems.
- Small equipment that reduces post-harvest losses and preserves raw materials before climatic shocks.
Manufacturing
Supported equipment includes:
- Flood barriers and protection materials, including flood boards, sandbags, and door seals.
- Shelving and racking systems to elevate inventory.
- Generators or solar and battery backup systems.
- Fire safety equipment.
- Flood protection improvements.
- Drainage enhancements.
- Insulation and ventilation for heat control.
- Water storage facilities.
- Solar backup systems for essential operations.
- Safe storage for sensitive materials.
- Workspace reconfiguration to protect inputs and finished goods from water damage and heat exposure.
Tourism
Supported equipment includes:
- Water storage tanks.
- Water pressure pumps.
- Fire safety equipment.
- Water harvesting equipment.
- Water-efficient fittings.
- Small-scale greywater reuse systems.
- Solar water heating.
- Backup solar power for essential services.
- Shading structures.
- Insulation equipment.
- Fire prevention and storm preparedness improvements.
- Backup lighting and drainage improvements for lodges, guesthouses, restaurants, and small tourism operators.
Creative Industries
Support may include:
- Protection of studios, workshops, rehearsal spaces, event infrastructure, and production equipment from heat, dust, moisture, and storms.
- Weatherproof storage.
- Shelving.
- Protective equipment cases.
- Ventilation improvements.
- Modest solar backup systems.
- Portable weather-resilient equipment for businesses dependent on live events.
- Covered mobile setups.
- Backup sound and lighting equipment for controlled-scale use.
- Resilient workspaces.
- Digitisation of products and archives for enterprises in fashion, crafts, design, media, and cultural production.
Supported Minor Works
Eligible minor works include:
- Drain clearing and site clean-up.
- Borehole drilling.
- Installation of flood barriers.
- Sealing of doors and windows.
- Elevation of electrical sockets and cables.
- Development of fire belts.
- Installation of water tanks, gutters, and basic water harvesting systems.
- Drainage and site protection works.
- Installation of shelving, pallets, and safe storage systems to reduce stock losses.
- Modest solar backup systems for critical operations.
- Insulation, shading, and ventilation improvements.
- Protective works for premises exposed to flooding, leaks, excessive heat, or storms.