Abstract

This paper uses real-time survey data from the hairdressing sector and qualitative response modeling to investigate the effects of the COVID-19 induced nationwide lockdown of March 2020 on Lesotho’s informal economy. Results show that workers in the hairdressing sector experienced challenges accessing basic goods and services in the wake of the lockdown. Workers also faced drops in hours worked and monthly earnings. This culminated in an erosion of savings and an accumulation of household debt. Workers that experienced difficulty accessing basic goods and services and those whose main source of income came from the hair dressing sector, were three times as likely to experience a decrease in their earnings. Those able to work from home were found to be moderately less likely to experience a decrease in earnings. A comprehensive scoping study of Lesotho's hairdressing business and other informal sector businesses is recommended to identify vulnerable groups and guide the development of effective policies and protective measures to withstand similar extraordinary shocks in the future.       

Key words:  Lesotho, informal economy, COVID-19, economic impact.