This Poverty Reduction Strategy Paper for the Kingdom of Lesotho presents a determined plan in pursuance of high and sustainable equity-based economic growth. It contains medium-term objectives and strategies to address the major challenges facing the country. These challenges include employment creation and income generation, and improving quality of and access to education and health services. Lesotho plans to deal boldly with its trading and investment partners by exploiting the opportunities inherent in the process of globalization under such mechanisms as the Africa Growth and Opportunities Act.
1. Gender inequalities in opportunities and outcomes persist in Lesotho and the growth potential from closing the gender gaps is sizable. Gender-based legal restrictions, as well as barriers in access to education, healthcare, financial services, assets, the labor market, and formalsector employment prevent women from fully and equally participating in the economy. This in turn lowers aggregate productivity and hampers the efficient allocation of talent and resources, thereby weighing down on economic growth. Eliminating gender inequality is thus macro-critical — it can boost productivity and help countries fulfill their growth potential, while enhancing economic stability and resilience.2 A 2015 study suggests that closing the gender gap of Lesotho with the ASEAN-5 countries could boost economic growth by 0.5 percentage point, which is comparable to cutting income inequality, and greater than the impact of improving infrastructure. To quantify, we selected a subgroup of ASEAN-5 countries with a strong track record of growth as the benchmark and decomposed the differences in average real GDP per capita growth between Lesotho and these fast-growing countries to determine the role that different factors play in explaining Lesotho’s growth shortfall (Figure 1).3