Situation Analysis

Unemployment rate is 31% and the percentage without any form of waged employment is considerably higher¹. There is a strong correlation between unemployment and poverty. The creation of employment remains the best means of addressing poverty and creating the overall conditions for sustained economic growth and the further reduction of poverty. However, the creation of new jobs will not reverse the high levels of unemployment in Lesotho unless higher rates of economic growth can be sustained over many years.

Lesotho is in the midst of a significant transformation of its economic base. In the late 1980s almost half of its GNP was based upon remittances from over 120,000 male migrant labourers, mostly in South Africa’s gold mines. Today, only half that number of migrants is employed. By contrast, the manufacturing sector in Lesotho has grown rapidly. Today it employs over 60,000 workers, most of whom are women in the textile industry, although at wage levels significantly lower than those of the miners.

Lesotho must prepare for greater competition in the textile sector. The rapid growth of the textile industry has been made possible largely as a result of AGOA, an American initiative that has created preferential terms of trade on a range of products manufactured in Africa for the US market. Concerted efforts by GOL to attract investors under AGOA have paid off. GOL is committed to ensuring that all efforts are taken to maximise the potential for further growth in this sector despite the increased international competition that will emerge in 2005 as a result of the opening of US markets following the expiry of the Multi-Fibre Agreement.

Small, Medium and Micro Enterprises (SMMEs) can make an enormous contribution to economic development and poverty reduction. Because their start-up costs are often low, SMMEs allow individuals and groups to engage in productive activities even if they have limited access to capital. Unlike large firms, they often operate in areas lacking sophisticated infrastructure and therefore have considerable potential to improve the geographic distribution of income and address income inequality. Many of the SMMEs are run by women and youth, providing an important means for them to participate in the economic development of the country. However, for SMMEs to flourish, a considerable effort will be required to create a more conducive environment with supportive legislation and better access to credit, markets and business development services.

GOL is committed towards countering the many local threats to further investment. These include: the long and cumbersome process involved in licensing new developments; difficulties in obtaining land; inadequate water supply to industrial areas; poor rail connections; low levels of productivity among workers; a weak and divided labour movement; and inadequate dispute resolution systems.

Proposed Strategies

GOL will closely monitor changes that might affect Lesotho’s competitiveness (such as the exchange rate and proposed trade agreements). It will move forthrightly to address internal constraints to growth and development. In order to attract domestic investment and foreign direct investment (FDI), it will:

• a) Create a conducive environment for investment by reducing administrative procedures to speed up the licensing process. In 2004/05 the legal framework will be established to set up a one-stop-shop that will speed up the licensing process. Particular attention will be given to ensuring that immigration and work permits are efficiently processed and to facilitating access to land;

• b) Improve the efficiency of the Department of Immigration. Government has taken heed of the concerns of both investors and ordinary Basotho whose livelihoods are being impaired by poor service delivery in this critical area. Measures, including the computerization and decentralisation of immigration functions, will be taken to reduce the back-log of applications and speed up the provision of services;

• c) Provide basic infrastructure. GOL will give top priority to seeking viable and sustainable fast-track solutions to the provision of water supply. The findings from the Lesotho Lowlands Water Supply Feasibility Study will be examined with a view to providing water to high priority ‘wet industry zones’ located close to water resources. High priority will be given to providing factory shells and upgrading the Maseru Rail Terminal Depot. A public-private partnership (PPP) approach will be adopted where viable;

• d) Promote and facilitate investment. New investment promotion materials will be developed and the capacity of Lesotho’s overseas missions to promote Lesotho as a prime investment destination will be enhanced. The Investment Promotion Centre of the Lesotho National Development Corporation (LNDC) will be strengthened. Government will improve Customs efficiency and the capacity of trade negotiators.

• e) Improve labour productivity. This is a multi-faceted issue which needs to be addressed in the long-term by improving attitudes towards work and employment. In the three-year PRS period, GOL will collaborate with the private sector to study and put in place measures that are necessary for shaping a stronger “culture of productivity”;

• f) Improve labour stability. GOL will strengthen tripartite relationships through an Economic Forum or a National Employment Council. Policies and legislation pertaining to labour will be reviewed and revised. Dispute resolution mechanisms will be decentralised to key districts;

• g) Establish a comprehensive social security system. GOL will continue to explore ways of establishing a system that covers both formal and informal sector workers. A pension for all citizens over 70 years of age will be introduced;

• h) Increase support to local businesses and SMMEs through a wide variety of measures, that include: building the skills of Basotho entrepreneurs through training; development of sustainable market opportunities; the provision of business counselling and mentoring; support to business associations; piloting rotational markets and establishing new market centres equipped with modern technology; improving access to credit through the reintroduction of credit schemes and financial services that are demand-led, market driven and flexible in nature; and

• i) Promote the optimal use of Lesotho’s natural resources in order to add value, especially in agri-business, tourism and mining.

Situation Analysis

Lesotho has not been in a position to grow enough food to feed its population for decades as a result of a combination of factors including: population growth, limited arable land, erosion, degradation of the soil, and variability of climate. National food self-sufficiency is unobtainable because the country simply does not have the enough fertile, arable land to feed its growing population. Past interventions, to a certain extent, may actually have worsened the situation by creating new dependencies.

Although official statistics show crop productivity has slightly increased over the past two decades, a good portion of current production is uneconomical, requiring farmers to cross-subsidise production from other sources of income. The decline in mine-worker remittances has meant that fewer families are able to do this. Stock theft and the degradation of rangelands have made animal rearing less attractive and official statistics show a decline in livestock productivity. The school system has socialised many of the youth to hold farming in disdain, yet urban areas cannot provide an adequate alternative source of employment. HIV and AIDS is taking its toll on productive farmers, as scarce resources are required to nurse the sick, cover the costs of funerals, and support orphans.

Proposed Strategies

The Government recognises that food security is a multidimensional concept that includes production and its equitable distribution, as well as household access to food. It involves dealing with both food emergencies and chronic food insecurity, mainly linked to poverty and problems of exclusion. Co-ordination is critical as various Ministries, NGOs and international agencies are all involved in addressing food security issues. Emergency interventions and subsidies must be designed so as not to undermine longer-term efforts to increase productivity.

Given the constraints described above, improvements in food security will come primarily from expanding formal and informal work opportunities, and through boosting the purchasing power of those with employment. As such the above strategies mentioned under employment creation will contribute considerably towards the attainment of food security. For those with land, every effort will be made to ensure that they use it as productively as possible either for consumption or income generating purposes, both of which improve food security.

GOL is committed to reducing hunger. The focus will be on improving productivity through proven methods of intensified agricultural production in areas that are agro-ecologically suitable, encouraging appropriate water harvesting and irrigation techniques, promoting block farming.

Food security will not be achieved if the poor do not fully utilise their land or release it for use to those who have means. This commitment will not be forthcoming if land tenure is not secure. With this in mind, Government will address issues of access to land and any legal inequalities between men and women with regard to land ownership. During the PRS period it will develop a National Land Policy, enact the Land Bill and develop a digitised land information system.

Bearing in mind the issues described above, GOL will implement the following strategies:

• a) Adopt appropriate farming practices. The policy focus will be on crop diversification and substitution; encouragement of field crops in areas that are agro-ecologically suitable; Exploring opportunities for block farming, especially in the lowlands areas; promotion of commercialisation of agriculture; and introduction of improved agricultural technologies;

• b) Develop appropriate irrigation, especially low-cost, gravity-fed systems that the poor can sustain, while at the same time exploring opportunities for larger scale irrigation;

• c) Incorporate agro-forestry practices into all scales of farming systems;

• d) Strengthen and decentralise extension services at area level within all districts;

• e) Ensure an efficient and standardised land tenure system;

• f) Encourage appropriate animal husbandry and fodder production. This will include the introduction of milk goats and indigenous poultry and promotion of fodder. In areas better suited to extensive animal husbandry, the focus will be on improving range management through community associations, and improved veterinary services;

• g) Enhance marketing by improving the response to regional and international market opportunities and facilitating the marketing of fresh produce locally; and

• h) Improve disaster preparedness for emergency food distribution to most vulnerable groups.

Situation Analysis

Given Lesotho’s rugged terrain and limited resources, it is remarkable that the country now has a relatively well developed road network, extensive village water supply systems, rapidly developing communications network, major dams, a hydroelectric plant and other infrastructure it can be proud of. Nevertheless, much remains to be done. Of particular concern is the lack of water for the fast growing industries and peri-urban areas, as well as the low proportion of households that are electrified. The rapid pace of urbanisation and the lack of adequate settlement planning is also a concern. There is clear evidence that the existing regulatory framework is cumbersome and constrains legal access to land by the poor, promotes ad hoc settlement and acts as a disincentive to investors.

Proposed Strategies

Development of infrastructure is essential for the creation of a conducive investment climate in Lesotho. To address inadequate infrastructure, which is one of the major developmental constraints, the Government will undertake these strategies during the PRS period:

• a) Road links are seen as vital to the implementation of many of the strategies described in this document. The Government will, therefore, provide a conducive legislative, policy and institutional framework while at the same time increasing road access. High priority will be given to labour-intensive construction and maintenance methods. Only where it is considered absolutely necessary (based on socio-economic criteria) will paved trunk roads be constructed to connect major towns or areas of strategic importance;

• b) Develop water resources in order to ensure the further growth of wet industries (textiles) and maintain job creation. Water needs are being addressed in feasibility studies (Metolong Dam, Lesotho Lowlands Water Supply). Within the next year major decisions will be made, with the fast-tracking of plans and implementation schedules. Institutional capacity to assess, monitor and manage water resources will be improved, together with water storage, delivery and distribution systems. Water conservation will be strengthened by ensuring that all new factories are equipped with water recycling plants;

• c) Construct improved water-borne sewerage systems. Government will seek ways of assisting poor households to up-grade their dry sanitation systems (latrines) to ensure that these provide adequate protection against disease and do not present a risk to ground water;

• d) Streamline planning and land allocation systems to accommodate growth in towns and peri-urban areas. GOL is committed to the urgent reform of the framework with a view to making it simpler, faster and more accessible;

• e) Increase support for rural water supply. This will include increasing resources for the rehabilitation and expansion of the rural water supply systems;

• f) With regard to telecommunications, GOL will pursue means to implement its Universal Access Policy that will ensure that poorer parts of the country are provided with the necessary services wherever possible. Highest priority will be given to places where development is being targeted under other components of the PRS (e.g. rural police stations). The Government will strive to create a conducive environment to enable private sector’s participation in this regard;

• g) Improve access to energy by implementing a National Rural Electrification Programme. The ongoing rural electrification programme will be expanded. In addition appropriate reform measures will be introduced, including the complete privatisation of the Lesotho Electricity Corporation under a Public Concession model; and

• h) Improve access to affordable housing by streamlining land application and allocation procedures, updating the National Settlement and Shelter Policy, and strengthening Lesotho Housing and Development Cooperation with a view to ease access to land for private sector housing development.

Situation Analysis

Political unrest in 1998 resulted in substantial damage to the country’s economy and credibility. It became abundantly clear that without national unity and stability, Lesotho would not make economic progress or be able to address the spectrum of poverty issues it faces. Lesotho was badly divided when it gained Independence but since 1998 the political leadership have worked together to create a more inclusive political model that has both constituency-based and proportional representation. Further steps are required to consolidate democracy at national and local levels. This is important as, since Independence, power and wealth have been concentrated in the capital. Issues of safety and security require major attention. Courts dispense justice very slowly and prisons are overcrowded, affecting the poor and vulnerable groups most.

Proposed Strategies

GOL is committed to deepening democracy, improving governance at all levels, increasing safety and security, and improving the efficiency of the justice system. These issues will be addressed by:

• a) Promoting national unity as a pre-condition for development, and strengthening the formal conflict management structures to enable speedy resolution of disputes at various levels;

• b) Establishing Civic Education programmes with the support of NGOs in schools and through the media to consolidate support for and understanding of democratic rights, responsibilities and procedures;

• c) Devising mechanisms for feedback and public monitoring with regard to how the community relate to GOL plans to address poverty issues, especially through local government and NGOs;

• d) Maintaining the capacity of the Independent Electoral Commission as a strategic role player in restoring and maintaining public confidence in democracy;

• e) Improving the legislative efficiency of Parliament through the parliamentary reforms, which include establishment of portfolio standing committees, the review of drafting and legislation processes and provision of training;

• f) reforming the judiciary system to be more independent and transparent;

• g) Strengthening the Directorate on Corruption and Economic Offences (DCEO) and facilitating its autonomy in order to make concerted progress in the fight against corruption;

• h) Creating and strengthening structures for public participation in governance, at local level, through a clearly developed devolution plan;

• i) Establishing appropriate financial structures for local government as well as financial systems that will enable local communities to implement their local plans;

• j) Reforming and strengthening safety and security institutions and establishing community policing to reduce the high rate of crime and livestock theft;

• k) Speeding up justice through improving case management systems, improving access to legal aid and protection for vulnerable groups, and establishing a restorative justice and rehabilitation system;

• l) Creating specialised high level response units for riot control and the protection of women and children; and

• m) Enhancing the capacity of Lesotho Defence Force to partner with other stakeholders in fighting crime, responding to disasters, training youth and supporting other community development initiatives.

Situation Analysis

Lesotho was a pioneer in Southern Africa with its Primary Health Care system during the late 1970s and early 1980s. It has a well developed system of Health Service Areas with hospitals, clinics, village health posts, village health workers and traditional birth attendants that bring services closer to the poor. In addition, efforts are being made to strengthen partnerships with churches and the network of traditional healers. Unfortunately, progress has been eroded by growing poverty and by the increasing incidence of HIV and AIDS and associated infectious diseases such as tuberculosis. Besides HIV and AIDS, which is discussed as a cross-cutting issue in the PRS, other areas of concern to Government that need urgently to be addressed include: a huge imbalance between over-crowded Government health centres with highly-subsidised fees and CHAL health centres where fuller fees are paid; the high cost of medical care to providers and users; long distances to medical facilities in mountain areas; and the insufficient numbers of health personnel especially in rural areas.

Proposed Strategies

The most critical areas that GOL will be addressing during the PRS period in order to improve both quality and access to essential health care include:

• a) Rationalised provision of health service facilities;

• b) Improving the procurement, storage, distribution and maintenance of equipment, drugs and dressings.

• c) Improvement of the capacity of health personnel and distribute it equitably at all levels;

• d) Improvement of health care management e.g. management information systems, research and financial systems and controls;

• e) Strengthening diseases prevention programs through critical programmes such as child vaccinations, reproductive health, etc;

• f) Provision of the nutrition food packages and micro-nutrient supplies to vulnerable groups; and

• g) Improvement of access to Social Welfare Services.

Situation Analysis

Lesotho has a well developed school system and one of the highest literacy rates in Africa. As with the health sector, a partnership exists between government and the churches. Lesotho operates a university and a number of other institutions for training professional, technical and commercial graduates. Local communities have established pre-schools over the past 25 years to address the needs of young children and working mothers. Unusually for a developing country, females are generally better educated then men, who in the past have relied on herding and mine work. One result is that women are more numerous in certain levels of the civil service and the formal sector than men. Lesotho’s educational system shows high repetition and drop-out rates, with over one half of primary enrolment traditionally dropping out before completing the cycle and about two thirds of secondary enrolment dropping out before graduating.

Until recently primary enrolment was in decline, falling from 71% of children aged 6–12 years in 1996 to 61% in 1999. GOL took a bold step to reverse these trends in 2000 when it introduced Free Primary Education, which is being implemented one year at a time. By 2002 this had raised enrolment to 85% of children 6–12 years. In addition, a targeted equity-based programme to cater for disadvantaged students at secondary and high school level is in operation. In this manner, the needs of the poor are being addressed in a meaningful way. Nonetheless, further reforms are necessary as there are valid concerns about the quality and efficiency of the education system, the high allocation of the budget to tertiary education and the supply-driven nature of technical and vocational training.

Proposed Strategies

Over the next three years, GOL is committed to the following:

• a) Expand and promote pre-school education (Early Childhood Care and Development);

• b) Expand Free Primary Education, which covers the first 7 years of school, to Universal

• c) Basic Education, covering the first 10 years, while also upgrading teacher qualifications and methods, and improve the relevance and quality of education;

• d) increase the number of schools and/or classrooms and laboratories and provide necessary equipment;

• e) Improve teacher/pupil ratios where these are below standard;

• f) Improve access, relevance and quality of technical and vocational education and tertiary education by bringing the courses offered at these levels more in line with national manpower needs;

• g) Expand Non-Formal Education by developing a comprehensive NFE curriculum covering vocational subjects and life skills; and

• h) Promote culture as a means to unify the nation, develop tourism and generate income.

Situation Analysis

The Lesotho environment is very fragile. It is characterised by steep slopes and frail soil formations. It is estimated that 0.25 per cent of the total arable land, or 39.6 million tons of soil, is lost through soil erosion each year, with the most visible signs being deep gullies in the lowlands and exposed rock in the mountains. The direct consequence of soil erosion is a decline in agricultural production, exacerbating the problems of food shortage and poverty.

Remedial efforts since then have had mixed results, particularly because greatly increased population and growing poverty has meant almost relentless pressure on the land and natural resource base. Bio-diversity has declined and the use of woody plants, grain stalks and animal droppings for fuel has led to the decline of soils and wooded hillsides. The recent rapid urbanisation of certain parts of the Lowlands, together with the introduction of wet industries, requires that urban environmental challenges must also be systematically addressed.

For the past 15 years, GOL has taken a more active approach through improved environmental planning and capacity building. Various action plans have been developed and international conventions adopted. In 2001, the Environment Act was passed. This Act will be revised to give the National Environment Secretariat adequate legal basis to enforce the Environmental Act regulations.

Proposed strategies

In order to ensure that today’s economic growth and development is sustainable, GOL will exercise its special responsibility to take into account the necessary ‘trade-offs’ to ensure that optimal economic growth is balanced with the conservation of ecosystems. It will ensure that production practices do not endanger the environment nor limit the options of future generations. Some productive activities, notably mining, remove finite national resources and are inherently unsustainable. GOL will, therefore, ensure that such activities generate additional flows of tax or other benefits which can be applied to assist other sectors in creating long-term economic activities. A multi-sectoral approach will be taken as environmental issues cut across various ministries.

GOL is committed to a number of specific pro-poor strategies to be implemented over the PRS period to ensure improved environmental management. These include:

• a) Promote environmental conservation for improved productivity by targeting committed families to be taught to harness water resources, increase ground cover and incorporate conservation and agro-forestry techniques into production;

• b) Strengthen management of solid and water waste as well as air pollution;

• c) Strengthen curriculum and media programmes on environmental education;

• d) Reduce loss of bio-diversity by implementing the Maloti-Drakensberg Trans-Frontier Park, maintaining existing reserves and moving towards the establishment of nature reserves and protected areas;

• e) Address range management issues by establishing and/or revitalising grazing associations in collaboration with new local government authorities; and

• f) Improve the legal, policy and institutional framework, giving particular attention to the capacity of the National Environment Secretariat and implementation of the Environment Act 2001.

Situation Analysis

During the community consultations frequent concerns were expressed regarding poor service delivery and the poor attitudes of civil servants charged with serving the public. Delays are frequent, which lead to loss of livelihood opportunities and the creation of fertile ground for bribery. This is apparent in services most sought after, such as obtaining timely medical attendance by outpatients, terminal benefits by civil servants, disbursements of scholarship, work and residence permits and passports.

Proposed Strategies

GOL is committed towards identifying and removing public service delivery bottlenecks and rooting out corruption. Reform of planning, monitoring, budgeting and fiscal management processes will be an important part of this. Thus, the following programmes will be undertaken over the next three years:

• a) Improve the management of public finances through better budgetary operations, and stronger oversight, management and accounting systems;

• b) Decentralise service delivery within the provisions of the Local Government Act; and

• c) Improve public service delivery by implementing reforms directed at productivity and management, such as performance appraisals and incentives for delivery in key PRS priority areas.

CROSS-CUTTING ISSUES