Kingdom of Lesotho: Poverty Reduction Strategy Paper, Prioritization, and Cost Matrix

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.


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.



This Poverty Reduction Strategy (PRS) is a three-year medium term development framework (2004/05 - 2006/07) for Lesotho. This mountainous country of 2.2 million people, entirely surrounded by the Republic of South Africa, has had to struggle since Independence in 1966 to maintain its sovereignty in the face of diverse political and economic adversities. Although it is one of the least developed countries in the world, it has a long history of consultative government that can be traced back over 180 years to the rule of its founder, Moshoeshoe I, and which is upheld by the democratically elected government of today.

Under the overall coordination of the Ministry of Finance and Development Planning, the PRSP process was initiated in 1999. It was a nationally-driven process under the guidance of a multi-stakeholder Technical Working Group (TWG). This TWG was organised into a number of sub-committees assigned to undertake specific sectoral and thematic functions. The sub-committees included Sector Working Groups (SWGs) organised around ministerial functions; Thematic Working Groups to deal with cross-cutting issues; and, two sub committees, one for Poverty Monitoring and the other to manage the consultative process.

In 2000, the TWG produced the Interim Poverty Reduction Strategy Paper (I-PRSP) which was approved by the Cabinet as well as the joint Boards of the World Bank and the International Monetary Fund. The I-PRSP laid the foundation for a full PRSP. This was followed by a report called “Towards a Poverty Monitoring Framework in Lesotho” in 2001 which helped in developing the community consultation manual.


In preparing this PRS, over 20,000 people (1 per100 inhabitants) were consulted in 200 communities covering all parts of the country. Consultations took place with groups of women, men, youth, herd boys, disabled people, the elderly, widows and orphans, retrenched mineworkers, community based organizations (CBOs), non-governmental organizations (NGOs), local authorities and businesses. The consultation process, coordinated by the Ministry of Finance and Development Planning (MFDP), involved 300 trained facilitators who, working in teams, reached even the remotest parts of the country. They made a special effort to include vulnerable groups in the consultation process. At the end of consultations, 200 village reports were compiled, analysed and aggregated by the facilitators to arrive at community and national priorities which formed the basis for the PRS. From this point of view, this paper is not simply another Government planning document, but rather it is a real expression of deeply held concerns and visions of the nation, particularly of those who are so often on the margins of society.

The views of the people expressed during the community consultations were given detailed and careful consideration by technical working groups composed of senior government officials, key policy makers and representatives of academia, nongovernmental organisations and the private sector. Working together in sector or thematic groups, usually chaired by Principal Secretaries, the groups prepared a series of papers that describe how Government might best respond to the concerns of the poor.

To ensure national ownership of PRS priorities, strategies emanating from the communities were ranked and sequenced. This was based on: (i) a score system that considered the number of times an issue was mentioned during the community consultations; (ii) the level of priority attached to the issue at community level; and (iii) the anticipated impact on poverty and the degree of sustainability (assessed by technical working groups). Further, Members of Parliament, as the elected representatives of the nation, were asked to endorse the priorities through a parliamentary sub-committee. The prioritised strategies and activities were costed indicatively, thus providing a valuable starting point for implementation.


The PRS presents a challenge not only to Government but to all sectors of society engaged in poverty alleviating activities. The challenge is to translate the plans contained in the PRS into actions that will be far reaching enough to result in a measurable reduction of poverty. Lesotho has produced some impressive anti-poverty action plans in the past, and many of these have been implemented. For example, on the basis of the 1996 Pathway out of Poverty,3 the Government invested heavily in primary education, progressively introducing one new free class each calendar year starting in 2000. Over the same period, significant strides were made in establishing macroeconomic stability, ending expensive subsidies to parastatals and promoting foreign direct investment. These measures resulted in over 20,000 jobs being created by the private sector.

While these and other efforts have been appreciated, they have not had the anticipated results in reducing poverty across the nation. Although Lesotho has recorded a real annual average GDP growth rate of 4.2% since 1980,4 the number of people living below the poverty line has increased. There is no evidence, in other words, of the economic benefits of these relatively high growth rates ‘trickling down’ to enough households to stem the tide of growing poverty.

The increase in poor households has been attributed to: the highly skewed distribution of wealth,5 with most of the growth concentrated in the capital; the impact of HIV and AIDS; the reduction in remittances from men working in South Africa as a result of mine retrenchments; slow improvement in agricultural productivity, due in part to unfavourable climatic conditions; and poor implementation and coordination of development programmes. However, the situation today would have been considerably worse were it not for the relatively high GDP growth rates and the pro-poor programmes that were implemented.

In short, the lesson is that growth rates will have to be raised beyond those of recent years and a more comprehensive and better organised approach will be needed for the battle against poverty to have the desired impact. The Government believes this can be achieved by creating an environment that is not only ‘enabling’ but is also highly attractive for both local and foreign investors. It is only through private sector investment that Lesotho’s economy can create the vast number of jobs required to have a sustainable impact on poverty. At the same time it has to be recognised that industrial investment will always focus on key points where the necessary services and labour can be provided. This being the case, it is the duty of Government to ensure that the livelihoods of the poor who remain in rural areas are not overlooked.


This PRS describes how, over the next three years, the Government will join forces with the private sector and civil society to translate ideals into action. The foundation of the plan has been laid by communities throughout the land. Their priorities, which form the basis of this document, are crystal clear and perfectly reasonable:6

  • First and foremost, they want to be able to work, either through formal employment or through improved opportunities to generate income. They are adamant that this is the only way they can address the host of problems that curtail their development.

  • Second, they want to be able to feed their families, either with food they have grown themselves or with food they have been able to purchase through income derived outside of agriculture.

  • Third, they want infrastructure to reach places where it is needed most, including the new factory sites where there are possibilities of job creation.

  • Fourth, they want to live in peace and security in a country which is governed democratically and transparently and where justice protects the innocent and punishment rehabilitates the guilty.

  • Fifth, they would like health services to reach all corners of the country, and to be delivered in efficient and caring ways.

  • Sixth, they want education to start early and to be accessible and relevant to the changing world they live in.

  • Seventh, they are worried about the rapid decline in the environment and the threats that new industries and rapid urban growth present; they want to ensure the next generation is able to survive.

  • Eighth, they want Government to provide essential public services, such as passports, in an efficient manner and in places that are accessible to them.

The top national priority of employment creation is based on an active contribution by the private sector, which will be the main engine of economic growth. Government will have the core responsibility of establishing and maintaining an appropriate policy and legislative framework so that the private sector can prosper. For Lesotho to overcome the numerous constraints to development, it must create an environment that is conducive to investment by both Basotho and foreigners by pursuing policies which successfully accelerate economic performance and which improve the distribution of income in the long-term. The potential productive capacity of the economy can only be utilised efficiently by providing adequate incentives, a sound infrastructure, modern laws and institutions, a skilled workforce and healthy industrial relations. Action is required in three areas:

  1. Sound macroeconomic policy and management: Economic growth requires high rates of private sector savings and investment which, in turn, depend on a stable fiscal and monetary policy framework. It is necessary to maintain the high standards of fiscal prudence that have characterised macroeconomic management since Independence.

  2. Supportive facilitating environment: The private sector requires an appropriate operating environment and incentive regime.

  3. Appropriate sectoral policy framework: In order to facilitate private sector efforts to create competitive advantages, it is necessary to establish a supportive sectoral policy framework e.g. industrial efficiency will be stimulated by promulgating an investment code and simplifying licensing procedures.


In addition to these national priorities, the PRS working groups identified a number of critical cross-cutting issues that must be addressed concurrently if any real progress is to be made. Of these, the HIV and AIDS pandemic is by far the most urgent. With infection rates for those aged 15-49 years at 30% (2003), the disease threatens to set the country’s development back by decades. Improving the health services - as suggested by the communities - is only a partial solution: the disease has to be confronted on all fronts and by all sectors. If this is not done, all other strategies contained in this document will amount to nothing and poverty will continue to rise unabated.

In many community gatherings special concern was expressed about the future of the children and youth of Lesotho. The most immediate concern is the tens of thousands of children left orphaned by HIV and AIDS. Unless they receive particular assistance their futures are bleak as traditional support mechanisms, such as extended families, are already under severe pressure. The Government of Lesotho will give high priority to assisting such cases, while at the same time augmenting its efforts to protect and assist children and youth more broadly.

The other cross-cutting issue that the PRS tackles is gender. In Lesotho this is not simply a question of improving women’s status, as there are a number of situations where males are disadvantaged. Gender is, therefore, understood from the point of view of equity, with any analysis or intervention bearing both sexes in mind.


The structure of this report is as follows: Chapter Two presents a ‘poverty diagnosis’ designed to give the reader an understanding of both the nature and the extent of poverty in the Lesotho context; Chapter Three describes the macroeconomic framework Lesotho intends to maintain over the three year PRS implementation period and assesses the potential risks that may be encountered; Chapters Four to Eleven provide a situation analysis and describe the objectives, strategies and activities needed to address the eight national priorities that emerged from the community consultations. Each Chapter concludes with a summary table showing key indicators, strategies and activities, indicative incremental costs as well as the key agencies involved in implementation. Chapter Twelve tackles the cross-cutting issues of HIV and AIDS, gender, children and youth; Chapter Thirteen discusses the implementation and monitoring aspects of the PRS; and Chapter Fourteen describes relevant risks and critical assumptions.

The PRS is supplemented by two very important documents that will enable stakeholders to ‘operationalise’ it. The first is the Prioritisation Matrix that provides details of all objectives, strategies and tasks, and gives an indication of their relative importance through a scoring and ranking system. The second is the Costing Matrix which provides an indicative cost for each activity, based on a detailed work carried out during the PRS preparation.7 The Costing Matrix gives an indication of the enormous gap that exists between current resources and the additional or incremental amounts required to implement the proposed activities. For this reason the Prioritisation Matrix is all the more critical as some difficult choices will have to be made in the years ahead.

This document is not a final product but rather a reflection of the progress made by the Kingdom of Lesotho in planning its struggle against poverty. The plan is far from perfect but it provides a valuable starting point. Over the next three years, it will be carefully reviewed and revised as monitoring and budgeting systems are strengthened and improved. For the sake of all those whose livelihoods depend on action, the Government appeals to all partners and stakeholders to join it in transforming this plan from words into real and meaningful actions.



The human face of poverty

Poverty has a human face, and in Lesotho it is frequently the face of an unqualified person without employment, who is poorly dressed, has no money and lives in a decrepit house far from basic services. Often - but not always - the person is a women or a child, frequently left more vulnerable by disease and death. Without protection, the person is often a victim of crime and feels abandoned by Government in general, and by the legal system in particular. He or she fears that political struggles may easily result in conflicts or the inappropriate use of resources.

Wage employment critical, but limited

From the image above, built from descriptions given during the community consultations, it is clear that poverty in Lesotho is very closely associated with the absence of wage employment and income. This is not surprising as Lesotho has a harsh and erratic climate with rugged terrain and poor soils, all of which make agriculture a risky enterprise. For generations the most secure form of income for Basotho has been migrant labour on the mines of South Africa, but with the number of miners now less than half what they once were rural households are struggling to survive. Some households have been able to find work, mostly for younger female members, in the new textile industries. These are, however, concentrated in a few of the urban areas, whereas miners were recruited from all over the country. The availability of waged work makes the urban areas more prosperous, but the influx of job seekers far exceeds the number of positions available. As a result, conditions in the fast growing peri-urban areas are in decline: services are overwhelmed and the quality of life is deteriorating.

Different ways of measuring poverty

From the community consultations and from previous studies, it is apparent that poverty has to be assessed from both a quantitative and a qualitative perspective. Money-metric approaches make it possible to compare socio-economic groups across geographic entities, while a poverty line is a useful way of determining the minimum income or expenditure levels required to maintain a specific welfare level. An assessment of livelihood assets and access to services also offers a viable way of determining relative poverty. However, it is clear that people also perceive poverty as being associated with broader issues relating to peace, good governance, security and justice which they see as being fundamental requirements. In this section, a brief attempt is made to provide a holistic description of the nature and extent of poverty, based on these different perspectives.


To determine trends in poverty from a money-metric point of view, detailed expenditure data are required.8 Although numerous household surveys have been conducted by different agencies in Lesotho over the last decade very few have gathered sufficiently detailed expenditure data on a large enough scale to determine poverty lines. Fortunately the data collected by the Bureau of Statistics as part of the Household Budget Surveys (HBS), first in 1986/7 and again in 1994/5, do provide a basis for analysis of trends between these two points in time.9

A poverty line

Establishing Lesotho’s poverty line involved converting expenditure on 30 items of food and 10 own-produced consumption items into quantities and calories. The minimum expenditure on food necessary to meet the internationally accepted threshold of 2,200 kilo-calories required for a healthy and active life was then calculated, based on the cost per calorie actually incurred by Basotho families. By including an amount based on actual expenditure incurred on non-food items by households from the more deprived segments of the population, a per capita “poverty line” (in constant 2002 prices) of M146 per person per month was calculated. Half this level was defined as the “ultra poverty line”.

Increasing number of ultra-poor

Analysis between the two points shows that the incidence of poverty increased between 1986/1987 and 1994/1995. Approximately 58% of the population was poor in both survey years, but the percent of households that was ultra-poor increased from 35% to 39%. Taking population growth into account, in absolute and rounded figures, the number of poor people increased from 850,000 to 950,000 while the number of ultra-poor people grew from 500,000 to 600,000.

Confirmation from other studies and the community consultations

A series of poverty mapping exercises carried out in 1990, 1993 and 1999 confirms this trend. Although data are more limited (based on income and only major items of expenditure), they show that the rapid economic growth which Lesotho experienced up to 199810 had limited or no impact on the majority of households.11 The studies show that the exception was the relatively small proportion of the population with access to waged employment, confirming the community perception that employment is the key to sustained poverty reduction. Unfortunately the number of households with a wage earner (as opposed to general employment, which includes informal sector activities) declined from 59% in 1990 to 49% in 1999, while the number of adults with work fell from 30% in 1990 to 23% in 1999.12 The statistical trends in employment were confirmed in every community consultation. Throughout the country people spoke of the declining work opportunities that they see as primarily being an outcome of the retrenchment of miners and the destruction of businesses during the unrest of September 1998.

High levels of growth needed

In order to reach the Millennium Development Goal (MDG) of halving the incidence of poverty by 2015, Lesotho’s economy has to grow by an estimated 7.5% per annum. In view of current growth trends of 3% to 4% per annum this target is unlikely to be achieved. Only with much greater and more focused effort will the goal be met.

Inequality is severe

Another major constraint to translating growth into poverty reduction is the persistently large inequalities in the distribution of income. The Gini coefficient, which is the most widely recognised inequality statistic, ranges from 0 (perfect equality) to 1 (perfect inequality). Gini coefficients computed for the country as a whole show that inequality in Lesotho increased from 0.60 to 0.66 in the period between 1986/7 and 1994/5, suggesting that inequality grew rapidly during this time. A new household budget survey has recently been completed and analysis of the data will update this critical indicator.


Virtually all national household surveys show that there are striking variations of poverty in relation to gender, household size, livelihood patterns, access to basic services, and geographic location. Of these perhaps the greatest determinant of variation is geography. Repeated studies have consistently shown that the mountain areas of Lesotho, which are home to approximately one-third of the population, are significantly poorer on all but two out of 30 indicators. This is confirmed by the 2002 Core Welfare Indicator study which used an assets approach. It shows that extreme poverty is concentrated in the rural areas not only as a proportion of the population but also in absolute numbers.

Second only to geography is gender. In 1986/7, an estimated 27% of households were officially headed by women who were single, divorced, widowed or abandoned by their husbands, rising to 30% by 1994/5, a proportion higher than in most other sub-Saharan African countries (Lampietti and Stalker, 2000). In both 1986/87 and 1994/95 such de jure female-headed households had the highest incidence of poverty (65% and 62% respectively), well above the national averages of 59% and 58% in the same years. The underlying survey data reveals that de jure female-headed households are particularly vulnerable because they are typically headed by ageing widows, who may have lost the assets they once possessed, are less likely to own agricultural assets, such as livestock (35%, compared to 55% of male-headed households) and have difficulties securing cash incomes.


The Government of Lesotho takes a holistic view in combating poverty. While jobs and income are critical - and given highest priority in this PRS- it is important not to neglect other critical aspects of the fight against poverty. From this point of view real progress has been made in recent years and the challenge ahead will be to maintain this. Key trends in two of the most vital basic services are shown by way of example in the following sub- sections.

2.4.1 Education

Obtaining some form of employment in Lesotho is difficult under any circumstances. For those who are poorly educated it is virtually impossible. Studies show that there is a strong relationship between educational attainment of the head of the household and the incidence of poverty. A Mosotho’s chances of being in wage employment are determined by education, age and technical training, in addition to location and gender. Nearly 80% of those with a diploma, senior secondary or higher education, are employed, compared to 40% of those with less education. Educational achievement, especially secondary education, dramatically affects earnings, which increase marginally with education until 11 years, but then triples with the completion of the last year of education.

As indicated in Chapter 9, Government has made significant progress in improving access to education. Nonetheless, Lesotho’s educational system shows high repetition and dropout rates, with at least one half of primary enrolment traditionally dropping out before completing the primary cycle and about two thirds of secondary enrolment dropping out before graduating. Until recently primary enrolment was in decline, falling from 71% in 1996 to 61% in 1998.13 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, raising enrolment to 85% in 2002.14 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.

2.4.2 Water and Sanitation

Various studies show that significant progress has been made in the provision of clean water, rising from 52% to 63% in the 1990s. This has been achieved largely through the efforts of the Department of Rural Water Supply that has the mandate to serve all rural areas. However, the situation has deteriorated in the peri-urban areas, especially with regard to the number of people per collection point.

Similar progress has been achieved with sanitation, with the percentage of households with some form of latrine increasing from 31% in 1990 to 49% in 1999. However, less than 20% of households had proper VIP latrines, considered to be the only standard that affords adequate protection from a health point of view.


Despite these gains, Lesotho’s overall position has declined in recent years. UNDP’s Human Development Index (HDI) is a composite indicator of relative welfare based on life expectancy, educational attainment and per capita income. Lesotho has experienced a decline in HDI, particularly in the areas of education, health and life expectancy. In terms of HDI ranking, Lesotho was ranked 120 out of 162 countries in 1999 but dropped to 132 out of 173 in 2000, and to 137 out of 175 in 2001, suggesting declining performance in human development. When the impact of HIV AND AIDS is taken into account, it is expected that the HDI for Lesotho will decline even further.

This reinforces the need for a pro-active poverty reduction strategy. Before describing the strategies and activities that will be brought to the fore in the battle against poverty, the next Chapter describes the macroeconomic framework that will greatly influence all efforts to reduce poverty over the next three years.



If the poverty levels described in the previous chapter are to diminish, very significant levels of growth will need to be sustained over a significant period of time. It has been estimated that employment growth will need to exceed 14% per annum if full employment is to be achieved over the next 10 years.15 The Government of Lesotho recognises that it does not have the necessary resources to generate the required growth. However, under the right conditions, the private sector, made up of both local and foreign companies, will be able to make a significant contribution to this ideal. The key macro-economic targets of Government during the implementation of the PRS are:

  • to increase real GDP from 3% in 2003 to 7% by 2006; 16

  • to reduce the population living below the poverty line from 58% in 1994/95 to 52% by 2006;

  • to reduce the Gini-coefficient from 0.66 in 1994/95 to 0.60% by 2006.


3.2.1 Context

Lesotho is a predominantly mountainous country, with an average altitude of more than 1600 metres above sea level. It covers approximately 30,350 square kilometres and has limited natural resource endowments. One-quarter of the land is lowlands and the remainder is highlands. Although it remains a least developed country, it has achieved a real annual average GDP growth rate of 4.2% between 1980 and 2002 and the national economy (GDP) has now reached M 7.5 billion (approximately US$ 1 billion). Lesotho has a population of 2.2 million growing at an average of 2.1% per annum and a literate but largely unskilled labour force represents the main national resource. It is entirely landlocked within the territory of the Republic of South Africa (RSA) and its economic development centres on its membership and participation in activities of SACU, the Common Monetary Area (CMA) and the Southern African Development Community (SADC).

3.2.2 Objectives

The macroeconomic policy framework and the consistent application of sound macroeconomic management are critical to the implementation of the Poverty Reduction Strategy. In setting an attractive environment for foreign and domestic investment, the policy is designed to: encourage domestic savings and foreign capital inflows; ensure that Lesotho experiences low and stable inflation; encourage rapid economic growth; influence the structure of economic growth to support the creation of productive employment opportunities; and set tax and expenditure policies which have a beneficial impact on the distribution of incomes and wealth. It should be noted that the discipline needed to achieve efficient economic growth must be provided by maintaining a stable and open incentive structure e.g. market-determined interest rates are required to ensure that the financial sector achieves an appropriate balance between the needs of both savers and borrowers.

The main objective of the comprehensive macroeconomic policy framework is to ensure economic stability by maintaining sustainable levels of fiscal deficit, inflation and external balances. In addition, it will address the critical challenge posed by the high levels of poverty by:

  • providing the basis for sound and consistent macroeconomic management;

  • creating an attractive macroeconomic environment which will support efficient production and generate faster economic growth by attracting both domestic and foreign investment; and

  • improving public sector performance by consistently applying the principles of sound public expenditure management (i.e. achieving aggregate fiscal discipline; concentrating public resources on a core set of activities which contribute significantly to a pro-poor growth strategy; and improving operational efficiency).

3.2.3 Fiscal Policy

The main instrument of macroeconomic policy is fiscal strategy. The Government actively manages aggregate expenditures and revenues in order to ensure the sustainability of public deficits and debt and to contain aggregate demand.

The Government is committed to maintaining its membership in SACU, which governs trade for the member countries of Botswana, Lesotho, Swaziland, Namibia and South Africa. The Union has a common external tariff and guarantees free movement of goods amongst member countries. Currently, the SACU revenue-sharing formula generates approximately 50% of public revenue. However, there are concerns that the recent renegotiation of the SACU Agreement and the revenue-sharing formula in the context of impending Free Trade Agreements with the EU and USA will lead to a decline in customs revenues over the medium-term and this will reduce Government’s share in the economy.

3.2.4 Monetary Policy

The overall objective of the Central Bank of Lesotho (CBL) is to ensure price stability. Within the context of the common monetary area, price stability is attained by maintaining an adequate level of reserves which underwrite the fixed exchange rate system and reduce domestically-generated inflation. The fixed exchange rate regime pegs Lesotho’s currency, the loti, at par with the South African rand. Although monetary policy is conducted under the constraints of the CMA agreement, which prevents excessive money creation to finance fiscal deficits, the CBL has established a policy framework: the operating target is reserve money (i.e. currency in circulation plus bankers deposits); the intermediate target is interest rates, particularly on Government of Lesotho treasury bills; and the ultimate monetary policy target is net foreign assets of the CBL.

Interest Rates: If interest rates in Lesotho diverged significantly from those prevailing in South Africa, the demand for rand would outweigh the demand for loti. Financial resources would leave the country and the resulting loss of reserves would threaten the parity of the currency. Thus, interest rates in Lesotho must move in line with regional rates of interest. In September 2001, the Central Bank moved from the use of direct controls to the indirect instruments of monetary policy. The new system is intended to remove rigidities by introducing market-determined interest rates and allowing the rates to reflect the true scarcity of savings in the economy.

Net Foreign Assets: The integrated money and capital markets of the CMA make it imperative that Lesotho, as a small open economy with a fixed exchange rate regime, maintains a sufficient level of reserves, as measured by the gross foreign assets held by commercial banks and the CBL. A favourable reserve position enables Lesotho to honour its foreign financial obligations e.g. financing imports of goods and services, making debt repayments, meeting the foreign exchange demands of travellers and assuring investors of their ability to repatriate profits.


Historically, the economy has been fashioned by its larger and wealthier neighbour, the Republic of South Africa. South Africa is the dominant member of both the SACU and the CMA, and its macroeconomic policies are key influences on the trade, exchange rate and monetary polices of all member countries. Until the early 1990s, the defining characteristic of Lesotho’s dependence on RSA was that nearly 50% of Lesotho’s GNI was generated in the form of remittances from Basotho mine-workers employed in South Africa. South Africa remains Lesotho’s main trading partner.17

Over the past 20 years, the economic contribution of the secondary sector (principally manufacturing and construction) has been growing in importance (from approximately 25% of GDP in the early 1980s to 42% in 2002). The tertiary sector (composed mainly of public and private service activities) has fallen from 50% to around 40% over the same period, while the primary sector (agriculture and mining) has declined from 25% to only 18% of GDP.

Since 1980, there have been significant changes in the structure of the economy. The main factors have been: the construction of the Lesotho Highlands Water Project; the growth of the textile industry driven by foreign direct investment and the decline in the number of mine-workers. Structural indicators suggest that the development of Lesotho’s economy between 1980 and 2002 can be described in three phases. For convenience, these phases are defined with respect to LHWP activity because of its overwhelming effect on the economy:

  • the pre-LHWP period (1980/81 - 1986/87), when the economy (GDP) grew at 2.8% per annum. Lesotho produced domestically only 57% of its GNI and relied heavily on RSA for a key source of livelihoods in the form of remittances from Basotho miners.

  • the high-LHWP period (1987/88 - 1997/98), when GDP growth was 6% per annum. The textile and garment industry developed rapidly but employment opportunities for the Basotho in RSA mines started to decline. About two-thirds of GNI was produced locally and remittances comprised only about 36% of GNI. The share of private investment in GNI, while rising rapidly, was still small at 6%. Public revenue increased both because LHWP-related imports led to an increase in SACU receipts from 5% of GNI prior to 1988/89 to 14% in the 1990s and because of water royalties after the completion of the first phase of the LHWP in 1996.

  • the post-LHWP period (1998/99 onwards), when GDP growth has slowed down to about 3% per annum. There is a significantly smaller flow of LHWP-related loans and grants but the garment industry has continued its rapid expansion.


Generally, the macroeconomic policy environment has been conducive for growth. The economy has benefited from the economic reform programmes dating back to Structural Adjustment in 1988. Following the social unrest in 1998 and the large deficit incurred in 1999/00 as a result of reconstruction and the restructuring of the Lesotho Bank and LHDA, the Government entered into an IMF-supported Poverty Reduction and Growth Facility (PRGF) programme designed to a) restore fiscal balance through improved revenue collection, expenditure cuts and public sector reforms, and b) maintain external reserves at about 6 months of import cover.

National Accounts: Over the period 1998 - 2002, GDP measured in current market prices has grown by an annual average of 11.2%. In real terms, however, GDP declined by 4.6% in 1998, but there has subsequently been a gradual increase in the annual growth rate, from 0.2% in 1999 to 1.3% in 2000, 3.2% in 2001 and a provisional figure of 3.8% in 2002. During the same period, GNI has increased in nominal terms by an annual average of 10.0% but, in real terms, it has fallen by 1.2% per annum. In nominal terms, GNI per capita18 fell to M 3,060 in 1998 but it has risen in each subsequent year, reaching a provisional value of M 4,196 in 2002. However, when expressed in US$ (using the annual average exchange rate), there has been a dramatic decline from $ 667 in 1997 to only $ 403 in 2002. It is therefore not surprising that poverty levels in Lesotho have remained high despite the relatively strong nominal GDP growth rate registered during this period.

Public Finance: One concern in managing public finances is that revenue and expenditure account for nearly half of GDP, which is much higher than in most developing countries at a similar level of social and economic development. The current SACU revenue-sharing formula has permitted Lesotho to sustain the high ratio of government expenditure to GDP.

Lesotho remains heavily dependent on revenue sources over which it does not have much control. Domestic revenue has grown more slowly than GDP at market prices (6.2% per annum v. 9.8% per annum), resulting in a steady reduction from 47.6% of GDP in 1997/98 to 40.3% of GDP in 2002/03. However, the establishment of the Lesotho Revenue Authority and the introduction of VAT at 14% in 2003 have helped to widen the tax base.

Total expenditure and net lending has increased at an average of 9.3% per annum since 1997/98. Recurrent expenditure has grown rapidly and its share of total public expenditure has risen from 62.9% in 1997/98 to 77.4% in 2002/03. While Wages and Salaries and Subsidies and Transfers have only grown by 8.5% per annum, there has been unsustainable growth in purchases of other Goods and Services (averaging 26.4% per annum) and it now absorbs 28.3% of total expenditure (up from only 13.8% in 1997/98). Interest payments have grown by an average of 19.5% per annum and now absorb 5.9% (up from 3.8%).

Public Debt: By 1997/98, foreign debt was 50% of GNI but domestic debt was still low at 4% of GNI. However, the value of total external public debt outstanding doubled from M 3.2 billion at the end of December 1998 to M 6.2 billion at the end of 2001. This was not the result of additional borrowing (since repayment of principal has exceeded new disbursements) but was caused by the consistent depreciation of the Maloti, which increased the value of external debt when expressed in local currency. As a result, the debt: GDP ratio increased from 68.0% in 1998 to 108.2% in 2001. However, the subsequent appreciation of the currency meant that the value of external debt fell by 17.9% to M 5.1 billion by the end of 2002.

Exchange Rate: In recent years, the foreign exchange market conditions in the sub-region have been volatile. The annual average exchange rate of the rand and the loti depreciated by approximately 50% against most major currencies between 1997 and 2002. However, in late 2002 and throughout 2003, this trend was reversed and there has been an appreciation of approximately 30% against the US$. Not only has this significantly changed the terms of trade (by changing the relative process of imports and exports) but it has also reduced the local currency value of reserve assets (held in US dollars).

Balance of Payments: Between 1998 and 2001, Lesotho maintained a strong reserve position with average gross foreign assets equal to approximately 10 months cover in terms of merchandise imports, which is well above the internationally accepted thresholds of 3-6 months. This was achieved as a result of the declining deficit on the current account despite a fall in the surplus on the capital and financial account. However, the significant appreciation against the major reserve currencies towards the end of 2002 caused a revaluation deficit and a consequent decline in reserve assets. This meant that the level of import cover fell from 12.2 months in 2001 to only 7.2 months in 2002.

Inflation: Inflation is driven primarily by prices in South Africa, which remains the source of almost 90% of the country’s imports. Favourable price developments in South Africa caused the overall annual inflation rate in Lesotho to decline from 8.6% in 1997 to 6.9% by 2001. However, regional food shortages in 2002 caused a significant increase in prices of agricultural commodities and this pushed the aggregate inflation rate up to 11.7%. Provisional data for 2003 show that the rate of inflation has fallen back to under 7%.

3.5 FISCAL STRATEGY, 2003/04 - 2006/07

3.5.1 Overview

The Fiscal Strategy was prepared on the basis of an economic forecast covering the period up to 2007. The economic projections depict a baseline scenario for the movement of key economic indicators from 2003 to 2007. They are based on developments in five main sectors: production as recorded in the national accounts; price movements; the external accounts; monetary aggregates; and public finance.

Economic growth is dependent on the performance of the private sector, notably the exceptionally strong growth of the manufacturing sector. Overall, GDP in constant prices is projected to grow by an annual average of 4.0% over the period, while GNI will grow at 3.4% per annum. Although the rate of growth in GDP is well above the expected population growth of 2.4% per annum, suggesting that a sustained reduction in the incidence of poverty may be achieved, the slower growth in GNI remains a cause for concern.

The main instrument of macroeconomic policy is fiscal strategy. Several indicators can be used to assess the viability of the fiscal strategy, including various deficit concepts, the public sector borrowing requirement and key debt ratios. As presented in the background to the Budget 2004/05, in order to ensure that the overall fiscal stance remains within sustainable limits, the fiscal strategy is designed to:

  • a) ensure that the exceptional SACU revenues anticipated for 2004/05 and 2005/06 are translated into overall budget surpluses;

  • b) maintain the real value of public expenditure by ensuring that the main categories (other than interest payments) are increased by at least the annual rate of inflation;

  • c) ensure that aggregate public expenditure grows by less than nominal growth in GDP, thus achieving a gradual reduction in the ratio of expenditure to GDP, in line with the forecast of a long-run decline in the ratio of revenue to GDP;

  • d) ensure that the projected substantial primary surplus of revenue (including grants) over expenditure (excluding interest) is utilised to achieve a sustained reduction in the amount of domestic debt outstanding;

  • e) maintain a surplus of current revenue over current expenditure in order to ensure that the public sector does not expand aggregate demand excessively; and

  • f) secure additional external finance on concessional terms.

Achieving the goals listed above will have several beneficial effects on macroeconomic management and economic performance. The projected primary surplus will allow a reduction in the level of public debt and generate savings from the resulting decline in debt service payments. It will also contribute to stability in the balance of payments. The current surplus indicates that public saving is being used to finance the acquisition of assets. Securing concessional external finance will limit public demand for domestic capital (ensuring that private sector borrowers have access to the domestic capital market on reasonable terms and that potential investors are not crowded out). The gradual reduction in the share of the economy controlled by the public sector should improve key financial indicators (e.g. releasing resources to the private sector will encourage additional investment).

This Fiscal Strategy should also contribute to a significant improvement in public expenditure management by setting a sustainable aggregate expenditure ceiling and by targeting public resources on a core set of poverty-targeted programmes and on activities which contribute to a pro-poor growth strategy. A summary of the Fiscal Strategy is given in Table 3.1:

Table 3.1:


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The projected resource envelope allows limited “fiscal headroom” to finance new investments and additional recurrent expenditures justified by the PRS to encourage growth and reduce poverty. The Government can create some additional fiscal headroom by implementing substantive public sector reforms. Ministries are expected to make sustainable improvements in the productivity of their expenditure on goods and services and these potential savings should be reallocated to activities targeted at national development priorities as defined in the PRS.

The Government will need to strike a sustainable balance between budget reallocations, additional external borrowing and more grants. It will be desirable to secure a medium-term commitment from donors for both concessional loans and grants linked to the implementation of a realistically costed PRS.

Even more important than increasing the quantity of public investment, the Government must improve the quality of investments it undertakes and ensure that capital expenditures generate a commensurate improvement in national welfare. It is vital to use management information to identify locations and sectors where the returns to investment are likely to be high.

3.5.2 Deficit and Financing Strategy

Fiscal deficits measure the difference between total government expenditure (including interest payments but excluding principal repayments on the outstanding stock of public debt) and total receipts, including tax and non-tax revenue and grants but excluding loan repayments. The nominal value of the overall deficit (including grants) anticipated for the financial year 2003/04 is M 127.9 million. However, the projected windfall receipts from SACU will allow Government to achieve budget surpluses in 2004/05 and 2005/06, although the subsequent decline to more normal revenues means that this will revert to a balanced budget by 2006/07. There will be primary surpluses throughout the period but they are expected to fall from M 466.8 million in 2004/05 to M 106.2 million in 2006/07.



4.1.1 Overview

The linkage between unemployment and poverty is strong

Unemployment rate stands at 31% (LFS, 1999). Throughout the country Basotho identified the lack of meaningful employment as the most fundamental cause of poverty. Statistics from various surveys confirm a direct relationship between levels of employment and levels of poverty: those with formal sector jobs that provide regular income are far better off than those who depend on informal activities or subsistence agriculture. Households that do not have a wage earner are most likely to fall into a situation of chronic poverty. A rapidly increasing number of households are losing or have lost wage earners as a result of massive retrenchments from the SA mining sector over the past decade and increasingly as the HIV and AIDS pandemic strikes those in their productive years. These households are then unable to afford the levels of education necessary for the next generation to be gainfully employed, thus perpetuating poverty in a cycle that is extremely difficult to break.

But state capacity to create formal sector employment is limited

From the community consultations, it is apparent that ordinary people believe that the state should create work for them through infrastructure development and other projects. However, with the finite resources available, the Government recognises that this can only be achieved to a very limited extent. Where possible it will target labour-intensive schemes to provide limited and temporary employment to the poor.

Private sector capacity to create employment is more promising

In recent years the private sector has demonstrated that, under the right circumstances, it has the capacity to stimulate economic growth and rapidly expand employment opportunities. With the introduction of the Africa Growth and Opportunities Act (AGOA),19 for example, industrialists based in Lesotho have been able to increase production and employment considerably. The biggest growth has been in the garment sub-sector which now employs over 40,000 people, most of whom come from poor households with only limited education. If favourable conditions prevail, there is no reason why this growth should not be sustained for some time. Indeed, many of the existing industrialists are keen to expand production further while new investors are held back only by lack of serviced sites.

GOL is committed to creating a climate conducive to maximising job creation

The Government is committed to making the best of AGOA and other opportunities by providing foreign investors and local business with optimal conditions in which to develop and expand. By creating a conducive investment climate it is anticipated that economic growth will be sustained at levels that are high enough to absorb not only new job seekers but also the many thousands of unemployed who struggle to survive from one year to the next without reliable incomes.

While there is a real possibility that private sector investment can create an unprecedented number of waged positions over the next three years, the Government recognises that this will still fall far short of the total requirement. For this reason Government will make a concerted effort to encourage enterprising Basotho to seek out and develop business opportunities that make optimal use of Lesotho’s own resources and generate work throughout the country. Special emphasis will be placed on supporting the development of agri-business, tourism and mining sectors in order to realise their employment potential.

The significance of migrant labour

Lesotho is part and parcel of a regional economy that has depended on migrant labour for generations. During the 1970s approximately 125,000 Basotho worked in the South African mining industry at any one time and it was estimated a further 25,000 were employed in other industries. As a result, almost half of Gross National Income was generated from remittances. The number of mine-workers remained at that level until 1990 but there was subsequently a sustained decline and there are now only approximately 60,000. Since the fall of apartheid, the pattern of migration has changed so that today it is not only men who work in South Africa but increasingly women of all ages. According to the 2001 Lesotho Demographic Survey, 14% of males and 4% of females over the age of 15 currently work in South Africa, which is equivalent to approximately 120,000 people.20

Key factors contributing to success of Foreign Direct Investment

The rapid growth fuelled by AGOA has demonstrated that, under current circumstances, of all proposed strategies, FDI has the greatest potential to generate the levels of employment so desperately needed to reduce poverty and it has therefore been given the highest possible priority.

Lesotho has been fortunate to attract a reasonable level of FDI in recent years. Without the constant efforts of Government to attract foreign investors, much less would have been accomplished in this highly competitive arena. It has been possible to attract investors partly through the provision, in certain cases, of ready-made factory shells and serviced industrial sites. Likewise, competitive wages and a literate and trainable labour force have been contributing factors. This indicates that Lesotho’s investment in basic education appears to have paid off, particularly for women who are better educated and are the main beneficiaries of employment in the factories. Maintaining peace and security in a democratic environment is seen as a critical link to employment creation and the restoration of stability following a period of political uncertainty in 1998 and the ensuing peace under a more inclusive electoral dispensation has done a great deal to restore investor confidence (see Chapter 7: Democracy, Governance, Safety and Security for details).

The contribution of Small, Medium and Micro Enterprises (SMMEs)

Even though data on SMMEs is limited, estimates from the early 1990s suggest that there were more than 100,000 small, medium and micro enterprises (SMMEs) providing employment to over 130,000 people. These were involved in a wide range of activities, including small-scale manufacturing, retailing, wood and metal work, sewing and knitting, horticulture, handicrafts, food sales and brewing. Although most SMMEs are unregistered and do not contribute to direct tax revenues, they make a significant contribution to indirect taxation through VAT. Most important, they provide a means of livelihood to a significant portion of the economically active population.

SMMEs can make an enormous contribution to economic development and poverty reduction because their start-up costs are often low, allowing individuals and groups to engage in productive activities even if they have limited access to capital. 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.

Current legislation promotes fair investment

In terms of legislation the Government has a number of pertinent instruments that are intended to regulate industrial development and associated activities to the benefit of all stakeholders. These include the Import and Export Act (1984) that specifies the types of goods that can be imported into Lesotho; the Customs and Excise Act (1984) that regulates collection of tariffs and duty at entry points; the Environment Act 2001 that provides guidelines and sets standards for sustainable use of the environment; the Pioneer Industries Encouragement Act (1969); the Industrial Licensing Act (1969); the Industrial Development and Investment Bill; the Labour Code (1992); the Financial Institutions Act (1999); and the Double Taxation Treaty.

4.1.2 Constraints to further industrial growth, entrepreneurial development and job creation

While legislation is intended to protect all parties involved in industrial development in as fair a manner as possible, one consequence is that the process of licensing a new investment can be unnecessarily long and complex. There are currently too many Government departments involved in the process. The issuing of licences is centralised in Maseru, making it inconvenient for firms wishing to operate elsewhere in the country. These problems have negative effects that have hindered industry from reaching its full growth potential.

Inadequate supply of water

The biggest constraint facing potential investors relates to infrastructure and utilities. LNDC reports that the expansion of current industries as well as development of new investments is being held up simply by the lack of water. In order to accommodate the needs of foreign investors from the garment sector in particular, the supply of water to existing and proposed industrial estates will need to be augmented very dramatically.

The capacity of the Maseru water supply system, managed by Water and Sewage Authority (WASA), is currently fully stretched. The shortages within the system are already impacting on production, with industrialists reporting that the delays caused by the unreliable water supply have resulted in them missing critical shipment dates at Durban, forcing them to fly consignments to the US, thus jeopardising profits and future orders.21 The lack of water is also holding back the significant new developments planned for the Tikoe industrial estate in Maseru. A similar situation exists in Maputsoe, as well as in the districts of Mohale’s Hoek, Butha-Buthe and Mafeteng where LNDC has already procured land for new estates. Unless fast track solutions can be found to the lack of water, there is a real risk that investors will seek alternatives to investing in Lesotho.22

Poor rail terminal

A second critical constraint is the poor condition of the Maseru Rail Terminal Depot. Efficient railways are important for industrialists to be able to export their products at a reasonable cost. Unless the Depot is modernised and efficiently operated to handle containers the risk of missing shipping dates is high, forcing the exporter to revert to more expensive road transport. Higher transport costs impact directly on profits and reduce the motivation and capacity to reinvest, which constrains further job creation.

Difficulties in obtaining land

LNDC plays a very critical role in obtaining serviced land for investors. There are, however, cases where investors may wish to pursue alternative locations and/or schedules to those proposed by LNDC. However, there is no provision for foreign ownership of land in Lesotho so, in these cases, obtaining land under some form of secure tenure is an obstacle to investment.

Low productivity and rising labour costs

Although industrialists are attracted by the high levels of literacy and reasonable wages, they are equally concerned about low productivity levels (reported to be one-third of those in Vietnam, for example23) and the impact of the strength of the rand on their labour costs. The unfavourable exchange rate makes it more urgent to find ways of improving the skills and productivity of workers. The opportunity for promotion helps to motivate workers, so it is important to find mechanisms for them to occupy positions in factories that are currently held almost exclusively by expatriates.

Poor linkages to local business

The rapid expansion of the industrial sector has not involved local business in any significant manner. The small, medium and micro enterprises (SMMEs) have not been able to benefit directly from the boom, although many provide indirect services such as food and shelter for workers. Unless more formal links are established an opportunity for expansion will be lost.

Uncertain labour representation and under-developed dispute resolution systems

Relative to some neighbouring countries, Lesotho has a stable work force and a reasonable balance is maintained between the opposing needs for wages to be both fair and competitive. The Government recognises the rights of workers, including their freedom to associate in trade unions. However, industrial relations are not always harmonious partly because the unions are weak and compete amongst each other for members. The underdeveloped dispute resolution system has resulted in inappropriate action and prolonged disagreements. Concerns have been raised about conditions of employment and poor occupational health in some factories and this issue will be monitored carefully to ensure workers are properly protected.

No passport, no job

For those seeking legal work in South Africa and in Lesotho, especially in the industrial sector, a passport is critical, for both travel and identification purposes. However, there are significant delays in issuing passports. Unsatisfactory service delivery in the department of Immigration is caused by the lack of technology, red tape in procurement procedures, administrative bureaucracy, unfavourable work conditions and shortage of staff. Failure to effectively and decisively attend to these problems over a long time has resulted in escalated corruption in the department and a backlog of service delivery.

Foreign investors need quality service

Foreign investors are a source of employment. Immigration laws and regulations on visas and work/residence permits should recognise the urgency and flexibility called for by both foreign investors and tourists. The legal framework that governs issuance of visas, residence permits and citizenship is the Aliens Control Act of 1966. This Act states conditions for granting visas or deportation, and it establishes what constitutes a lawful and unlawful presence in Lesotho. However, it is outdated and has very serious shortcomings and requires urgent review.

Access to credit

During community consultations Basotho repeatedly stressed that lack of access to credit was a key barrier hindering them from running their enterprises successfully. Experience from other countries supports the view that, when the poor are able to access credit, they invest and generate a sufficient surplus to repay their loans as well as to save for reinvestment. In some countries (such as India and Kenya) rotating savings and credit schemes have repayment rates in excess of 95%. Unfortunately, to date, Lesotho has not had such positive experience. Although some informal credit schemes are working successfully, formal schemes, introduced by Government on a subsidised basis, suffered from a range of problems, including gross mismanagement, a poor legal framework and limited advisory and supervisory services. Those which failed were targeting particular sectors and activities without relating this to market forces. As such, they tended to distort the financial market to the extent that borrowers did not develop the necessary discipline of repaying their credit.

4.1.3 Potential threats to investment and industrial growth

In addition to the constraints listed above, there are a number of potential threats to the expansion of industry that will be monitored with a view to developing possible mitigation measures. Of particular importance to Lesotho, various international and regional trade agreements could have drastic implications for the country’s position vis-à-vis that of other investment destinations. These include the status of AGOA, the Multi-Fibre Agreement, the EU-RSA Free Trade Agreement, the SADC Free Trade Agreement and the SACU-USA Free Trade Agreement. Significant developments in any one of these could mean that the advantages Lesotho has gained through AGOA could disappear.

Another very critical threat is the HIV AND AIDS pandemic, which has major implications for workers well-being, productivity and turnover.


Government is aware that creating jobs will be a massive undertaking that is likely to extend well beyond the first period of PRS implementation. However, there are a number of very urgent and fundamental steps that can be taken over the next three years which will provide a more solid foundation for employment creation.

To contribute towards employment creation five broad objectives have been set:

  • attract domestic investment and foreign direct investment (FDI);

  • support local business;

  • increase support to small, medium and micro enterprises;

  • make optimal use of natural resources;

  • improve and decentralise key services, particularly at the Department of Immigration.

Clearly these ambitious goals cannot be attained through the efforts of any single ministry or organisation. A multi-sectoral effort will be launched involving trade and industry, natural resources, tourism and agriculture. In these sectors, Government will focus on the formulation and monitoring of policies and the development of appropriate legislation to create an enabling environment for the private sector. These roles will be carried out in consultation with other stakeholders, which include non-governmental organisations, private sector associations, parastatals and relevant academic entities.

The starting point for establishing an appropriate enabling environment is described in the Diagnostic Trade Integration Study coordinated by the Ministry of Trade, Industry, Cooperatives and Marketing and conducted under the auspices of the Integrated Framework (IF) for Trade Related Technical Assistance to Least Developed Countries.

The Lesotho IF is the result of a joint effort between the Government and donors and is supported by the World bank, IMF, ITC, UNCTAD, WTO, UNDP and the World Customs Organisation, with DFID acting as the IF facilitator for other bilateral donors. The Study has benefited from several concurrent activities, including UNCTAD’s Investment Policy Review and the World Bank’s growth and employment options study.

The IF aims to ensure better integration of trade issues in poverty reduction programmes. It recommends that Lesotho should take advantage of its sovereign status to pursue two parallel strategies: (1) to lower the costs of trading with South Africa and other SACU partners and the rest of the world by removing barriers to trade (customs procedures, technical regulations and standards, and lowering the common external tariff) and to the movement of capital and labour within SACU, thereby transforming it into a fully-fledged single market; and (2) to establish a competitive business environment relative to other countries in the region through the removal of administrative barriers impeding the conduct of business activity while ensuring the effective provision of public services including public order and good governance.

Priority policy actions have been included in the IF matrix annexed to this document. Activities to be undertaken through the IF process will include improving trade data, analysis and negotiating capacity, as well as the various job creation strategies described in the following sections, which are designed to improve the business and investment environment and the trading infrastructure, including mechanisms for identifying and exploiting appropriate opportunities for improved market access. As can be seen from the list of strategies below, there is clear concurrence between the IF Report and this PRS.


The principal aim will be to facilitate economic growth through the development of the private sector. Highest priority is given to strategies that will most directly impact on the lives of the poor.

4.3.1 Attract domestic investment and foreign direct investment (FDI)

Attracting more FDI into Lesotho as well as enhancing domestic investment will not be confined to the garment sector. Serious efforts have been/will be made to identify other types of industries that can be attracted to Lesotho in order to add value to local products and diversify the industrial base. Under this broad objective, a number of strategies will be deployed during the three year implementation period of the PRS.

  • Reduce administrative procedures to speed up the licensing process. In the first year of the PRS (2004/05) the legal framework will be established to set up a one-stop-shop that will speed up the licensing process. At the same time the Investment Promotion Centre of LNDC will be strengthened to improve efficiency. Particular attention will be given to the complex problem of facilitating access to land (outside of the LNDC estates) and to ensuring that immigration and work permits are efficiently processed.

  • Improve the efficiency of the Department of Immigration. Government has taken heed of the concerns of ordinary people whose livelihoods are being impaired by service delivery in this critical area. Particular actions to be taken in the next year include: computerising the passport issuance systems; undertaking stringent supervision to curb corruption; decentralisation of Immigration functions to offices throughout the country; and improvement of human resource capacity to clear the back-log of applications.

  • Provide basic infrastructure. The Government 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 in detail in 2004/05, with a view to providing water to high priority ‘wet industry zones’. Government will ensure that all new industrial estates have built-in water recycling measures.

    High priority will be given to providing factory shells when needed, as well as to upgrade the Maseru Terminal Depot in collaboration with Spoornet.

  • Promote and facilitate investment. Activities aimed at investment promotion will continue with vigour. In 2004/05 new investment promotion materials will be developed and the capacity of Lesotho’s overseas missions to promote Lesotho as a prime investment site will be enhanced. In addition, Government will improve Customs efficiency and the capacity of trade negotiators.

  • Improve workers’ productivity. Productivity is a multi-faceted issue which needs to be addressed, in the long-term, by addressing attitudes towards work and employment (through the school system). Training and capacity building of workers with a view to increase their productivity will be given due priority. Training will be geared towards equipping Basotho with skills that are necessary for assuming key positions. A skills development fund will be established to finance training of these entrepreneurs and of workers in key positions.

  • Improve labour stability. The key activity here will involve the strengthening of tripartite relationships through an Economic Forum or National Employment Council. Current policies and legislation pertaining to labour will be reviewed and revised. Dispute resolution mechanisms will be decentralised to key districts where major industrial development is planned.

  • Establishment of a comprehensive social security scheme. The Government will continue to explore means and ways to establish a comprehensive social security scheme that will cover both the formal and the informal sector workers. When the scheme is fully operational it will improve the welfare of the ex-workers and their dependants by providing them with income after they have stopped working. In 2004/05 the Government will introduce an old age pension scheme for those aged 70 years and above as a safety net measure. The scheme will also entail an investment portfolio that will provide a potentially large pool of financial resources that could also be directed to support certain sectors of the economy.

4.3.2 Support local business

While appreciating the very significant impact of FDI, the long term goal of promoting local businesses owned by residents of Lesotho will not be overlooked. In the three year PRS implementation period the Government will pursue the following key strategies:

  • Build the skills of Basotho entrepreneurs and productivity of workers. The Government will seek to improve the resources and capacity of local training institutions to run appropriate courses designed specifically to increase the skills of local entrepreneurs and to promote self-employment. In the first year proposals from institutions will be reviewed.

  • Develop sustainable market opportunities. Over the next three years key people will be selected from Government ministries (MTICM, MOFDP, MOFA) and the private sector to be trained in market identification and negotiation skills. The key to the success of this will be the creation of linkages and niche marketing of the opportunities presented by Lesotho’s alpine climate. Local entrepreneurs will be encouraged to organise themselves into partnerships that will enable them to supply quality products to common markets. If successful, Government believes the employment creation possibilities of such efforts will be significant and will have a direct impact on the poor.

  • Support adoption of appropriate technology. The Bethel Business Community Development project24 provides an ideal model for technological multi-disciplinary skills- development. A study will be conducted on how best to up-scale this model. Where appropriate technology is proven to have lasting benefits, Government will seek to link it to a subsidy or credit scheme.

4.3.3 Increase support to Small, Medium and Micro-Enterprises

Experience in Lesotho and elsewhere suggests that direct intervention by Government, in the form of subsidies and supply-driven training, is not effective in encouraging sustained entrepreneurship and profitability for SMMEs. Instead, it creates a culture of dependency and poor debt servicing. Thus, the objective for Government during the PRS period is to provide an effective institutional support that facilitates growth driven by private investment and SMMEs.

The prosperity of the SMMEs requires a conducive environment created by supportive legislation, policies and a favourable institutional framework. The Ministry of Trade and Industry, Cooperatives and Marketing (MITCM), in collaboration with relevant stakeholders, is in the process of implementing the SMME policy. Government is firmly committed to furthering this process during the PRS implementation period.

The vision of the Government for future institutional support starts with the following premises:

  • the development of the SMME sector will only be sustainable if it can provide goods and services in a competitive market;

  • Government should not crowd out the private sector by distorting domestic markets, by competing with private sector producers or by raising the cost of resources (either pushing up capital costs by an inappropriate fiscal strategy or labour costs through excessive regulation);

  • Government should establish the necessary legal framework to facilitate the development of savings mobilisation by SMME groups to provide the basis for lending;

  • Government will actively encourage deregulation to allow informal sector activities to flourish;

  • Government should provide information to SMMEs about relevant regulations and local and regional market opportunities; and

  • Government should not provide small business finance but instead encourage groups to secure commercial loans when they need capital.

In addition to providing an appropriate policy and legislative framework, core strategies to be implemented in support of the SMME sector include:

  • Access to Business Development Services. Business skills development and demand-driven training and business counselling are fundamental. In Lesotho there is a limited entrepreneurial culture and limited business experience. There is a need to develop understanding of how markets operate, how to take advantage of them and how best to make use of facilities and services that are available. Previous Government interventions have produced very limited entrepreneurial culture due to their supply orientation. In order to change this situation Government is committed to implement a number of interventions which will be implemented during the PRS period:

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      Development of Entrepreneurial Culture. Through the Ministry of Education and Training (MOET), MITCM and private sector business associations, Government will improve the national curriculum to strengthen its business component. MOET will complete its policy paper that has already received positive support from a variety of stakeholders.

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      Business Counselling. Government will endeavour to integrate local SMMEs into an overall economic development programme and will strengthen its multi-agency strategy to be coordinated by the MITCM in the provision of training, counselling and mentoring. Where Government does not have enough practical experience or expertise for this, it will outsource such services from the private sector. Priority will go to new enterprises that have high export potential, high value addition to the economy and an impact on poverty reduction.

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      Support to Business Associations. For the purposes of monitoring progress, ensuring quality and protecting consumers, Government will collaborate very closely with the local SMME business councils and Lesotho Chamber of Commerce and Industry (LCCI) and will provide information and support on a regular basis. It will strongly promote public-private sector dialogue that results in further improvements in policies and strategies. During the first phase of the PRS, Government will spend time creating these essential working relationships so as to develop mutual trust and cooperation between the private sector and the public sector. It will promote greater use of information technology that fosters an entrepreneurial culture and provides useful contacts for the purposes of marketing and networking.

  • Access to credit for the poor. During the PRS period the government will conduct a study to assess how credit can be made more accessible to the SMMEs in a viable and sustainable manner. This study will aim to consolidate all past studies and work done so far in this regard with a clear aim to:

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      establish demand and supply for credit;

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      identify constraints hindering the present credit schemes and commercial banks from meeting the credit demand of the SMMEs;

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      learn positive and negative lessons from past schemes, with a view to emulate successes if any;

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      suggest how the identified constraints can be addressed.

    The study will serve as a basis towards the formulation of a long overdue micro credit policy. The policy will guide all future activities geared towards making credit more accessible and more effective in stimulating growth and employment creation. In developing a micro credit policy the government will adopt a participatory approach by involving key stakeholders, including credit institutions, the SMMEs and business support institutions. The objective will also be to adopt an integrated approach, as credit alone will not solve the SMMEs’ constraints, unless accompanied by concrete measures such as those proposed below.

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      Rural Finance Savings and Credit Groups. Under this scheme, the Central Bank of Lesotho (CBL) encourages commercial banks to lend to groups through a credit guarantee scheme with funds mobilised either from donors or Government to underwrite loans extended. During the PRS period the Government will extend this scheme with a view to build confidence in private banks to extend credit to local investors. This scheme will also facilitate linkage between these groups and banks where groups will open savings accounts in which they will deposit their savings regularly. The savings mobilised in this way should be able to facilitate credit to its members.25

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      Export Finance and Insurance Scheme. Government will support this through a modification of an earlier scheme established in 1988. The Scheme aims to ameliorate the financial impediments faced by Lesotho exporters and to expand and diversify the country’s export base. This will be done by assisting exporters to access credit from commercial banks to meet their working capital requirements (through a loan guarantee fund) and to manage particular risks through insurance cover. In order to ensure that SMMEs benefit fully from this scheme, about 60% of the fund will be apportioned to this category of exporters while the rest will be reserved for large scale exporters.26

    Government recognises that the success of credit schemes will depend on the following factors: availability of financial services, access to markets, business development training, the extension of property rights and functioning commercial courts. Government is committed to two particular areas to be explored and furthered during the PRS period:

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      Financial services. This entails increasing access in rural areas through Postal Banking Services announced in the 2004/05 budget.

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      Credit Bureau. The Bureau will assist lending institutions to assess the credit worthiness of borrowers before their loans are approved. However, this depends on the introduction of national identity cards that are necessary to ensure loan repayments. During the PRS period the Government will explore the feasibility of this further.

  • Access to markets. SMMEs often have poorly developed marketing strategies and struggle to sell their products. Promotion of any product will henceforth need to be linked to marketing to ensure the balance between supply and demand. To date, Government’s efforts have included provision of industrial estates, market stalls and sites for street vendors. Service providers have held district trade fairs and flea markets are organised by BEDCO on a monthly basis. These efforts have had limited success, partly because in rural areas entrepreneurs cannot access these facilities due to distance and cost of transporting their merchandise.

During the PRS period, the Government will undertake the following activities to enhance market access for the SMMEs:

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    Review Government procurement policy to give preference to SMMEs in order to encourage them to participate meaningfully in the economic growth of the country. The policy will encourage sub-contracting and joint ventures with local SMMEs wherever practical without compromising the quality of supplies and/or services.

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    Establishment of market centres equipped with modern technologies that facilitate easy access to information on markets and marketing for existing and potential local products in strategic and accessible places countrywide. The Government will provide sites, market shells, display areas, sanitation and water systems in market places and key areas where licensed street vendors operate in urban areas.

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    Piloting of rotational markets - through a network of BDS providers - that combine provision of mobile basic services (e.g. post, bank, health and telecommunications) with marketing opportunities.

4.3.4 Make optimal use of natural resources

Lesotho is a country that is blessed with a unique blend of natural resources. Although the rocky terrain of high mountains and deep valleys is an impediment to development, the Government also sees opportunities to use these very features in the struggle against poverty. While the cold, harsh winter climate is a constraint to agriculture, the Government is seeking to identify high-value, niche crops that can only flourish if exposed to the cold. Even the gullies that scar much of the lowlands are a resource waiting to be harnessed as it is here that moisture and soil nutrients can be captured and exploited for productive purposes. In short, a concerted effort will be made to turn commonly perceived “problems” into opportunities for development. Three areas will receive particular attention: agri-business, tourism and mining. Over the PRS period the Government will:

  • Develop agri-business. Government has recently completed an Agricultural Sector Strategy that describes the need to introduce new crops and agricultural technologies.27 Over the last decade a series of studies have established the feasibility of growing various high value crops well suited to Lesotho’s exceptional African alpine climate.

    Working in six selected pilot areas, specialised production zones will be created where concerted effort is focused on one or two high value crops suited to the soils and micro-climate of the area. 28 Promotion of the selected specialised crops will be based on commercial links (e.g. to the walnut de-shelling plant in Hershel) or guaranteed markets (e.g. out-growing contracts for herbs).

    Ownership and production will be by individuals on their land, while training and marketing will be through producers’ groups or co-operatives. As far as possible, the high value trees and herbs will be intercropped between food crops for local consumption. Communities will be encouraged to identify fields that have been left fallow for more than five years for re-allocation to landless people wishing to participate in the programme (in keeping with the 1979 Land Act or subsequent legislation).

    Where irrigation is necessary this will be done wherever possible through appropriate water harvesting, gravity fed systems or manual pumps. Agricultural subsidies will be focused on rewarding innovation and effort. Larger commercial schemes (involving land pooling) will be encouraged where protection of the poor is clearly demonstrated through fair and transparent rental arrangements or provision of work. By the third year, Government anticipates that at least three of the pilot projects will be showing enough promise to be significantly expanded.

  • Develop and diversify the tourism product and encourage community-based income generating activities on the tourism sites

    Lesotho’s dramatic alpine scenery and villages offer a unique product within Southern Africa. With over 300,000 tourists visiting Lesotho per annum there is considerable potential for their expenditure to create employment and income generating opportunities in parts of the country that will never attract other investment. For this reason Government believes tourism should be given high priority, especially where investors are able to demonstrate links between lodge-based services, such as accommodation and food, and community-based services such as guiding, pony-trekking and cultural activities (as is the case, for example, at Malealea, Morija and Semonkong).

    Over the next three years the Government will aim to extend the average number of days spent by tourists in Lesotho from two and a half to four and to increase average expenditure from M132 per day to M200. This will be done primarily by a joint tourist promotional package with the Republic of South Africa, where Lesotho is promoted as one of the main stopovers in the circuit. The Morija Arts and Cultural Festival, the Roof of Africa Rally, the Maseru-Mohale bicycle race, and other national events will be promoted and strengthened as a means of increasing awareness of the Lesotho brand.

    Working under the Tourism Policy of 2001 and the Tourism Act 2002, the Lesotho Tourism Development Corporation (LTDC) will strive to diversify what is on offer by developing one new tourist site per annum over the next three years. Community awareness campaigns will focus on these areas. Consideration will be given to introducing a tourism levy to generate a fund that assists community-based initiatives to improve the quality of their product. A new grading system will enable even the poorest households to participate in these developments through the provision of over-night hut accommodation linked to hiking and trekking routes mapped out and promoted by LTDC in collaboration with private lodges.

  • Develop mining industry. For centuries Basotho have made use of natural stone for building their homes. From these homes men have migrated to South Africa to produce minerals that have fuelled Africa’s most powerful economy. No wonder then that ordinary people throughout the country believe poverty can be alleviated through exploiting rocks and minerals. Some progress has been made in promoting use of local building materials through Government’s policy that new public buildings should feature sandstone. Over the next three years, Government will evaluate sandstone reserves and seek to strengthen market links. Mining initiatives that generate employment will be provided with access to credit and training. New sandstone products (such as those being produced by the Mineworkers’ Development Agency groups) will be actively promoted.

    Lesotho already exploits reserves of dolerite and clay. Over the next three years production will be increased by the private sector in particular areas, including Ha Teko, Ha Motloheloa (clay), Kolo, Letšeng and Kao (diamonds).

    Government will strive to create an enabling environment for these activities by implementing the new Mines and Minerals Act 2005 and monitoring the use of resources to ensure safety, health and environment.

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In a land that once exported surplus grains to the new mining towns of South Africa, there is now hunger. Evidence from many sources points to persistent child malnourishment in Lesotho.29 In over 60% of the communities involved in the PRS consultation “lack of food” was mentioned as a defining feature of poverty. Throughout the country people described how their communities have progressively become more and more food deficient since the 1970s. They blamed a combination of environmental, climatic, political and economic factors for this, but the end result is the same: hunger. Government statistics confirm that the production of cereal crops is very susceptible to the vagaries of climate. Productivity suffers significantly in years where adequate rain does not fall at the required time.

Donor/GOL interventions have often created a dependency syndrome

The prospects for increasing staple food production are not good. Despite massive efforts by both Government and donor agencies, Lesotho remains highly dependent on cereal imports. Indeed, to a certain extent, it is likely that the interventions themselves may have limited increased productivity as they raised expectations and created dependencies that the state has been unable to address in a consistent manner. Erratic subsidies and emergency interventions, which vary from one year to the next, have often been counterproductive in the long run as families often wait to see what will be available from Government, and then miss critical planting dates.

Agriculture is often uneconomical while production is inadequate

It is not only Government that has been subsidising cereal crop production. Over the years, households have themselves subsidised ploughing and planting costs by diverting income from other sources - such as mine remittances - to crop production. Because few households keep proper records, they are not aware that their costs often exceed their returns. However, a cost-benefit analysis of crop production in the Lowlands, where there is greater dependency on mechanised traction and purchased inputs, shows that the majority of households are making a loss.30 In the mountains, where direct costs are lower because people tend to use animal traction, manure and their own seeds, crop production is profitable, but the amounts grown fall far short of the requirements. Nationally fewer than 5% of households produce enough cereals to feed their families throughout the year, with the remainder having to purchase part or all of their cereal needs.31

Lesotho produces approximately 30% of the total food requirement

The country produces around 30% of the total food required to feed its population in a normal year. This means that 60% of the annual cereal requirement has to be imported at the going regional market price. Household purchasing power therefore plays an important role in household food security. This in effect means that overall households are probably more vulnerable to increases in the price of maize than they are to low crop production as a result of erratic weather patterns. Although the current situation in Lesotho cannot be characterised as an emergency, most rural populations will face Food/Income deficits and interventions will be necessary. However, interventions clearly need to go beyond food aid. This is because the current food access problems are a result of low food production, increases in the price of staple foods and depressed employment markets. It is within this context that the PRS aims to address food security through an increase in agricultural production, employment creation and income enhancement.

Mine retrenchments have exacerbated low production

The decline in mine remittances has had an impact on food production as far fewer households have the necessary income to invest in the required inputs. For poor households the annual practise of procuring the required inputs for cereal production is almost insurmountable. In the past this would have been overcome through sharecropping with other households but, as the number without wage employment grows, the prospects for sharecropping have declined.

Settlement patterns help to cause depletion of soils

Basotho live far from their fields. For reasons that can be traced back to the time of Moshoeshoe I, the pattern of settlement is such that people and animals are separated from the land which they use to produce their food. The most serious implication of this is that it is virtually impossible to maintain fertility as the distances between the sources of soil nutrition (manure) and the fields is excessive. Fertility and soil conditions steadily decline as the majority of families are unable to find the means to transport manure to the fields and are unable to afford artificial fertilisers. Depletion of organic matter in the soil - exacerbated by the removal of crop residues for fuel or fodder - results in a reduction of the soil’s capacity to retain moisture, which in turn means that crops are increasingly vulnerable to dry spells that they might otherwise have survived in the past.32 The decline in soil fertility and in its capacity to produce good crops needs to be appreciated in the context of Lesotho’s very limited arable land, estimated at less than 10% of the total area, or about 0.2 hectares per person.

Livestock conditions are also declining as communal land is not being well managed

In the livestock sector, productivity has not increased,33 largely as an outcome of overstocking, uncontrolled grazing and the associated decline in range conditions in many parts of the country. To a certain extent, reduced levels of control stem from a reduction in the authority of chiefs who once had exclusive powers of control over natural resources. Until new local government structures are well established, the prospects for properly controlled grazing and range recovery are remote, which means the quality of the stock will remain low in most cases.

The impact of stock theft increases poverty

Stock theft, which the communities perceive as a significant cause of poverty, is limiting the growth of herds. Although this allows some recovery of range lands in certain places, this is of little consolation to those households who have lost their livelihoods overnight. During the community consultations, devastated individuals described how they had been thrown into poverty and hunger through stock theft. Descriptions of the thefts suggest high levels of organisation implying that the thieves are far from poor (in some cases trucks were involved in moving the animals). Moreover, there is a strong perception that some police, chiefs, officials and businessmen are involved in these criminal networks. In border areas, there are clear indications of the international dimensions to stock theft that will need to be addressed if any progress is to be made.34

Distribution of livestock is highly skewed

In developing programmes to assist the poor, cognisance must be taken of the fact that the proportion of households that own livestock is declining (between 1993 and 1999 cattle ownership fell from 48% to 39% while sheep and goats ownership fell from 32% to 26%). The average number owned is low (1.43 for cattle and 3.96 for small stock) with very limited variation across income quintiles. However, a small percentage of rich households own large herds. These wealthier members of the community are able to benefit more from the communal resource than those who do not own any livestock. In the early 1990s an attempt was made to introduce locally-managed grazing fees which would have resulted in livestock owners effectively paying their communities something for use of rangeland, but this failed due to lack of popular support. The issue of unequal access to natural resources remains and it is necessary to work towards a consensus with the various stakeholders on a way forward.

Credit facilities are very limited and crop insurance unobtainable

Whether it regards livestock or crops, access to capital for farmers to procure inputs is very limited. Community-based schemes are sometimes able to offer very small amounts but formal rural credit is not accessible. This severely constrains farmer initiatives and the improvement of existing resources. For progressive farmers, no crop insurance is available.

Marketing facilities are poorly developed hindering sale of surplus production

Rural marketing facilities are very poorly developed in the country. Few traders operate in rural areas, and marketing infrastructure, including roads, storage facilities and market places have not been established. This makes it hard for farmers who have small and variable surpluses to dispose of them for cash. It is also possible that marketing structures fail to develop because surpluses are too small and variable to maintain them. As a result markets are poorly integrated and prices vary widely from place to place.

HIV and AIDS has an increasingly negative impact on production

As productive members of a household succumb to disease it is evident that this will have an impact on the amount of food they are able to produce. Poor health undermines energy levels making labour-intensive tasks, such as ploughing and planting, difficult to perform.

Socialisation/Education have tended to discourage agriculture

Because paid employment is seen as the most desirable option and because much of the emphasis for many years has been on book learning in schools, many Basotho rate agriculture as an undesirable mode of life and thus as a low priority. Although agriculture is subject to the variability of climate and other factors, certain men and youth ignore the obvious potential of homestead plots/fields and other local resources that could easily provide better food security and thus opportunities are lost.

Optimising land use can greatly promote food security

Despite the challenges facing the country, Basotho are convinced that Lesotho has land, livestock, labour and water resources that if brought together in the right way will go a long way towards ending malnutrition. Measures are planned to deal with all of the problems mentioned above. Agriculture forms a major part of the Government’s fight against poverty. It also recognises that it has the potential to play an even greater, and much more fully integrated, role in the economy. Although productive land is scarce in overall terms, in actual fact it is massively underused, with many fields lying fallow from one year to the next. By promoting and facilitating different forms of sharecropping, much of this land can be brought back into production. By optimising the use of the small amounts of land immediately around people’s homes even those who do not own fields can boost food security.

Intensive farming methods are now a high priority

Over the last decades, Basotho agricultural researchers (notably J.J. Machobane) have demonstrated that land, either around the home or in the more distant fields, can be intensely worked year round. With effort and the right combination of crops and organic farming principles, a family can live off a small piece of land in its possession and generate a surplus for sale. Combined with conservation farming and agro-forestry, the organic farming practices that have been developed locally and abroad can revive soils and restore productivity. Even in urban areas, much greater productivity can be achieved from the small parcels of land that people possess. Since agriculture and food security was a high priority during consultations, the battle for food security will be given high priority by Government over the next three years.


Given the constraints listed above, the Government is determined that lessons should be learned from past attempts to increase food security. Although the overall objective of increasing crop and livestock production remains unchanged, new strategies and activities have been devised that draw from both Government and NGOs demonstrable successes in boosting production. While many of these successes have been on a small scale, their impact is proven and the focus of the next three years will be to up-scale and spread them to a wider group of practitioners.35 The key objectives of this National Priority are:

  • adoption of appropriate farming practices and timely access to inputs;

  • development of appropriate irrigation systems;

  • strengthening and decentralising extension services at area level within all districts;

  • ensuring an efficient and standardised land tenure system;

  • improving livestock and fodder production; and

  • improving marketing systems.


5.3.1 Adoption of appropriate farming practices and timely access to inputs

In order to achieve these objectives the Government will:

  • Encourage farmers to adopt appropriate farming practices and to diversify field crops in areas that are ecologically suitable. It will also engage the private sector to ensure that the required inputs are available as widely as possible and that they reach the farmers in time. Those households who are prepared to engage in intensive farming practices will be supported through training and targeted subsidies.

  • Explore block farming opportunities and mechanisation services. Government will encourage interested Basotho land owners to enter into block farming. This is to intensify and mechanise farming and reduce production cost by exploiting economies of scale. During the PRS period this approach will be piloted, with careful monitoring to determine its viability.

  • Prioritise use of land around the homes. Greatest priority will be given to ensuring that the land around people’s homes (that is closest to animal manure and most easily defended against theft) is made as productive as possible, particularly for vegetable production.

  • Construction of water tanks. As a growing majority of Basotho have built homes with corrugated iron roofing (as opposed to older styles using thatching grass), it is now possible to greatly improve household vegetable production using rain water collected in inexpensive water tanks constructed on site.

  • Provide specialised support for HIV and AIDS-impacted households. Those families who have been impacted by HIV and AIDS, particularly those involved in home-based care programmes, will be targeted. A programme will be developed that minimises labour by using activities such as key-hole gardens and household water storage systems, as well as providing seeds of plants that are known to combat opportunistic infections and boost the immune system (such as garlic).

  • Design packages for child-headed households. In the first year of the programme, a special package will be designed for child-headed households that will enable them to link intensive horticulture to other activities such as bee-keeping or free-range poultry production. Appropriate share cropping activities will be designed and implemented so that orphans who have land can be assisted with ploughing services and other agricultural inputs.

5.3.2 Development of appropriate irrigation systems

Government recognises that previous irrigation schemes have failed largely because large areas of land were targeted without proper consultation with farmers. The new approach will, therefore:

  • Identify smallholder farmers and encourage them to use the appropriate gravity fed techniques and water harvesting. This will be closely co-ordinated with the activities described under the previous strategy with poor families being targeted for any subsidies.

  • Explore opportunities for irrigation along the Caledon and Makhaleng rivers in partnership with South African farming communities. South African farmers are already taking advantage of these rivers for irrigation purposes. During the PRS period the Government will initiate a dialogue with neighbouring farmers on how best to collaborate on irrigation matters.

  • Determine longer-term opportunities arising from the Lesotho Lowlands Water Supply Scheme Feasibility Study. The Ministry of Agriculture and Food Security will actively participate in discussions regarding the LLWSS with a view to identifying irrigation opportunities that can be implemented in a participatory and technologically appropriate manner.

5.3.3 Strengthening and decentralising extension services at area level within all districts

Government recognises that the above strategies cannot be achieved without the active engagement of poverty-conscious extension workers. Over the next three years Government will accelerate progress already made under the Unified Extension approach with the following activities:

  • training of extension workers and decentralising them to area level;

  • identifying and outsourcing components of the extension service;

  • improving communications and networking with NGOs and business.

5.3.4 Ensuring an efficient and standardised land tenure system

Food security will not be achieved if the poor are not confident about their ownership of the land they want to make productive. Organic farming systems may be proven, but they require considerable commitment over many years to rebuild soil quality, establish water harvesting systems and plant trees. This commitment will not be forthcoming if land tenure is not secure. Government will therefore undertake the following in the next three years:

  • amend the legislation in order to address any inequality between men and women with regard to land ownership;

  • develop a National Land Policy and enact the Land Bill;

  • develop a digitised land information system.

5.3.5 Improving livestock and fodder production

Animals have played a critical role in helping Basotho through difficult times. During the PRS period, Government will encourage appropriate animal husbandry and strengthen the links to homestead food production. Government will promote the use of dairy goats and indigenous chickens. It will also encourage the planting of lucerne and fodder tree species linked to water harvesting systems. In areas better suited to extensive animal husbandry the focus will be on improving range management through community-based associations. Government will also promote fodder (grasses) production on marginal land, especially in the Southern districts, as a substitution crop and a means of restoring soil fertility which can be followed by systematic cereal replanting. This will be linked - through cut and carry practices - to the intensive livestock and horticulture systems described earlier.

5.3.6 Improving marketing systems

Lesotho is not heavily dependent on agricultural exports. However, if successfully implemented, the strategies listed above will result in households moving fairly rapidly from meeting their own consumption needs to generating a surplus for sale. The successful sale of such surpluses will help to ensure that food security objectives are achieved as cash becomes available for other purposes. As homestead gardening results in the production of relatively small quantities of fresh produce it is important to find ways of disposing of this rapidly and as close to the homestead as possible. In places near factories, local gardeners are successfully selling large quantities of fresh vegetables to workers. The challenge ahead will be to strengthen and expand such opportunities. One way to do this is through the creation of rotating markets where both buyers and sellers know that on a given day sales of fresh produce will take place. If essential services (such as a mobile post office or bank) are provided at the same time, this attracts people, further stimulating sales of farmers’ produce.

Where marketing of surplus fresh produce is difficult, emphasis will need to be placed on food preservation and storage technologies. This can be done through well-established networks of Government nutritionists and NGOs such as the Homemakers Association.

Government will also facilitate links between farmers who start producing on a larger scale (through block farming, for example) and buyers looking for particular products. While such farmers may not be amongst the poorest they do generate employment and stimulate the economy.

As far as possible, Government will encourage the private sector to take the lead in marketing activities. The primary role of the Government will be to stimulate links, provide encouragement, regulate and promote high standards of produce. To this effect, the sub-sector will undertake the following strategies:

  • enhance market research and market information services;

  • ensure the maintenance of standards and enforce fair trading practices;

  • improve the response to local, regional and international market opportunities;

  • improve marketing infrastructure in partnership with the private sector;

  • pilot rotating markets linked to provision of essential services, particularly for producers of fresh produce;

  • provide training on the preservation of surplus fresh produce.

5.3.7 Strengthen food security database

During the medium term, the food security data base will be strengthened, in order to address the existing weak national information systems, inadequate analysis of food price data and inefficient early warning systems. This will facilitate better understanding of vulnerability and inform policy making and budgeting.

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The situation at Independence

At the time of Independence, Lesotho consisted primarily of villages connected only by gravel roads and bridle paths. Only a very small elite had their own vehicles; most people travelled on horse back or used the buses if they had to travel long distances. Mineworkers used the South African Railways to make the long journey to the mines, returning only once a year. Virtually all schools and clinics belonged to the churches. Telephones hardly reached beyond Maseru district and most institutions that needed electricity outside the capital had to generate their own. The vast majority of villages did not have piped water supplies and latrines were rare. The most common fuels were cow dung, shrubs and crop residues.

Considerable progress

Since Independence Lesotho has made enormous strides in developing its infrastructure. Despite the challenges posed by a difficult terrain, the country has been transformed by continuously expanding infrastructure of all kinds. The road network now covers a distance of 6035 km, of which 1205 km are paved. The rural roads network covers 3800 km, or over 60 percent of all roads. In areas where vehicle transport is not justifiable because of low population density, 109 foot bridges have been constructed. Rural water supply has made equally impressive strides, with approximately 62% of the population now able to access 30 litres per capita per day within 150 metres of their homes (a standard higher than that of many African countries).

In urban areas sophisticated systems supply water not only for domestic purposes but also for the fast growing industries. Electricity supplies have been extended through most parts of the Lowlands and now reach all district headquarters in the mountains. Much of this power is generated by the award-winning Lesotho Highlands Water Project that also exports water to South Africa. As for communications, within a five-year period the number of fixed telephone lines (21,000) has been exceeded by mobile phones (27,000). A brief analysis of key areas is given below.

Challenges ahead

While the Government takes great pride in what has been achieved much remains to be done. Two massive challenges loom that will have to be tackled head on if the gains of the past are to yield benefits for the poor. These are equally important but require very different approaches and strategies. First, relevant infrastructure - especially water -must be provided as fast as is feasibly possible to the new industrial estates of Butha-Buthe, Maputsoe, Teyateyaneng, Maseru (Ha Tikoe), Mafeteng and Mohale’s Hoek. If this is not achieved within a reasonable time, potential investors will turn their backs on Lesotho and tens of thousands of job opportunities will be lost. The second great challenge is to maintain the momentum of providing basic infrastructure to rural areas. As much of the lowlands now has access to the water and roads, the task will be to take the process forward into ever remoter regions. During consultations for the National Vision and Poverty Reduction Strategy, community members in the mountain districts expressed the concern that they had been forgotten by the government because very few developments occur in their areas, compared to those of their counterparts living in the lowland parts of the country. As services are extended to these areas, the Government is aware that the per capita/unit costs will increase dramatically. Nevertheless, on the basis that every Mosotho is entitled to basic services the process must go on.

6.1.1 Transport

The Lesotho Road Network map shows that most of the roads are concentrated in the Lowland portions of the districts of Butha-Buthe, Leribe, Berea, Maseru, Mafeteng and Mohale’s Hoek. Roads are relatively few in the Mountain districts of Thaba Tseka, Mokhotlong, Qacha’s Nek, and Quthing. Although there are arterial roads that connect all the districts in the country, few rural roads connect villages and towns within districts in the mountainous parts of the country, which comprise 75% of the total area of Lesotho, and in which about one quarter of the population lives.

Experience from the transport sector demonstrates that the provision of infrastructure can have both long and short-term impacts on poverty alleviation. The Department of Rural Roads already makes a significant contribution in this respect, as it employs between 7,000 and 8,000 labourers on a rotational basis in construction activities. Without sacrificing efficiency, the Government will strive to ensure that wherever possible labour-intensive methods are used. Contractors who are able to demonstrate that this can be done in a timely and cost effective manner will be favoured.

6.1.2 Water

Lesotho is blessed with relatively abundant water resources.36 Since 1986 efforts have been focused on developing these for export through the Lesotho Highlands Water Project. This has brought many benefits to Lesotho, including a steady stream of royalties that reinforce the Government’s capacity to provide essential services. However, with Lesotho’s own need for water reaching levels that could not have been anticipated 30 years ago, Government is determined to direct efforts towards developing sources to supply the fast growing urban areas of the Lowlands. Another important change since the Highlands Water Treaty was signed is that Lesotho is now a signatory to various international conventions that it has obligations to fulfil.37 Under these conventions, all future projects will have to be undertaken in consultation, particularly with those states that are members of the Orange River Basin Commission. Government will maintain a high profile in these fora to ensure that the country’s needs are well represented, as the future of tens of thousands of households depends on this.

The enormous importance of providing water to new industrial areas has already been stressed (see Section 4.2.2). Here it is worth reiterating the fundamental point that unless fast track solutions can be found to the lack of water there is a real risk that investors will seek alternatives to investing in Lesotho. Government, with the support of its development partners, is already earnestly seeking ways of providing water not only to these industries but also to the peri-urban areas where most of the workers and job-seekers are to be found.

Two closely related feasibility studies are underway that aim to address the shortage of water in the Lowlands. The Metolong Dam Feasibility Study focuses on provision of water to Maseru and surrounding areas by 2007. A more comprehensive study, the Lesotho Lowlands Water Supply Scheme Feasibility Study, is examining how best to supply all Lowland settlements with populations greater than 2,500 by 2010.

While evaluating the study results for a long term solution, the government will continue to extend water supply systems to communities that are poorly supplied in order to address present demand in a viable manner. This is particularly important from a gender point of view: in the community consultations, women consistently ranked lack of water higher than men.38

6.1.3 Sanitation and Solid Waste

Inadequately treated sewage and trade wastes are the main sources of surface water pollution and are responsible for the introduction of toxic substances into the aquatic environment. Untreated sewage also contributes to increases in micro-organisms, such as bacteria, viruses and protozoa, which, particularly in urban areas, presents a threat to the health of the population. In Maseru, spillage from septic tanks and the high concentration of latrines may contaminate groundwater resources, upon which many poor households depend (through the use of hand pumps). Urban areas generate large amounts of solid waste and, as accessible dumpsites are filling up, it is becoming increasingly difficult and more expensive to dispose of. Poor management allows disease vectors to proliferate, with serious consequences for health.

6.1.4 Telecommunications and Mass Media

The Telecommunications Policy of 1999 drives developments in the Communications subsector by providing a framework for improving communications connectivity throughout the country. The objective of the policy is to facilitate the restructuring of the sector and provide guidance to the new law that has allocated responsibilities to various role players: the Ministry of Communications is responsible for policy formulation; the Lesotho Telecommunications Authority is responsible for regulating operations in the sector while service providers are responsible for service delivery.

Over the last few years privatisation has made a significant contribution to improving access but communications development is largely concentrated in Maseru and the lowland parts of the northern and southern regions of Lesotho. In mid-2001 mobile telephone subscribers totalled 27,000 with an average of 1.35 mobile phones for a population of one hundred people. Data for May 2002 shows there were 21,416 fixed telephone network connections, translating to one telephone line for a population of one hundred persons. Maseru accounts for 71% of the main telephone lines, leaving the other nine districts to share the remaining 29%. Moreover, public telephones are only found in urban areas confirming that telephone communication is very limited in the rural areas. The challenge ahead is to ensure, through proper regulation, that the operators do not neglect rural areas in their bid to maximise profits in the more commercially attractive urban areas.

Radio plays a key role in promoting various development initiatives. The broadcasting service covers about 75% of the country with the larger percentage in the urban areas. In the last decade Government has issued a number of radio licenses for private radio stations that have extended listeners’ choice considerably.

6.1.5 Energy

Lesotho is experiencing a considerable energy shortage. Almost 90% of energy consumption in the rural areas is sourced from indigenous biomass fuels consisting of shrubs, firewood, crop residues and animal waste. This has resulted in the depletion of reserves for woody plants and animal droppings that might have been used to enrich the soil. The consequences on the environment have been devastating, further perpetuating the poverty cycle. Electricity access was limited to about 10% of households in 2002 and most connections are found in the Lowlands. Paraffin is used for cooking, heating and lighting, but its access in the rural areas remains a problem mainly due to inaccessibility and high prices. Other fuels such as liquefied petroleum gas and coal play a minor role in rural areas. Finally, few rural households use Photovoltaic (PV) systems or diesel/petrol generators.

Data show that the poorer the household the more time spent per day collecting fuel. The wealthiest households spend an average of eight minutes a day collecting fuel, compared to more than two hours a day for the poorest. Women and children are most severely impacted as they are the ones responsible for collection. In some mountain areas, school children spend almost one day a week collecting fuel for the school kitchen, seriously impairing their education. Between 1993 and 1999 the percentage of households that depended on collected fuel rose from 55% to 66%.39 In short, energy is both an environmental and a poverty issue - and one which the Government of Lesotho is determined to tackle.

6.1.6 Urban Settlements and Access to Housing

An assessment of the housing sector undertaken in 1998 revealed that, while people are generally successful in their efforts to provide some measure of shelter for their families, most of this housing is provided informally and constructed by the owner, financed by individual savings and, in urban areas, often constructed on illegally-held land without basic services. Formal sector institutions have failed to respond effectively to the needs of the informal sector and lower income households.

The vast majority of housing is owner-constructed and financed. In urban areas, and to some extent in rural areas, owners typically collect materials over time and eventually build the houses after all the building materials have been assembled. In this way, it normally takes a household a minimum of three years to put the building materials together before the actual construction of the house starts. Households tend to apply this strategy with unreliable or irregular incomes. In rare cases home builders are able to access limited credit. Even where credit exists, it is unaffordable to the majority of the people because of the stringent conditions imposed by commercial banks, including high interest rates and deposits of around 10% of the loan. The formal real estate market is poorly developed and private sector developers are discouraged from playing a role in housing provision because of difficulties experienced in obtaining land.

The significant shifts from rural to urban areas exert immense pressure on the limited infrastructure services and the acute shortage of housing has become a contentious issue in urban areas. More than 600,000 people (27% of the population) live in urban areas and growth points at present, with Maseru absorbing the largest share and growing at the rate of 7% per annum. Government is determined to ensure that the residents of the peri-urban areas, areas that are filling with new arrivals searching for work, are not neglected.

Thus, comprehensive infrastructure plans will be implemented to ensure that not only the factories but also the people who work in them are well catered for.

Government is particularly concerned about the supply of utilities in peri-urban areas. For utility companies to provide a cost-effective service, it is important that they should have reasonably easy access to people’s homes. The lack of settlement planning in urban areas prevents this. One reason for the ad hoc pattern of settlement is that acquiring land through proper legal channels is cumbersome and expensive, leaving the poor with little alternative other than to work through chiefs and field owners. This underlines the need for a co-ordinated approach to urban development involving Government agencies, local authorities, utility companies and private sector developers.


To fulfil the goals of service delivery in rural, urban and peri-urban areas over the next three years, Government has agreed on the following series of clearly defined objectives:

  • increase access to roads and transport;

  • increase access to water;

  • increase access to sanitation;

  • increase access to telecommunications and mass media;

  • increase access to clean and affordable energy supplies;

  • ensure planned settlement of peri-urban areas and affordable access to housing.

With support, Government can allocate significant resources to the wide variety of infrastructure projects mentioned in the PRS. However, unless these are carried out under proper legal and policy frameworks there is always a risk of failure. Government, therefore, will ensure that all sub-sectors lacking effective infrastructure policy frameworks to guide and regulate developments in their sector are strengthened.


Under each of the objectives, a series of strategies has been devised. Where necessary, additional background information is provided. For ease of reference the strategies are described under objective sub-headings.

6.3.1 Improve Access to Roads and Transport

In many cases, infrastructure can only be put in place once roads make this possible. Under this objective, the following strategies will form the focus of the PRS implementation period:

  • Provide a conducive legislative, policy and institutional framework. The transport sector is making considerable progress on policy formulation, including how best to assess and manage environmental impacts of transport infrastructure development. This process will be continued and strengthened through:

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      reviewing road legislation with a view to clarifying the responsibilities of all the institutions involved in road construction and maintenance;

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      reviewing transport policy, particularly with a view to attracting private transport operators to rural areas through licensing procedures and enhancing inspection of transporters to reduce accident rates.

  • Increase road access. Within the transport sector, Government sees roads as being most critical in the struggle to alleviate poverty. However, 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. In the first year of the PRS implementation, Government will conduct studies (including EIA) to determine the costs of constructing paved roads in the highlands. Maintenance of all national trunk roads will continue throughout the period. Instead, particular priority will be given to rural roads which are constructed and maintained with community involvement, but according to set standards and procedures. For this reason Government will aim to:

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      construct, rehabilitate and maintain roads linking rural communities to basic services;

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      train local communities in road construction and maintenance to ensure sustainability of rural road infrastructure;

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      construct foot bridges and river crossings in the rural areas.

6.3.2 Access to Water

Over the next three years Government will increase its efforts to better serve both rural and urban areas through a variety of projects and local schemes. Implementation of ongoing and new projects will be done in a co-ordinated manner under the leadership of the new Commissioner of Water’s office. The key strategies and projects are mentioned below.

  • Monitor, refine and formulate water policies and legislation. The sustainable provision of water for various purposes cannot take place without a supporting policy and legal environment. For this reason, in 1999, a Water Resources Management Policy was adopted by Government. While useful in many ways, some key areas that relate to water resource development are not adequately dealt with in the Policy. As these have important implications for access by the poor to water, this oversight will be addressed over the next three years. In particular, policies will be formulated that deal with resettlement, sanitation, water pricing, water resources development and water conservation (including recycling). This process will contribute to the drafting a new Water and Sanitation Act that is intended to bring the Water Resources Act of 1978 into line with international agreements and developments in the sector. Another important revision to the legislation will consist of amending the Water and Sewerage Authority Order of 1992 to support new policies. In addition, Government will amend the law to require an annual review of tariffs. To ensure that the poor are adequately protected, Government will maintain a stepped tariff structure whereby poorer consumers are subsidised by those who are better off. To ensure that various pieces of legislation are enforced, Government will increase the capacity of the Department of Water Affairs to regulate and enforce water sector legislation.

  • Improve institutional capacity to assess and monitor water resources. With numerous water sector projects due to be implemented in the next few years it is important that the institutional capacity to manage critical data and inventories is developed and maintained. Government will seek additional support for key institutions, including the Office of the Commissioner of Water, Department of Water Affairs (DWA) and the Department of Rural Water Supply (DRWS). Concurrently, Government will conduct a feasibility study to determine if there are any advantages to be gained from separating water supply and distribution functions, particular in view of the recommendations of the Lowlands Water Supply Scheme Feasibility Study.

    • Improve water storage, delivery and distribution. The central strategy for the water sector is to improve storage, delivery and distribution. The key activities are:

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        complete the Lowlands Water Feasibility Study and proceed to detailed design;

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        complete the EIA and detailed design of Metolong Dam and proceed to construction;

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        augment Maseru Water Supply System by raising Maqalika dam wall and upgrade water treatment works;

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        carry out detailed design and start implementation of the Pilot Programme of Maseru Consensus Building for Peri-Urban Water Supply Project;

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        implement WASA’s Peri-Urban Water Project Phase II;

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        complete the detailed design and construction of the Six Towns Water Supply and Sanitation project;

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        complete the Feasibility Study of Five Towns Water Supply and Sanitation project and procure consultants for detailed design stage;

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        extend rural water supplies to unserved areas;

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        rehabilitate and expand existing rural water supply schemes in areas that will not be covered by the Lowlands Scheme;

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        maintain flexibility in standards and service levels according to communities’ demand for water and their ability to pay.

    • Improve water conservation and management. Preliminary results from the Lowlands Water Supply Scheme Feasibility Study indicated that water conservation measures - particularly the recycling of industrial water - could significantly reduce the need for expensive new infrastructure. Some factories in Maseru have already invested in their own recycling plants and have found that up to 80% of the water can be recycled, cutting their recurrent costs, while at the same time protecting the environment and pleasing their clients. If 50% of industrial water were to be recycled, the pressure on Maseru’s overstretched supply would be immediately reduced. Equally important is the need to identify the quantity and reasons for water loss (currently approximately 30%) and determine the best options to minimize losses. Both of these activities will be given high priority over the next three years.

  • Strengthen community capacity to manage rural water schemes. Many rural water systems are not functioning at all or are not meeting DRWS standards. In pursuing the goal of universal coverage - including to communities in the remote mountains - Government will focus on rehabilitating and maintaining existing rural water systems through implementation of the DRWS 5-year plan that encourages community ownership and management of completed water systems and outsourcing of work to private contractors and NGOs.

6.3.3 Access to Sanitation

  • Improve water-borne sewerage systems in Maseru. Efforts will be made to expand the water-borne sewerage system and to up-grade the associated treatment works. Concurrently, the Government will re-examine mechanisms to assist 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. Government will ensure the provision of public toilets, especially at key public transport nodes and markets.

6.3.4 Access to Telecommunications and Mass Media

  • Develop a Universal Access Policy. The Universal Access Policy will ensure that these 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). Numerous studies have shown that radio is a particularly effective way of reaching poor households with critical information regarding projects, public health, education and employment. For this reason, over the next three years, Government will expand its public broadcast transmitters to cover 90% of the country (from 75%).

6.3.5 Access to Energy

As the vast majority of the poor use - and will continue to use - biomass as their primary fuel, the Government will increase the resources allocated to forestry, particularly to the expansion of private and public woodlots (this is discussed in more detail in Chapter 10). Further, to ensure that children are not deprived of part of their education because of the fuel needs of school kitchens the Government will conduct a feasibility study to determine how best to convert these to less demanding systems (see Chapter 9). This section focuses on Government plans to improve access in rural areas to modern fuels that are less demanding from both an environmental and social perspective.

  • Develop and implement a National Rural Electrification Programme. Electricity is vital for the growth of businesses, the development of institutions and the well-being of families. For this reason it is essential that Government plays a role in ensuring that electricity is spread as extensively as possible. The Lesotho Electricity Corporation (LEC) is the sole organisation with responsibility for this task.40 In order to ensure that it meets the huge challenges that lie ahead, the following key activities will take place in the next three years:

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      develop a Rural Electrification Master Plan;

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      identify economically productive/business centres in the rural areas for early electrification;

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      implement the access to electricity pilot projects and projects emanating from the Rural Electrification Master Plan;

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      establish the National Rural Electrification Fund (NREF) and mobilise funding to subsidise the costs of rural electrification projects;

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      reduce the existing backlog of applicants;

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      develop service delivery models and financing mechanisms for renewable energy technologies.

  • Introduce appropriate reform measures, develop institutional capacities and responsibilities for electrification, and energy service delivery in rural areas. None of the very ambitious service delivery tasks listed above can be accomplished without a solid institutional base. For this reason, over the next three years, the Government will implement the following specific tasks:

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      establish the Lesotho Electricity Authority;

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      establish a Rural Electrification Unit/Agency to facilitate, co-ordinate and manage rural electrification projects;

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      complete the privatisation of LEC;

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      complete the financial restructuring of ‘Muela Hydropower Plant;

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      develop a training plan for capacity building of electricity institutions and their stakeholders;

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      study the potential social impacts of sector reform (including tariff adjustments) and determine the most effective measures to include the poor in new programmes and protect them from adverse adjustments.

  • Improve the availability of commercial fuels in rural areas. The private sector supplies commercial fuels to most parts of the country but some areas are poorly served. Government will review the instruments at its disposal to assess how best to ensure that the private sector does not neglect poor areas. The Government policy will be to promote use of renewable energy for sustainable development.

6.3.6 Ensure planned settlement of peri-urban areas and affordable access to housing

In anticipation of the continuous growth of peri-urban areas, Government will carry out the following over the next three years:

  • Ensure adequate provision for the land tenure needs of peri-urban areas

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      streamline land application and allocation procedures and make land more accessible to the poor;

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      ensure that the Local Government Act and the Land Act are in harmony;

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      train the new structures that will be responsible for land allocation under the new Land Act;

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      monitor implementation.

  • Improve planning of settlements

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      review, up-date and implement the National Settlement and Shelter Policies in line with the legislation described above;

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      establish a National Housing Authority and ease access to land for private sector housing development;

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      review and/or establish regional, town and village plans that are community-based with a view to pro-poor interventions that can be implemented within three year plans (including proper public access to parks, transport terminals, community centres, grave yards, waste disposal sites, etc).41

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NB: TBD is To Be Determined.



Lesotho’s heritage gives clear guidance

Lesotho’s very existence can be traced back to the extraordinary achievements of King Moshoeshoe I who overcame great adversity through his consultative, inclusive and diplomatic approach to governance. Under his leadership, refugees, war victims, widows and the poor were given a place in society and an opportunity to rebuild their lives in security. The community consultations clearly spelt out the appeal from ordinary Basotho: they seek the same fundamental rights as those who lived at the time of Moshoeshoe I, being peace, participation and security. The Government of Lesotho sees this as the most fundamental long-term challenge facing the country. Good governance is a pre-condition for poverty eradication, and its pillars are democracy, transparency, accountability and protection for all. It must pro-actively promote people’s participation in decision making and resource allocation, while protecting them from arbitrary, uncontrolled actions by governments, multinationals and other forces.

But the last 40 years have not produced consensus among the political elite

Lesotho held its first democratic elections in 1965, under a borrowed Westminster model based on multi-party democracy. Democracy was readily accepted. Political participation was not a new phenomenon as the obligation of the political leadership to consult the people. This was a norm entrenched in the system of governance in the pre-colonial era. Basotho culture suggests that ultimate power lies with the people. However, this noble tradition was seriously undermined by the political elite in the post-independence period. The state apparatus became highly partisan and politicised. State power also became highly centralised and the state security apparatus grew increasingly influential. Over the years Lesotho’s democracy has been fragile, undermined by a refusal to accept election outcomes, the suspension of constitutional rule and rampant abuse of human rights.

The Westminster system was a flawed model for Lesotho

The determination of ordinary people to participate and vote for a government of their choice has been demonstrated in 1993, 1998 and 2002, when Basotho went to the polls to choose a government that they thought would serve their interests best. While the people’s commitment to democracy is unquestionable, experience in the 1990s revealed that the electoral model was itself inappropriate. Lesotho had been using the first past the post electoral model (FPTP), which did not translate the national vote into a proportionate share of seats in the National Assembly. Losing political parties felt cheated by being left out of parliament although substantial numbers of supporters voted for them. In 1998 the protests about the election results by an alliance of opposition parties culminated in mass destruction of businesses and public property, anarchy and lawlessness. GDP fell by 4.6 percent in real terms and many hundreds of people were left jobless; national resources, which could have been used for development, were diverted to reconstruction; and potential investors were scared away, thus increasing levels of poverty.

A more inclusive system has recently been established

Out of the ashes of destruction rose a collective determination to transform the very nature of Lesotho’s democratic system, making it more inclusive than the Westminster model. In 1998, political leaders established the Interim Political Authority (IPA). Through the IPA the ruling party and opposition parties reached consensus on adopting an electoral system that combines FPTP and proportional representation (PR) in order to ensure that the national vote approximates the proportion of seats that each party receives in the National Assembly. Thus, Lesotho employed a mixed member proportional (MMP) system in its 2002 elections. These have been hailed as an example of what can be achieved through negotiation and reforms agreed upon by consensus. The 2002 elections, declared free and fair by observers, have set the country on a new course which holds the promise of stability and progress, while reinstating the fundamental principles of governance.

Consolidating democracy remains a large challenge

The successful conduct of the elections is only a start to consolidating Lesotho’s fragile democracy. Much remains to be done. The institutions specialising in conflict management and resolution are still relatively weak. There is also a general lack of trust and confidence in the capacity and political neutrality of the law enforcement agencies mandated to investigate crime, enforce the law and protect the Constitution. Furthermore, there is a lack of cohesion and coherence regarding the national policies aimed at consolidating democracy, particularly at local level. Links between the electorate and Members of Parliament are generally weak, due to poor accountability. Parliament lacks portfolio committees that should facilitate the production of quality legislation, as well as control and monitor the executive arm of government. These impair the efficiency and effectiveness of Parliament.

Decentralisation is a key area to be implemented

The Government of Lesotho is committed to ensuring the participation of Basotho in the development process. In this regard, the Ministry of Local Government is working towards preparing communities for responsible and mature participation in local government structures that will be more effective in reaching the poor. The Local Government Act was passed in 1997 and elections for the new local government structures are planned to take place in 2004/05. The policy framework to facilitate implementation of local government is in place. The process of determining the financial feasibility of decentralisation is underway. This involves clarification of the functions, roles and responsibilities of different local authority role players, as well as of the administrative arrangements and the relations between the central government and local government.


The community consultations show that there is a widespread perception that “government is the milk cow of the well placed”. This view is so widespread that it will take concerted efforts by the highest offices in the land to reverse. Ordinary people are concerned about the apparent ability of powerful individuals to alter the course of justice, to misuse the resources of the state for personal advantage, or to accept bribes and kickbacks. They claimed that this has become an increasingly disturbing phenomenon in Lesotho. Whether through lack of transparency in tendering processes, the breakdown of accounting and auditing functions in Government ministries, or the simple misuse of Government property, they say the signs are clear. The Government is committed to developing a new ethic of service that is not based upon personal connections. It will ensure that this is enforced through new mechanisms of reward and promotion, resulting in an improvement in the delivery of services to the poor.

Human Rights

The Constitution of Lesotho (Chapter II) specifies the civil and political rights that can be contested and enforced through the courts of law. Institutions of protection, such as the courts and the Ombudsman, have been established to give practical effect to these rights. However, there are several social, cultural and economic rights (Chapter III) which cannot be contested or enforced by the courts, but are promoted through the policies of the state. Government’s commitment to ensuring access to these rights is, however, limited by the availability of resources.42

Lesotho has a high incidence of crime, including offences such as murder, robbery, stock theft, theft, rape, fraud and assault with intent to do grievous bodily harm. Perpetrators of crime have legal rights as the Constitution states that: “Every person shall be entitled to equality before the law and to the equal protection of the law.” Section 12 and its subsections provide suspects charged with criminal offences with substantive rights at every stage of the proceedings. A suspect has the right to be presumed innocent until the court has found him guilty. Prior to judgement, the suspect has the right to bail (subject to the presiding officer’s discretion), the right to defend his case through a legal representative of his choice (sometimes provided by the state through Legal Aid or pro-deo) and has the right to be assisted with an interpreter if necessary.

By contrast there are no substantive and procedural provisions in the Constitution protecting the rights of the victims. This disparity defeats the spirit of the equality clause in Section 19 of the Constitution. The legal process, while aimed at securing a conviction, fails to adequately address the interests of the victim. The victim does not have the right to make a statement prior to sentencing in order to provide the court with an assessment of the impact that the criminal conduct has had. A victim may appear in court as a witness but, if they are not required to actually assist in securing a conviction they may not always be informed of the proceedings. Where medical treatment and counselling is needed by a victim, it is at the victim’s expense. Medical costs that are part of the prosecution evidence are also at the victim’s cost. The Criminal Procedure and Evidence Act, 1981, sets an extremely low level for compensation (maximum of M400) obtainable through civil proceedings. This amount is inadequate to compensate victims of crimes who have suffered serious damage.

Justice, safety and security require more concerted effort

Consultation has shown that communities throughout the country gave high priority to improving all aspects of the justice system. Their main concerns are:

  • Slow prosecutions. The police are experiencing serious problems and cannot respond promptly to crimes. They take too long to investigate thoroughly and consequently there is a delay in handing dockets over to the Prosecution. There are huge backlogs and suspects have to remain in custody for a long time before they start serving the actual prison term or are acquitted. This worsens the prison overcrowding situation. Many of the suspects lose their means of livelihood and are more likely to turn to crime. Thus families are negatively affected psychologically, economically and socially. Prisons are costly to maintain, eating up resources that would better be spent on the poor.

  • The impact of inefficient courts on livelihoods. The High Court lacks administration skills for proper management. Preparation of the case roll is uncoordinated and inefficient, as it is not recognised as a central function. The lower courts are understaffed, under-resourced and inadequate in number. They have no facilities for safe storage of exhibits and consequently valuable evidence gets lost. There is no modern case tracking mechanism and cases drag on for years. Quite often, witnesses, victims, perpetrators and their relatives have to attend court over lengthy periods of time, interfering with their productivity. People want speedy delivery of justice and, if they have to wait too long for that to happen, they lose confidence in the justice system. Quite often they take the law into their own hands. This has led to the emergence of feuds, killings and destruction of property leaving countless families in absolute poverty.

  • Consequences of overcrowding. There is a serious problem of overcrowding, with prisons holding twice the number of prisoners they were designed for. This severely hampers all rehabilitation efforts as overcrowded prisons become breeding places for hardened criminals, who increase the rate of crime on their release.

  • Poor protection of vulnerable groups. Despite the advances made by the justice sector through the introduction of new legislation and the incorporation of international and regional conventions into Lesotho law, the justice system is plagued with problems that hinder the achievement of its main goal, which is the reduction and control of crime. An increasing number of children are getting into conflict with the law.43 Legal aid for the poor is limited and exists only in Maseru where it is out of reach for many. There is no policy regarding decentralisation and no proposed legislation for this department. There is no policy in relation to restorative justice and no legislation in the pipeline. There are particular concerns regarding the lack of automatic legal protection for vulnerable groups. These include women (who do not have equal status before the law), people with disabilities (who have problems of access), children (especially the inheritance rights of orphans) and people living with HIV and AIDS (notably regarding their rights to employment tenure). There is no specific policy on the aged and disabled or any specific legislation pertaining to their protection. Although there is a policy on HIV and AIDS, there is no corresponding legislation.


Government’s commitment to meet the expectations of the people is long-term and will extend well beyond the period of this PRS. However, over the next three years essential steps will be taken to ensure that democracy is consolidated, governance improved, participation increased and confidence restored in the security and justice systems. Government has noted, with concern, the views of many ordinary people, expressed in the course of the community consultations, that Government is “distant” from them and that contests for political power have set back their development. In the course of the PRS implementation, Government will pro-actively attempt to reverse this perception. The key objectives of this national priority are to:

  • deepen democracy;

  • improve national governance;

  • improve local governance;

  • strengthen human rights;

  • increase safety and security;

  • improve the efficiency of the justice system.


7.3.1 Deepening Democracy

To achieve the goal of deepening democracy four basic strategies have been devised. These aim to:

  • Promote national unity as a pre-condition for socio-economic development. The events leading up to 22 September 1998 underlined, for every Mosotho, the need to establish some degree of national unity, while at the same time accepting and even developing diversity of views and cultures. This intention is well captured in the Sesotho expression “Kaofela re chabana sa khomo”, which literally means “we are all people of the cow” but more accurately conveys a sense of striving for unity in diversity. Without this unity, the country will always have to live with the risk that peace will be sacrificed for dubious political gains. To promote unity Government will:

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      support campaigns that clearly foster a love for the country and which promote unity in all things that are good for the nation;

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      strengthen the formal conflict management structures of the state and civil society to enable the speedy resolution of disputes at various levels.

  • Establish Civic Education programmes. The community consultations show that some people remain sceptical about the benefits democracy can bring and do not fully understand the new electoral system or even the provisions in the Constitution that protect their rights. For the poor, who are often at the margins of political decision making, this is unfortunate. Therefore the following activities will be undertaken:

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      support NGOs with a capacity to carry out training on human rights;

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      sensitise the public through media campaigns on constitutional rights;

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      consolidate the teaching/curriculum in schools with regard to civic education.

  • Devise mechanisms for feedback and public monitoring. At the start of the PRS implementation, a campaign will be launched to provide vulnerable and marginalised households with an understanding of how Government plans to reach them through PRS activities. The campaign will also show how they can make the best of opportunities provided by the PRS process and how they can become involved in monitoring progress. Where possible, this will be followed up and re-enforced through local government structures and NGOs.

  • Maintain capacity of the Independent Electoral Commission. The IEC has played a strategic role in restoring public confidence in democracy. Government will ensure that this confidence is maintained by providing all the necessary resources, particularly those required for local elections which will be held during the PRS implementation period.

7.3.2 Improve National Governance

Under the objective of improving national governance two strategies have been drawn up:

  • Improve legislative efficiency of Parliament. This is essential if the poverty-eradicating measures proposed as part of the PRS are to be given proper legal support. Measures to be carried out in the next three years include:

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      strengthen the role of Parliament and reform its procedures and processes

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      establish standing portfolio committees;44

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      train standing committee members on the various issues they are tackling to improve their efficiency and effectiveness;

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      assist the Law Office (Legal Drafting Section) and the various ministries to speed up the preparation of draft legislation;

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      review procedures for enacting legislation to accelerate the process and train personnel on speedy passing of legislation.

  • Strengthen Directorate of Corruption and Economic Offences (DCEO). People have expressed deep concerns about accountability. An unfortunately widespread belief prevails that Government officials are corrupt and are “eating” public goods while in power instead of ensuring that these reach the people they are intended for. Over the next three years Government will demonstrate its commitment to tackling corruption in concrete ways, notably by:

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      reviewing the legal instruments for effectively combating corruption;

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      increasing the numbers and training of anti-corruption personnel;

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      holding public forums on corruption and developing corruption alert mechanisms;

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      intensifying implementation of anti-corruption mechanisms and laws;

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      training the police and other service providers to enhance their professional conduct and improve service delivery;

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      ensuring that accounting, auditing and tendering processes within government are strengthened.

7.3.3 Improve Local Governance

Under the objective of improving local governance the following key strategies will be deployed:

  • Create and strengthen structures for public participation in governance. Although legislation for decentralisation exists, there is no policy to guide implementation. Government will move rapidly, in the first year of the PRS period, to develop a clear and widely accepted policy on decentralisation, the key elements of which will be devolution, local political and administrative control, freedom from centralised constraints and improvement of financial systems. Particular activities will include:

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      developing guiding principles to set clear rules and regulations for the distribution of powers between modern and traditional leadership;

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      decentralising the current labour dispute resolution and prevention mechanisms to the districts, to improve dispute prevention and settlement at source;

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      training district planning units and local authorities’ staff;

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      identifying infrastructural needs of the local communities and developing suitable implementation plans.

  • Establish financial structures and build capacity for decentralisation. Local Government will only be able to reach the poor if it has direct access to real resources (in the past Village Development Councils had very few resources). Hence the feasibility of different financing options, including commissions and development funds, are being explored with a view to finding the most viable.

7.3.4 Strengthen Human Rights

Under the objective of strengthening human rights, the Government will:

  • Develop guidelines to ensure an appropriate balance between the respective rights of criminal suspects and of the victims of crime. This strategy will be achieved through the following particular activities:

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      reviewing relevant sections of the Constitution and existing legislation in order to determine appropriate amendments to give practical effect to the guidelines;

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      undertaking advocacy programmes to inculcate a culture of respect for the rights of victims of crime, abuse of power and violations of human rights;

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      providing medical treatment, counselling, support and care to the victims of crime such as rape and attempted murder.

7.3.5 Increase Safety and Security

Under the objective of increasing safety and security, Government will urgently address the constraints discussed in the Situation Analysis of this Chapter through:

  • Strengthening crime prevention and reducing the existing high crime rate. Given the impact on poverty and the importance placed on security by communities all over Lesotho, this over-arching strategy will be given high priority by Government. Although the aims are long-term, Government will undertake specific, measurable activities to ensure progress and momentum. These include:

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      reforming and restructuring management of security institutions and expanding community policing, equipped with communication facilities.

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      creating specialised high level response units for riot control and the protection of women and children;

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      identifying strategic locations that require police stations and providing appropriate facilities;

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      improving facilities at existing police stations;

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      expanding livestock registration and marking to curb the high rate of livestock theft;

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      reducing cross border crime through sensitising communities along both sides of the border about cross-border crime and stock theft;

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      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.

7.3.6 Improve Efficiency of the Justice System

Finally, under the objective of improving efficiency of the justice system three key strategies have been drawn up:

  • Improve case management. This is essential to maintain human rights and promote confidence in the justice system. Specific actions to be implemented during the first PRS period include:

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      develop case management policy and implement the Speedy Court Trials Act 2002;

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      train police on proper compilation of dockets and effective transfer of dockets to the prosecution office;

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      improve existing registers for movement of dockets and establish complaint mechanisms to deal with unsatisfactory cases;

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      develop an effective case tracking system that is transparent;

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      maintain staff motivation and curb turnover by improving working conditions.

  • Improve operational efficiency of the commercial court.

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      Separate the administrative functions of the commercial court from the high court.

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      Train the judiciary - lawyers and judges - on handling commercial cases for successful operation of the commercial court.

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      Speed up commercial cases e.g. non-repayment of loans in commercial court.

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      Establish a small claims court.

  • Improve access to justice by vulnerable groups. Government is concerned that poor and vulnerable groups have difficulty accessing the legal system and are not afforded adequate protection. High priority will be given to the following activities:

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      revise the current Legal Aid Act;

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      increase trained personnel within the Legal Aid Office and explore the possibility of opening offices in the districts;

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      draft legislation to provide legal protection to vulnerable groups including persons with disabilities, children, and people living with HIV and AIDS;

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      establish child, juvenile and family courts with child-friendly environments;

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      sensitise the community on the rights of vulnerable groups.

  • Establish a restorative justice and rehabilitation system. The emphasis of a pro-poor system should not be on punishment but on compensating victims for their losses and on ensuring the offenders’ rehabilitation and return to society armed with skills and an understanding of what they can contribute. This requires radical reforms that will take many years. Over the next three years, Government will ensure that a start is made by undertaking the following activities:

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      establish an inclusive task force to define restorative justice;

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      orientate and train legal practitioners and other stakeholders for effective implementation of the restorative justice system;

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      reconstruct and improve the central prison, and construct two more open camp prisons;

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      train inmates to provide them with functional literacy and numeracy, as well as vocational skills;

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      implement post-sentence alternative measures to custody and release eligible inmates on parole where possible;

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      set up community based structures for restorative justice.

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Concerted Efforts in Primary Health Care

Lesotho has made substantial efforts to provide affordable and accessible Primary Health Care (PHC) to the poor.45 In the late 1970s Government and church health providers developed a decentralised system with designated health service areas (HSAs), each with its own hospital, clinics, village health posts, village health workers and traditional birth attendants.46 Over the years, Government has sought to strengthen this system by emphasising broad-based PHC as the principal means of dealing with preventable infectious diseases that are the primary cause of serious illness and death among the poor.

The Ministry of Health and Social Welfare (MOHSW) has given high priority to interventions that reach some of the most vulnerable individuals in society, notably: family planning, ante and postnatal care, mother and child health, immunisation campaigns and nutrition interventions targeting under-fives. Unlike many African countries, whose health services were disrupted by war, Lesotho has been able to maintain vital immunisation services and has virtually no polio victims. Treatment for tuberculosis, which impacts the poor more than the better-off, is provided free of charge. Under a cost-sharing scheme consultations and medication are obtained for M10 (about $ 1.50) at Government health centres.

Progress … and then decline

By and large, the PHC approach described above was successful: life expectancy grew from 40 years in the 1970s to 59 years in the 1990s while infant mortality declined from 122 per 1000 live births to 74. Family planning measures also showed real signs of progress with a decline in the Total Fertility Rate from 5.3 to 4.9. Sadly these gains have since been reversed, as shown in Table 8.1.

Table 8.1:

The performance trend for selected indicators of quality of life

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Source: BOS - Demographic Survey 2001

Total engagement required

These declines are due to the emergence of new diseases, increasing poverty and disease resistance to drugs. The health system has not been able to address the devastating effects of HIV and AIDS resulting in the resurgence of diseases like tuberculosis, sexually transmitted and other communicable diseases. It is estimated that 30% of the population aged 15–49 years are reported to be HIV positive, resulting in the deaths of 70 persons per day. Consequently, the demand for curative services has increased dramatically, beyond the capacity of existing health services to respond. The consequences of the HIV and AIDS pandemic are massive and cut across all sectors. While the MOHSW may be most directly responsible for assisting those afflicted, all sectors must actively engage in the struggle. In this sense Lesotho is on a war-footing; unless the entire society is mobilised to fight the disease all efforts to combat poverty will be in vain. For this reason Government has ranked dealing with HIV and AIDS as a special priority area (see Chapter 12). In this chapter, therefore, other health priorities are described.

Increasing malnutrition

The onset of the HIV and AIDS pandemic has exacerbated the high levels of malnutrition prevalent in many parts of the country. In 1996 the Government noted in its report Pathway Out of Poverty that:

“Malnutrition levels among children under five are unacceptably high everywhere, but urban children are considerably better off than the children in mountain areas”.47

Between 1993 and 1999 the percentage of children below standard weight for age increased from 13% to 16%, while those below standard height for age remained at an “unacceptable” 46%.48 As noted earlier, by 2000 the Multiple Indicator Cluster Survey (MICS) showed similar results, with a slight increase to 17.8% for low weight for age while low height for age was effectively the same (45.4%).

Chronic malnutrition and chronic infections (acute respiratory infections and diarrhoea) are inversely related to the level of income, water and sanitation. There is also a significant relationship between the mother’s education and nutritional status, particularly regarding stunting and weight loss. For this reason malnutrition requires a multi-sectoral response, as discussed later in this Chapter.

Other contributing factors and their implications

While HIV and AIDS is a key cause for the deterioration of the nation’s health status - and probably the main reason for health systems being overstretched - there are many other factors that are of concern to Government. These include: a poorly-functioning health system with 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 all providers and users; long distances to medical facilities; and the insufficient numbers of health personnel especially in rural areas. Further, there is only one referral hospital (Queen Elizabeth II) where most specialists are concentrated, which also functions as Maseru district hospital. This makes this key facility very congested and difficult for people to use. While the highly subsidised fees (also known as ‘cost sharing’) have improved access, the imbalance between Government and CHAL fees has resulted in overcrowding of Government health centres.


The increasing levels of poverty described earlier, particularly when related to retrenchment, disability, and HIV and AIDS, have increased the number of very vulnerable households, particularly those caring for orphans. In 2001, the Department of Social Welfare conducted a survey, which estimated that the number of orphans is over 85,000 while UNICEF estimated it to be over 117,000, from AIDS alone. The inconsistencies in the figures - possibly due to different definitions of orphans - points to the difficulties entailed in determining the exact extent of vulnerability. However, there is strong consensus that there is a large and growing orphan population that poses major challenges for the Department of Social Welfare and other stakeholders.


It will not be possible to reverse the trends described above in the three years of PRS implementation. The HIV and AIDS pandemic will continue to have devastating impacts on mortality and morbidity patterns as most of those who will fall ill and die during this period have already been infected. This makes it even more essential that the health system should operate as effectively as possible in all areas, including combating further infections. With this in mind, the Government has formulated strategies and activities which can be achieved, at least in part, over the next three years under three broad objectives. These are to:

  • promote access to quality and essential health care;

  • reduce malnutrition;

  • improve access to social welfare services.


8.3.1 Improve Access to Quality Health Care

Given Lesotho’s concerted efforts in Primary Health Care, which resulted in the gains made in the 1970s and 1980s, the Government is determined to reinstate the country’s reputation as one capable of delivering quality curative and preventive health care down to village level. In view of the HIV and AIDS epidemic this will require renewed dedication and vigour, which should be recognised and rewarded as far as possible. A comprehensive approach will be taken, starting with the clarification of key issues through the review and renewal of policies:

  • Establish a Sustainable Health Care Financing System

    The Health and Social Welfare Policy and Strategic Plan, recently developed, will reinforce the on-going poverty focused activities. This will include programmes that affect health and social welfare priorities, which will ensure adaptation to external and internal changes and will harmonise all interventions currently being undertaken. The policy and the strategic plan will provide guidance for the development of medium term and annual operational plans. In order to address the cost problem, the MOHSW will generate and mobilise funds for Health and Social Welfare and ensure that funds are allocated according to agreed priorities. The Government will aim to finance the Essential Health Package from national revenue, external aid and from subsidised user fees. Private funding through cost recovery user fees, health insurance and community based financing will be encouraged. To improve access to health services, criteria for exemption from user fees will be developed, based on ability to pay and nature of diseases (e.g. diseases that are infectious and require lengthy treatment, such as tuberculosis and mental health). User fees will be equal between GOL and CHAL facilities to improve equity in access to services, and the shortfall in revenue of CHAL facilities as a result of user fee equalisation policy will be compensated by the Government.

  • Improve health infrastructure, equipment, maintenance and supplies. The efforts to improve and maintain health facilities will be accelerated over the next three years. Specific activities will include:

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      rationalising health service facilities with construction or renovation;

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      improving the procurement, storage, distribution and maintenance of equipment, drugs and dressings.

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      establishing village health posts and mobile health care for unserved areas;

  • Improve the capacity of health personnel. The Government recognises the enormous contribution made by its health personnel at all levels across the country. In the struggle against HIV and AIDS they are in the front line and deserve to be supported as far as possible. Specific activities include:

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      Training health personnel at all levels;

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      reviewing and improving working conditions of health personnel to address the high rate of staff turnover and brain drain;

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      training additional Village Health Workers and introducing incentives for them;

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      establishing training for traditional healers to complement health delivery.

  • Improve health care management. Government expects that resources and processes should be well managed. During the implementation period, high priority will, therefore, be given to strengthening management capacity at service provision level. Better management of resources will reduce wastage and curb pilferage and will ensure that the Basotho get better value for money through proper, effective and efficient service delivery. To accomplish this, four activities have been prioritised under which the MOHSW will:

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      upgrade the health management information system for measuring, monitoring and evaluating the sector’s performance;

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      strengthen research and data management systems for disease control;

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      intensify and diversify training of health management staff to include effective use of funds;

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      introduce financial controls and management audits to address the problems affecting use of resources and service delivery.

  • Strengthen disease prevention programmes. The most cost effective way to manage diseases is to prevent their spread. A concerted effort will be made to expand the programmes involved in prevention, including HIV and AIDS. The strategy is considered to be of particular importance for the PRS as it has far reaching implications for particularly vulnerable groups. In year one of the PRS, Government will outsource health education activities to the private sector with a view to making these as creative and as effective as possible. The outcomes will be closely monitored with the best being selected for up-scaling by year three.

In health education campaigns emphasis will be placed on the use of preventive services, especially childhood vaccinations, family planning, monitoring pregnancy, ante-natal care (ANC) and mother’s health after birth, as well as post-natal care (PNC). A particular focus will be teenage health in order to reduce teenage pregnancy.49 Information will be provided on youth friendly services, free supply of contraceptives and empowerment programmes for women to be able to negotiate their sexual rights (especially in view of the HIV and AIDS threat to this group).

The promotion of sanitation and good hygiene practices is an important part of disease prevention and will continue to be given priority. As repeated studies have shown that the biggest constraint to the wider adoption of VIP latrines is their cost, an effort will be made over the next three years to pilot new low-cost prototypes that provide adequate protection against disease at a price that is more affordable for the poor. Soak way and refuse pits will also be encouraged around the homesteads. Water quality surveillance and spring protection will be enhanced. Medical waste management around health facilities will also be given priority.

8.3.2 Improve nutritional status of vulnerable groups

Where there is a significant shortage of food, vulnerable groups such as children under five years suffer the most. This, therefore, is a very high priority area for the PRS, as confirmed by the Basotho in community consultations.

The institutional arrangements to combat malnutrition require clarification. Four ministries or departments (other than MOHSW) play a role at different levels, including: Food and Nutrition Coordination Office (FNCO); Disaster Management Authority (DMA); Ministry of Education and Training (MOET); and the Ministry of Agriculture and Food Security (MOAFS). Given this complexity clear guidelines are required. Activities to address this and other concerns during the PRS period include:

  • refining the National Nutrition Policy;

  • improving disaster preparedness for emergency food distribution;

  • maintaining the school feeding programme;

  • strengthening systems of supplementary feeding of malnourished children;

  • promoting good nutrition practices through community awareness campaigns, meetings, distribution of pamphlets etc;

  • providing nutritional food packages and micro-nutrient supplements to the vulnerable and other relevant groups.

8.3.3 Provide social welfare services for vulnerable groups

During the PRS period the Government will prepare a strategic plan based on the National Social Welfare Policy which will identify top priorities, roles and responsibilities and delivery mechanisms in detail. Unlike South Africa, Lesotho does not have the resources to provide universal monetary support to vulnerable groups.50 However, the Government will strive to improve social welfare service delivery to the most vulnerable groups by increasing the resources and capacity of all stakeholders through increased funding and training. In 2004/05, a pension of M150 per month will be introduced for persons over 70 years of age. Other efforts will include mechanisms to assist NGOs working directly with orphans, people living with HIV and AIDS and disabilities, and child-headed households.

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Government-church partnership

The first schools in Lesotho were started shortly after the arrival of missionaries in 1833. Both Protestant and Catholic missions invested heavily in the education sector as schools were seen as a prime vehicle for attracting adherents. The 2001 statistics showed that there are 1,295 primary schools in the country, of which 508 belong to the Roman Catholic church, with the remainder owned by either the Lesotho Evangelical Church, the Anglican Church or (in a few cases) the communities themselves. Only 59 primary schools are owned by Government.

Together, the primary schools of Lesotho catered for over 433,000 pupils in 2001. As in the health sector, Government makes a major contribution to the running of these schools by covering the costs of staff salaries. After the introduction of Free Primary Education (FPE) in 2000, Government also absorbed the cost of textbooks and school feeding in the FPE classes.

High literacy

The investment in primary education has given Lesotho one of the highest literacy rates in Africa. However, girls have benefited more from primary education than boys, who are often kept out of school to herd livestock. In the days when boys were able to graduate directly from herding to working on the mines there was little incentive to attend school, so this resulted in a significant gender difference in favour of girls and women, a situation that is perhaps unique in Africa.

Reversing declining enrolment

Much of the progress made in the 1970s and 1980s was lost when enrolment rates started to decline in the 1990s. Primary enrolment fell 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. As can be seen from Table 9.1, enrolment increased dramatically and the gap between boys and girls narrowed. However, at the same time there was an increase in the pupil-teacher ratio and a decline in the percentage of qualified teachers.

Table 9.1:

Key Indicators Showing Trends for Primary Education, 1996 - 2002

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NER= Net Enrolment Rate of Children 6-12 according to new projections for Lesotho’s de facto population.

Sources: MOET, March 2004; MOET Education Bulletin Vol.1. 2003; BoS Census 1996 projections; BoS/UNFPA, Lesotho Demographic Survey 2001

A difficult transition between primary and secondary

The transition from primary school to secondary has proved to be a major obstacle for poorer families. Most of the 217 secondary schools are owned by the churches, with Government only owning 23. Although the Government covers the costs of most teachers salaries, secondary schools still have to charge fees to maintain operations. The fact that there are only 73,000 secondary school students in total (compared to 433,000 at primary level) gives an immediate sense of the shape of Lesotho’s ‘education pyramid’.

During the 1990s, over one half of Standard One pupils did not go on to complete the primary cycle. Of those that eventually make it to Standard Seven, about 78% pass their Primary Standard Leaving Examination (PSLE), but only 68% of those that pass proceed to enter the first year of secondary education. At each step, therefore, there is a significant reduction in overall numbers, especially in the transition from primary to secondary education. Overall, secondary schools accommodate as little as 13.5% of all pupils that enter the first class of primary school.51 The main barrier between primary and secondary levels is cost: fees at secondary level are often 20 times higher than the average at primary level (in cases where free primary education does not yet apply). However, even if this barrier were to be overcome a considerable effort would be required to increase space at the country’s secondary schools as these could not accommodate a large influx of primary school graduates.

A concern for quality

The shortage of qualified teachers, as well as overcrowding in classrooms, are among the factors that contribute to low quality and poor efficiency at primary level. The pupil-teacher ratio shown in Table 9.1 hides the considerable range that exists within and between schools. Generally speaking the ratio is far higher in the first years, reaching as high as 100:1; it then declines with each subsequent year to level below 40:1 in the final grade. One reason for this is that great emphasis is given in the education system to passing the final exam, with the best teaching resources often being concentrated in the final year. To reduce the relatively high drop out rates that occur in the early years, increased emphasis will be placed on improving quality in the first three to four years of primary schooling, particularly with regard to pupil-teacher ratios. An important part of improving the quality of schools is ensuring better quality of management as this varies significantly according to school ownership and the extent of meaningful community participation.

The need for at least a decade at school

The obstacles to secondary school education present a serious threat. The World Bank points out that the chances of being employed increase significantly after 10 years of education.52 Any education below this has little impact on the earning capacity and/or the economic status of an individual. By extending free primary education to universal basic education (free to year 10) the Government intends to do all that it can to improve the chances of employment of every Mosotho. However, the Government will first need to assess the financial feasibility of this before extending free primary education to universal basic education.

The need for education to be relevant

The community consultations underline an important point that should not be overlooked: it is not simply the number of years that parents are interested in; they want to see relevant education provided to their children. They want schools to equip young people with practical, marketable skills. Realising how limited job opportunities are today, the parents also want the skills to change the way young people think. This is clearly conveyed in the words of a parent from Ha Mafa in Thaba Tseka district:

Some Basotho have developed an expectation that everything is to be done for them. They don’t want to take their own initiatives and do things for themselves. They have not been trained to do things for themselves and to give up expecting things to be done for them.”

Although there has been a concerted push over the past 15 years to ensure that most secondary and high schools offer some practical subjects, the standard Cambridge syllabus remains academic. With regard to post-secondary education, only 27 schools under the Technical and Vocational Department (TVD) offer technical subjects such as woodwork, basic handicrafts and technical drawing. Although a number of private schools promote computer, secretarial, business and management studies, much more is required. Clearly a significant shift will be needed if a larger number of school leavers are to be equipped with the necessary technical, entrepreneurial and life skills needed to make the best of the few resources available to them.

A narrow, expensive tip of the pyramid

The education pyramid narrows from 73,000 students at secondary schools to a mere 5,137 students at the National University of Lesotho; 1,767 at Institute for Extra Mural Studies (IEMS); 1,120 at the Lesotho College of Education; 690 at the Lerotholi Polytechnic and no more than a few hundred at other tertiary institutions. In addition, there are approximately 2,000 Basotho studying in South African tertiary institutions, most of whom are sponsored by Government. Although tertiary education accommodates only around 2% of the numbers at primary school, it absorbs about one quarter of the budget of the Ministry of Education. The ratio of secondary to primary expenditure is estimated to be about three to one. This is dwarfed by the difference in per capita expenditure between tertiary and primary expenditure: according to the Public Expenditure Review of 1999, Government spends about 30 times more per student on technical institutions and teacher training, and 84 times more on those attending the National University than it spends on a primary pupil.

HIV and AIDS attrition

Of all the sectors, the impact of HIV and AIDS on education in Lesotho is considered most devastating. The Ministry of Education estimates that it is losing many teachers each month (the exact number remains to be determined by a proposed HIV and AIDS Impact Assessment). The current limited capacity of the Lesotho College of Education means it will not be able to supply the required number of teachers to provide for normal needs as well as to replace those lost to the pandemic. This loss of teachers has directly hit the education system by reducing the numbers of teachers and the quality of teaching, and increasing the cost of education. It is also beginning to affect enrolment and retention of children in schools. A study is underway to determine the consequences of HIV and AIDS impact in more detail.

Early learning critical

Early learning has proven to be critical to the success of children at school. Parents appreciate this and have moved to fill a gap that neither the churches nor Government had really addressed. In March 2001 statistics showed that there were 1,578 early childhood education development centres countrywide, catering for 36,000 pre-schoolers, or 41% of the eligible children. Almost all of these are community based. The Early Childhood Care and Development (ECCD) department has the responsibility to promote standards and regulate the ECCD centres. However, at the moment there is limited awareness of the potential contribution of ECCD to the country’s human development and Government support is limited.

Culture promotes peace and unity

The unfortunate political conflicts that culminated in the upheaval of 1998, and resulted in significant damage to property, jobs and investor confidence, underlined the importance of promoting national unity. The Government views Sesotho culture as a common heritage in which all Basotho can take pride. The preservation and promotion of culture is an integral part of the battle against poverty and conflict. Equally important, the community consultations demonstrated that many rural Basotho feel far removed from Government and out of touch with Government initiatives. One reason for this is that critical documents are often not translated from English into Sesotho.

The Department of Culture is responsible for the national museums, historical monuments, relics, antiques, fauna and flora and the national archives. The Department has recently formulated a cultural policy framework, but this has not yet been adopted by Cabinet. The framework is expected to create an appropriate environment for the development of cultural initiatives through the enactment of new laws (such as the proposed legislation for public libraries, art galleries and exhibition centres) and the revision of outdated laws. This will facilitate the founding and funding of the proposed Lesotho Arts and Cultural Council and regional arts and crafts centres, the reorganisation of existing cultural institutions and agencies and the fostering of interdepartmental cooperation.

Although efforts are being made by the Department to achieve its mandate for the preservation of the existing culture, it faces several problems including the widespread lack of recognition of the importance of a cultural heritage.

One of the key events under this sub-sector is the annual Morija Arts and Culture Festival. This event has the potential to promote unity and to expose Basotho entrepreneurs to new markets and introduce Lesotho to new investors. The infrastructure at Morija still remains basic, and may need to be upgraded if greater trade and economic spin-offs are to be achieved during the festival.

The other cultural sites of national importance that have yet to be developed include Menkhoaneng (the birth place of Moshoeshoe I) and Thaba Bosiu, the mountain fortress that helped secured Lesotho’s nationhood in the 19th century.


The situation analysis gives an indication of the complexities of the education and cultural sector. The challenge for planners is to maintain a holistic view of the sector, ensuring that resources are channelled where they will have the greatest and most sustainable impact on the livelihoods of Basotho in the long-term.

Government is convinced that investment in appropriate education is the single most important contribution that it can make to the long-term socio-economic development of the country. For this reason the education budget remains the highest of all ministries, and is set to grow over the next three years.

Seven key objectives have been set for human resource development in the PRS:

  • expand and promote Early Childhood Care and Development;

  • ensure that all children have access to and complete basic and secondary education;

  • improve quality in basic and secondary education;

  • develop and expand Technical and Vocational Education and Training to cater for the economic needs of the country;

  • strengthen non-formal education programmes;

  • increase access to and relevance of tertiary education; and

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


9.3.1 Expand and promote Early Childhood Care and Development (ECCD)

This focal area is highly important for poverty reduction. Providing day care for children in a learning environment has strong gender implications as it enables women to work and participate in development activities while the children are cared for. In itself it is a significant source of employment for women in rural areas and has long term development implications as it prepares children for school. Government support to date has been limited to curriculum development. Over the next three years this will be augmented. Where possible, support will be given to start covering some of the costs of the schools, particularly feeding of children in the mountain areas. Additional support will involve: facilitating approval of the ECCD policy; providing structures, staffing and guidelines and standards to ensure that an effective nationwide ECCD programme is in place; developing and providing inclusive learning and teaching materials and equipment for promoting a home-based approach; and ensuring integration of children with special educational needs in ECCD programmes.

9.3.2 Ensure that all children have access and complete basic and secondary education

Under this objective the following strategies have been devised:

  • conduct community campaigns to encourage parents to make the best of Free Primary Education (FPE);

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

  • make FPE compulsory and study the financial implications of expanding FPE to Universal Basic Education;

  • reduce the high rates of repetition and drop-out;

  • identify and remove non-fee barriers to accessing FPE.

Community campaigns are considered extremely important for the poor, as despite the efforts of Government, some parents still do not send their children to school. The aim of these campaigns will be to encourage parents to recognise that education is a fundamental right of children and they should fulfil this by taking full advantage of FPE. A component of this will include dialogue with the owners of initiation schools to ensure that initiation times do not conflict with the school calendar.

The rate at which new schools or classrooms are built will depend on the outcome of the HIV and AIDS Impact Assessment Study, which will be completed in the first year of PRS implementation. A new Geographic Information System map will be prepared to better identify school catchment areas and gaps.

In expanding free education, the Government will implement its targeted equity-based programmes to cater for the disadvantaged who do not benefit directly from free education. Grant provision will be intensified for needy schools and bursaries will be provided to needy children. Teaching and learning conditions will be improved, beginning with the identification of schools with the lowest retention rates. School inspections will be intensified in districts to ensure that inspectors conduct supervision more regularly and provide support to teachers and school management. As a priority, the Government will put measures in place to reduce the current high dropout rates, especially among girls in secondary schools.

Government is concerned that despite all the efforts to make primary schooling free there are still non-fee barriers to access. The Government and key stakeholders will identify these barriers and determine how best they can be removed.

9.3.3 Improve relevance and quality in basic and secondary education

The Government is not only committed to increasing access to basic education, but also towards ensuring that it is relevant to the socio-economic needs of Lesotho and is of high quality. The following measures will be implemented to improve the quality of education:

  • build the capacity of personnel;

  • revise the curriculum to respond to evolving socio-economic realities;

  • improve teacher-pupil ratios (including expansion of teacher training);

To ensure quality delivery of basic education, pre-service education will be improved and more in-service training will be provided for poorly qualified teachers. Advisers, inspectors of schools and teachers will be trained to enhance their skills, as well as on gender, HIV and AIDS and other cross-cutting issues. Heeding the call of parents for schools to be more relevant, the Ministry of Education will review basic education curriculum and integrate practical/ technical subjects into the school programme so as to provide relevant teaching and learning materials for quality basic education.

Very high priority will be given to maintaining and improving teacher-pupil ratios. Based on the HIV and AIDS Impact Assessment findings, the Ministry of Education will develop an HIV and AIDS Policy that will guide the introduction of anti-retroviral treatment (ARV) as well as a voluntary testing and counselling programme for teachers. To retain teachers in remote areas, the mountain allowance will be improved.

9.3.4 Increase Access to Technical and Vocational Education and Training

The aim will be to improve the quality of Technical and Vocational Education and Training (TVET) programmes with a view to enhance and diversify technical skills, ensure excellence and achievement by all trainees and make certain that training programmes offered in TVET promote employment creation and income generation. The programmes will also be expanded to increase access for many students who wish to be enrolled. New TVET centres will be constructed in Qacha’s Nek, Mokhotlong and Butha-Buthe. Training programmes will be adapted to meet production, marketing and entrepreneurship needs in the market. Top priority will be given to infusing entrepreneurship in all training.

In reviewing and expanding TVET, Government will discourage gender misconceptions and promote the involvement of men in sectors previously considered the reserve of women (such as sewing) and vice-versa. An apprenticeship programme will be introduced to provide practical experience.

9.3.5 Strengthen Non-Formal Education programmes

This strategy is given high priority as it aims at some of the poorest members of society. Non-formal education (NFE) programmes complement formal education programmes and cater for the herd boys and young school dropouts and adults who missed out on their chances to acquire education, most of whom are forced into this situation by poverty. It will be achieved by: completing the NFE policy; developing a comprehensive NFE curriculum covering various issues such as agriculture, community development, entrepreneurship, environment, and health e.g. Sexually Transmitted Infections (STIs) and HIV and AIDS; providing teaching facilities for NFE where necessary; and recruiting teachers for NFE, as well as giving them necessary basic skills. Three courses are being developed to cater for the out-of-school population, which will provide them with functional skills. These are Alternative Learning Opportunities, Basic English Course and Modules on Practical Skills.

9.3.6 Increase Access to and Appropriateness of Tertiary Education

Government is aware of the high per capita costs of the National University of Lesotho. However, to shape the leadership of the future, who will continue the struggle against poverty in years to come, it is vital that the University should fulfil its mandate in as effective a manner as possible. Over the PRS period, the key task will be to bring the courses offered at the University more in line with national manpower needs. This will be done in close consultation with the National Manpower Development Council (NMDC), the private sector, NGOs and Government stakeholders. Equally important, the recovery of Government student loans, provided through the NMDC, will be improved.

Where there are manpower requirements which have a very high unit cost, these will be discontinued and, instead, the Government of Lesotho will negotiate with the Government of South Africa (under the Joint Bilateral Commission for Co-operation) for low-fee access for Basotho to South African universities. The sector will also revise and implement the tertiary education curricula and programmes, to give more emphasis on science and technology and to provide skills and competencies that are employment-related. Policy guidelines will be formulated to guide higher education on HIV and AIDS issues as prevalence amongst young people is highest. The sector will also sensitise and mobilise its institutions to ensure that they are able to implement HIV and AIDS workplace programmes effectively.

9.3.7 Promote culture to unify the nation, develop tourism and generate income

As part of its efforts to improve people’s participation, Government will take steps to encourage greater utilisation of the Sesotho language. This will be done through reviving the Sesotho Academy and by ensuring that critical documents, including the Constitution and key acts of Parliament, are translated into Sesotho and made available through district offices. Government will promote Basotho arts and culture by accelerating approval of the Cultural Policy Framework and supporting centres and activities of excellence. An effort will be made to support initiatives already taken by local communities in the arts and culture arena, including Morija, Masite, Thaba Bosiu, Ha Kome, Menkhoaneng and Semonkong. The private sector will be encouraged to take a leading role in generating, packaging and disseminating promotional information packages and conducting training workshops to sensitise local communities about the need to form income generating activities on cultural industries, such as photography, film, music, pottery, basketry, fine arts, and writing. These centres will be designed to represent the unique features of those areas for tourism and the associated activities will be geared towards self-employment. By promoting cultural activities, Lesotho’s national image and identity will be enhanced, which in turn can become the cornerstone of the tourism industry.

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