LESOTHO: New strategies to boost a flagging economy

[ This report does not necessarily reflect the views of the United Nations]

JOHANNESBURG, 21 Sep 2005 (IRIN) - Job creation and bolstering food production are to be the cornerstones of the Lesotho government's fight against deepening poverty.

The recently released Poverty Reduction Strategy Paper (PRSP) put the country's unemployment rate at 31 percent, although independent studies say more than 70 percent of the workforce are jobless.

Impoverished Lesotho is still battling to recover from the steady loss of foreign currency earnings of migrant workers being retrenched from neighbouring South Africa's gold mines. In the late 1980s almost half the gross national product was generated by remittances from over 120,000 migrant labourers, whereas today only half that number is employed.

The hope that the fledgling manufacturing sector would kick-start economic recovery was dashed after expiry in January this year of the US concessions that had allowed low-cost textile producers to set up companies in African Growth and Opportunity Act countries for competing in key overseas markets.

During the next three years the government in the small mountain kingdom expects to channel much of its energy and resources into supporting small, medium and micro-enterprises (SMMEs) as part of its broader strategy to boost economic growth.

"Unlike large firms, they [SMMEs] allow individuals and groups to engage in productive activities even if they have limited access to capital; unlike large firms, they often operate in areas lacking sophisticated infrastructure and therefore have considerable potential to improve the geographic distribution of income and address income inequality," the PRSP noted.

However, if SMMEs are to flourish, concrete steps have to be taken to create an environment conducive to investment and moves are already underway to establish a 'one-stop-shop' to speed up business licensing. Particular attention is being paid to easing immigration procedures to attract much-needed skills.

The government has committed itself to providing infrastructure to businesses and developing the capacity of its overseas missions to promote the country, surrounded by South Africa as a "prime investment destination".

Observers have welcomed the government's attempts to diversify the economy but pointed out that although the "plan sounds good", success would depend on its implementation.

Labane Chokobane, an economist at the University of Lesotho, said: "The strategy is a sound one, and in line with World Bank and IMF [International Monetary Fund] requirements. But despite all the good intentions, much relies on having the means to implement such grand plans. A major obstacle is, of course, the lack of adequate funds to see these projects through."

He implored authorities to encourage a 'culture of entrepreneurship' to accelerate growth.

"What we seriously lack in Lesotho is an enterprising spirit. In the past many of us relied on employment in South Africa's mines, but since that stopped it has been difficult for us to develop ways of making money at home," he commented.

Rethabile Nokonane, a programme officer at the Lesotho Council of Non-Governmental Organisations, added that international aid had proved to be a double-edged sword, often resulting in an over-reliance on foreign assistance.

"To a large extent the aid has made us weak - we have come to expect a handouts, and that has been detrimental for our development. The country may not offer much in natural resources but we have inexpensive labour, which has been an asset in the past," Nokonane observed.

Chokobane and Nokonane agreed that the government ought to give equal weight to the perennial problem of food insecurity. Lesotho has been unable to grow enough food to feed its population for decades as result of bad weather, limited arable land and population growth. In recent years HIV/AIDS has taken a heavy toll of the agricultural workforce, which has aggravated the situation.

According to Chokobane, "Food security will come primarily from expanding formal and informal work opportunities, and through boosting the purchasing power of those with employment. There should also be greater government support to those who have land to ensure that it is used productively."

The PRSP commits the government to focusing on "appropriate" farming practices, including crop diversification and low-cost irrigation, while a sustained emphasis on crop marketing locally and abroad is expected to strengthen the agricultural sector.

[Poverty Reduction Strategy: Lesotho]

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