Lesotho: Country Profile 2015

COUNTRY PROFILE 2015
LESOTHO
COUNTRY PROFILE 2015
LESOTHO
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Note
The designations used and the presentation of material in this publication do not imply
the expression of any opinion whatsoever on the part of the United Nations Economic
Commission for Africa (ECA) concerning the legal status of any country, territory, city or
area, or of its authorities, or concerning the delimitation of its frontiers or boundaries,
or its economic system or degree of development. Designations such as “developed”,
“industrialized” and “developing” are intended for statistical convenience and do not
necessarily express a judgment about the stage reached by a particular country or area in the
development process.
CONTENTS
Acknowledgements v
Lesotho at a glance vii
1. Overview 1
2. National and subregional context 2
3. Economic performance 6
3.1 Economic growth and sectoral performance 6
3.2 Fiscal policy 9
3.3 Inflation and monetary policy 10
3.4 Current account 10
3.5 Capital and financial accounts 12
4. Social developments 13
4.1 Demography 13
4.2 Poverty and employment 13
4.3 Health 15
4.4 Education 16
4.5 Gender scorecard of the African Union Commission 18
5. Major policy challenge: water for economic transformation 19

Policy implications 22
6. National data quality evaluation 24
References 25
Annex I 27
iii
COUNTRY PROFILE - LESOTHO
Boxes
Box 1: Africa regional integration index: Lesotho 4
Box 2: Forecasts for Lesotho 8
Box 3: The National Social Protection Strategy in Lesotho 15
Box 4: The water bottling sector presents a lucrative business opportunity 21
Figures
Figure 1: Real GDP growth, Lesotho vs. Southern Africa and Africa (2010-2014) 2
Figure 2: Gross value added shares and growth (2014) 6
Figure 3: Demand shares and growth (2013-2014 7
Figure A: Real GDP growth forecasts and forecast accuracy (2008-2014) 8
Figure 4: Inflation and interest rates (2010-2014) 10
Figure 5: Balance of payments (2010-2014) 11
Figure 6: Foreign trade (2012) 11
Figure 7: Financial account balance (2010-2014) 12
Figure 8: Population by age group (1990-2014) 13
Figure 9: Poverty and economic growth per capita (2002-2014) 14
Figure 10: Neo-natal, infant and under-5 mortality rates, Lesotho (1994-2014) 16
Figure 11: HIV prevalence rates by sex and age group (2004-2009) 16
Figure 12: Gross enrolment rate in primary and secondary education by sex (2002-2014) 19
Figure 13: Access to safe drinking water and improved sanitation (2014) 19
Figure 14: Classification of water springs 21
Tables
Table: Lesotho fiscal accounts, millions of maloti 9
iv
ACKNOWLEDGEMENTS
The aim of the Economic Commission for Africa Southern Africa, with supervision from Sizo Mhlanga,
country profile series is to produce and disseminate Chief of the Subregional Data Centre.
country and region-specific policy analyses and
recommendations for economic transformation The country profile benefited from substantive
that will promote sustainable growth and social inputs from national institutions including the
development, strengthen regional integration Lesotho Bureau of Statistics, the Central Bank of
and facilitate better development planning and Lesotho and the United Nations Development
economic governance. They are a joint collaboration Programme Lesotho Country Office.
of the Commission’s subregional offices and the
African Centre for Statistics, with inputs from the Valuable contributions and comments were made
Macroeconomic Policy Division, the Regional by the internal review panel, put together by the
Integration and Trade Division and the Social Commission’s Operational Quality Section.
Development and Policy Division.
We would also like to thank Dr. Jesimen Chipika,
The lead author of the Lesotho country profile who provided expert critique and review, and Open
was Marta Duda-Nyczak of the Subregional Data Watch for conducting data review and analysis.
Office for Southern Africa. The country profile
was prepared under the overall coordination and A special mention also goes to the Publications
substantive guidance of Giovanie Biha, Deputy Section for editing, translating, designing and
Executive Secretary for Knowledge Delivery of the printing the country profile.
Commission, and the direct leadership of Said
Adejumobi, Director of the Subregional Office for
v
LESOTHO AT A GLANCE
General information Rankings

Subregion Southern Africa Human development index (United Nations Development Programme) 161/188 (2014)
Official language(s) Sesotho, English Gender inequality index (African Union Commission) 124/155 (2014)
Currency Lesotho Loti Ibrahim index of African governance (Mo Ibrahim Foundation) 10/54 (2014)
Capital city Maseru Ease of doing business index (World Bank) 110/189 (2015)
REC membership(s) SADC Corruption perceptions index (Transparency International) 61/168 (2015)
ECONOMIC GROWTH
In Lesotho, increases of 12.3 per cent in public spending in 2014 constituted the main driving force behind
demand growth, with government projects benefiting in particular the construction, transport, communications
and health sectors.
FISCAL POLICY
The main allocation of public spending is recurrent expenditure, including the civil service wage bill, which
cannot be sustained in the medium and long term (estimated at 22.7 per cent of gross domestic product (GDP)
and 37.5 per cent of total expenditure in 2014/2015).
MONETARY POLICY
In 2014 the inflation rate was 3.6 per cent, a fall of 1.5 percentage points from the 2013 value of 5.1 per cent.
The main reason for this downward movement was a significant decrease of 14.5 per cent in the price of fuel
(mainly gasoline and diesel), following a drop in the global price of oil.
CURRENT ACCOUNT
For the last five years the current account balance, driven by the high trade deficit, has remained negative and
relatively stable. In 2012, South Africa was the origin of 88.9 per cent of the total import value, and it was a
major destination for exports from Lesotho, accounting for 47.3 per cent of the country’s total exports. Thanks
to implementation of the African Growth and Opportunity Act, the United States was the second largest export
destination (43.9 per cent) in 2012.
CAPITAL AND FINANCIAL ACCOUNTS

Despite a high deficit recorded in 2010, the financial account balance in Lesotho has been positive since 2011,
reaching US$ 231 million in 2014. Because of the depreciation of the local currency, inflows of foreign direct
investment dropped to US$ 46.4 million in 2014 from US$ 60.9 million in 2011. It is estimated that foreign
direct investment will increase between 2014 and 2016 at an annual average of 1.0 per cent of GDP. Much of
this expected investment will be channelled into clothing and textiles.
vi
DEMOGRAPHY
The population of Lesotho grew by 2.7 per cent between 2000 and 2014, to reach an estimated population of
1.92 million inhabitants. The rate of urbanization was 26.6 per cent in 2014, compared to 20 per cent in 2000.
POVERTY
The share of the population living below the national poverty line increased from 49.2 per cent in 1993 to 57.1
per cent in 2010. The 2010 Gini coefficient of 53.8 represented an improvement from the 1993 level of 57.9,
but is still indicative of persistent and large inequalities among the population.
EMPLOYMENT
In 2011, it was estimated that 51.5 per cent of men and 28.1 per cent of women actively participated in the
labour force. In all, 39 per cent of this working population was engaged in precarious employment.
HEALTH
In 2014, men lived on average 42.5 years and women 45.6 years. Over 26.0 per cent of women aged 15-49
were HIV positive, compared to 18.0 per cent of men. The doctor-patient ratio is higher than 1 to 10,000, which
is largely above the World Health Organization recommendation of 1 to 1,500.
EDUCATION
The adult literacy rate was 87.4 per cent in 2011. The net enrolment rate was 76.6 per cent for primary
education and 37.7 per cent for secondary education in 2014.
GENDER SCORECARD OF THE AFRICAN UNION COMMISSION

Lesotho has gone beyond parity in secondary school enrolment, with gross enrolment ratios of 62.3 per cent
for girls and 44.5 per cent for boys. Women account for 26.7 per cent of members of parliament. The labour
force participation rate for women is 70.7 per cent, compared to 86.5 per cent for men. There is room for
improvement regarding equal access to land, as illustrated by a score of 4 out of 10 on the African Gender
Scorecard.
vii
1
OVERVIEW
The economy of Lesotho continued to experience Health care remains poor, with very limited access
moderate growth of 3.6 per cent in 2014 (Bureau for people in remote areas, and the country has an
of Statistics, 2015a) due to the global economic HIV/AIDS prevalence rate of 23 per cent (Bureau
recovery and increased external demand. The recent of Statistics, 2015c), one of the world’s highest.
positive growth figures are driven by agriculture, Meanwhile, the progress of Lesotho in providing
mining and large-scale construction projects, as well universal primary education has been remarkable,
as the health, financial intermediation, transport which is also reflected in high literacy rates of
and communications sectors. On the fiscal side, nearly 90 per cent (Bureau of Statistics, 2013). The
Lesotho’s budget is to a large extent financed by emphasis recently placed on bridging the gender
Southern African Customs Union (SACU) transfers, gap is also commendable.
whose volatility remains an obstacle to planning
fiscal consolidation. With the national currency In Lesotho, the water subsector has so far played
pegged to the South African rand, the country has a significant role in transforming the economy,
little scope for monetary policy. The developments increasing investment through initiatives such as
in construction and trade preferences are boosting the Lesotho Highlands Water Project, and creating
foreign direct investment (FDI); however, the net positive linkages to other sectors and employment.
external demand remains strongly negative due to At the same time, maintaining positive spillovers,
increasing imports, mainly from South Africa. profiting from the full potential of the sector and
ensuring access to that rich resource still pose a
At the same time, persistent poverty, with 57.1 per major challenge. Policymakers should therefore
cent of population living below the poverty line focus their attention on good governance of the
(Bureau of Statistics, 2015c), and a deep urban-rural sector, supporting developments in other sectors
divide are serious social issues for the State, which such as tourism and mobilizing resources to increase
has made little progress in alleviating poverty. The access to water for the Basotho people.
labour market is characterized by a large share of
low quality jobs; and unemployment, at over 25 per
cent (Bureau of Statistics, 2008), is rife, in particular
among youths, university graduates and women.
1
2
NATIONAL AND SUBREGIONAL CONTEXT
Over the past five years Lesotho has surpassed to a downturn in South Africa, which was strongly
the regional and subregional trends in terms of its affected by the world crisis. The robust performance
economic standing. As presented in figure 1, the of fast-growers like Mozambique or Zambia was
country’s real GDP growth was an average 5 per thus offset by the major economy in the subregion.
cent over the period 2010-2014, compared to 3.3 The recent drops in commodity prices have also
per cent in Southern Africa and 3.7 per cent in Africa brought negative perspectives for the subregion,
as a whole. After the robust performance of 7.9 per whose economies are often commodity-based. It
cent in 2010, more than double the subregional is projected, however, that Lesotho will grow at an
mean GDP growth over the same year, the pace average 3.9 per cent from 2015 to 2017 (Central
of economic growth in Lesotho has slowed down, Bank of Lesotho, 2015a).
remaining at moderate, positive levels. In 2011, GDP
growth nearly halved to 4 per cent, after which the Following an attempted coup d’état in September
economy recorded growth rates of 5 per cent in 2014, the fragile political situation in the country
2012, 4.5 per cent in 2013 and 3.6 per cent in 2014 still remains a preoccupation in the region. After
(Bureau of Statistics, 2015a). As a comparison, the the mediation and security intervention imposed
Southern African region registered its growth record by the Southern African Development Community
of 3.7 per cent in 2010 and 2012, after which the rate
decreased gradually to 2.5 per cent in 2014. At the
Figure 1: Real GDP growth, Lesotho vs. Southern Africa
same time, the continent as a whole was strongly
affected by shocks to major economies, such as
and Africa (2010-2014)
the war in Libya in 2011, so that overall growth fell (percentage)
7.9
to 1.0 per cent in 2011, rebounding to 5.5 per cent 8
in 2012 and stabilizing at 3.3-3.4 per cent in 2013-

2014 (United Nations, Department of Economic and 6
5.2
5.5
5.0
Social Affairs, 2016). 4.5
4.0
4 3.7 3.7 3.6
3.4 3.3 Lesotho
The positive figures in Lesotho were mainly 3.1
3.4 Africa
Southern Africa
attributed to the strong growth in mining, 2 2.5
construction and services, boosted by extensive

1.0
public spending in the latter. The global crisis, 0
2010 2011 2012 2013 2014
however, triggered a slowdown in 2011 because of
falling external demand for Lesotho’s manufacturing
Source: Lesotho Bureau of Statistics for Lesotho and United
exports. Similarly, the overall low growth rate for Nations, Department for Economic and Social Affairs, for
Southern Africa over the period was mainly due Southern Africa and Africa.
2
2015 COUNTRY PROFILE - LESOTHO
(SADC) mandate, and in an effort to end the political increased employment, Lesotho benefits from the
crisis and restore order, early general elections were hydroelectricity generated, water royalties and the
held. Despite the swearing in of the new cabinet at associated infrastructure, as well as positive spin-offs
the end of March 2015, the risk of renewed political for the economy. Recently, a tripartite agreement
instability remains significant. In the aftermath of was signed with Botswana to extend the transfer
the political turmoil the opposition leaders were network to the water-stressed southern part of the
exiled in South Africa, which further exacerbated the country.
current state of affairs. It appears, however, that the
stabilization of Lesotho is under way, and political Upon completion of Phase I of the Project in 2003,
tensions are easing, with SADC closely monitoring a network of dams, tunnels and reservoirs was
the developments. inaugurated, with an annual water delivery capacity
of 780 million m3. The accumulated sales of water
As an active member of SACU, the Common to date2 have brought Lesotho revenues of over
Monetary Area and SADC, Lesotho has preferential 6.3 billion maloti (nearly 500 million United States
access to regional markets. In particular, SACU, dollars3) and the related hydropower generation
with roughly 60 million consumers,1 provides a has contributed nearly 930 million maloti (over US$
huge market for Lesotho products with its zero- 70 million), with electricity being sold on both the
tariff agreement, whereas participation in the domestic and external markets.4 The completion
Common Monetary Area requires parity between of the second phase of the project planned for
the rand and the loti to ensure stable terms of trade. 2022, with an estimated cost of roughly US$ 1.3
Lesotho’s high level of integration within SACU billion,5 will increase water delivery to 1,260 million
does not, however, translate into a high level of m3 per annum and preliminary feasibility studies
integration outside of the subregion. Reliance on indicate it could boost existing hydropower
SACU revenues is a downside for planning budget generation in Lesotho by up to 1,200 MW (Lesotho
spending and any shocks to the South African Highlands Development Authority, 2015). This has
economy have a strong cascade effect on domestic the potential to contribute greatly to the country’s
developments. The plans to modify the SACU rural electrification developments that are designed
revenue-sharing formula emphasize the need to to supply electricity to rural and remote mountain
expand the economy and trade patterns of Lesotho. areas, and to reduce diesel generation costs
through the Lesotho Renewable Energy Based
On the infrastructure side, the Lesotho Rural Electrification project. Currently, apart from
Highlands Water Project is a prime example the ‘Muela station, there are four mini hydro-power
of regional cooperation in the area of natural stations in the mountains at Semonkong, Tlokoeng,
resources management and exploitation. Since Tsoelike and Mants’onyane.
its establishment in 1986, the Project has been
regarded as one of the most ambitious engineering
projects ever attempted in Africa. The underlying
concept is to benefit both Lesotho and South
Africa. The water transfer scheme, financed fully
by the Government of South Africa, diverts water 2 As at 30 June 2015.
to the South African region of Gauteng for its 3 Rate as at 30 June 2015.
4 ‘Muela hydropower station generates 85 per cent of Lesotho’s domestic
domestic and industrial use, while apart from the requirements. It is worth noting that Lesotho was 100 per cent dependent on
South Africa for electricity before the ‘Muela station was built.
5 The World Bank has committed to providing a grant and a loan to the
1 SACU members include Botswana, Lesotho, Namibia, Swaziland and Government of Lesotho, totalling over 15 million dollars (World Bank, 2014), to
South Africa. cover the hydropower and social and environmental impact components.
3
As a result, the Lesotho Highlands Water Project is Bank, 2015). Overall, half of the jobs are expected
also triggering infrastructure developments such as to be in the construction sector, whereas spillover
access roads, bridges, camps, schools and health effects will lead to employment in the food and
facilities, as well as employment opportunities. It is catering, health and tourism industries, with a
estimated that the number of jobs provided by the corresponding increase in demand for agricultural
project will increase over the period 2015-2020 by products.
roughly 11,000 job opportunities per year (World
Box 1: Africa regional integration index: Lesotho

The Africa regional integration index is designed to for Africa, covers the following dimensions: (i) free
measure the extent to which each country in Africa movement of persons; (ii) trade integration; (iii)
is meeting its commitments under the various pan- productive integration; (iv) infrastructure; (v) financial
African integration frameworks such as Agenda 2063 integration and macroeconomic policy convergence.
and the Abuja Treaty. The index, which is a joint The following section gives highlights on selected
project of the African Development Bank, the African indicators. A technical description of the indicator may
Union Commission and the Economic Commission be found on the ECA website at www.uneca.org.
Overall rank:
10th in the Southern African Development Community (SADC) (score – 0.39). Best-performing country in SADC is
South Africa (score – 0.74). *
Free movement of persons Trade integration – 6th Productive integration Infrastructural integration Financial integration
– joint 8th in SADC (score in SADC (score – 0.54). – 15th in SADC (score – – 15th in SADC (score – and macroeconomic
– 0.6). Best-performing Best-performing country 0.07). Best-performing
0.29). Best-performing policy convergence – 7th
country in SADC is in SADC is South Africa country in SADC is
Swaziland (score – 0.70). (score – 1). Zimbabwe (score – 0.74). country in SADC is in SADC (score – 0.42).
Botswana (score – 0.82). Best-performing country in
SADC is South Africa (score
– 0.915).
Free movement of persons - African countries are countries to enter visa-free or with a visa on arrival.
scored based on two indicators in this dimension (ECA, African Development Bank and African Union
of the index: the proportion of regional economic Commission, 2012; ECA, African Union Commission
community protocols on free movement of persons and African Development Bank, 2013; ECA and African
ratified (out of those RECs of which the country is a Union Commission, 2015).
member) and the number of other African countries
whose nationals are allowed to enter visa-free or with Trade integration - The trade integration is measured
a visa on arrival. Lesotho scores moderately in this through indicators including average applied tariffs on
dimension. The state has ratified the relevant SADC intra-community imports and intra-community goods
instruments concerning free movement of persons, imports and goods exports. Examining the above
rights of establishment and free movement of workers, indicators in detail, in 2014 Lesotho had an average
which is greatly benefiting the Basotho people, in applied tariff of zero on imports from SADC, which is
particular miners, working in South Africa. However, joint-lowest among the members of that community
currently it allows nationals of only 25 other African (with Mauritius and Swaziland) (United Nations
4
Statistics Division, 2015; ITC, 2015). Lesotho’s trade same year, its share of intermediates in total exports
with SADC as a share of its GDP is strong. In 2012, was around 13 per cent, which is also relatively low
the country’s imports from SADC amounted to 61 per compared to other SADC members.
cent of its GDP, placing it first within the bloc on this
measure. Lesotho also performs strongly in terms of its Infrastructure - Lesotho’s infrastructural integration
exports (excluding re-exports) to the rest of SADC as with the rest of the continent appears also to be
a share of its GDP. Fourteen per cent of the country’s weak relative to other members of SADC. Based on
GDP was accounted for by exports (less re-exports) the latest available data (2013), Lesotho’s internet
to SADC in 2012, which means that it ranks fourth bandwidth per capita of around 0.3 megabits per
within the bloc. Swaziland performs strongest among second per person is 33rd-highest on the continent.
SADC members on this measure, with exports to other Internet bandwidth is important for international
SADC members (less re-exports) accounting for 30 per communication, both within Africa and beyond,
cent of GDP (United Nations Statistics Division, 2015; including to support trade in services. However, 100
UNCTADStat, 2015; national statistics offices). per cent of international flights to and from Lesotho
in June 2014 were intra-SADC, meaning that it ranks
Productive integration - Lesotho falls within the group joint-highest among members of that REC on this
of lowest-ranking countries within SADC in terms of measure, along with Swaziland.
its integration into regional value chains. Lesotho Information on Lesotho’s macroeconomic policy
scores weakly (forty-ninth or sixth-to-last out of all convergence can be retrieved from the dedicated
countries in Africa) in UNCTAD’s Merchandise Trade website on the Africa regional integration index.
Complementarity Index, which measures the extent
to which a country’s trade is complementary with that Conclusion - Overall, Lesotho appears to perform
of its partners. This suggests that little specialization strongly in the area of trade integration and
through trade between Lesotho and other countries in moderately in that of free movement of persons
the region may have taken place. relative to other SADC members. It scores weakly in
The Index also measures productive integration the other dimensions of the index. In terms of specific
looking at intra-regional trade in intermediate goods. policy measures that could boost its performance,
The proportion of intermediate goods in Lesotho’s Lesotho could consider:
trade within the region is low relative to other • Waiving visa requirements or granting visas
members of SADC. Lesotho’s share of intermediates in on arrival for nationals of a greater number of
its imports from SADC was around 11 per cent in 2012, African countries
the latest year for which data was available. In the • Upgrading its internet infrastructure.
* A continent-wide ranking, in which all African countries from all Regional Economic Communities will be compared with one another, is currently
under development for the Africa regional integration index and will be added to subsequent updates of ECA's country profiles.
5
3
ECONOMIC PERFORMANCE
3.1 Economic growth and sectoral economy (see figure 2), agriculture is a relatively
performance small contributor to GDP, accounting for just 7.9 per
Despite an armyworm attack in financial year cent in 2014 (Bureau of Statistics, 2015a).
2013/14, the growth rate of agricultural value
addition reached 4.7 per cent in 2014, although In turn, the reopening of the Kao and Letseng
down from 13.2 per cent in 2013. The positive 2014 mines led to increased mining production (although
result was mainly due to the Government’s cropping subdued by a temporary closure of the Liqhobong
program. The livestock subsector also contributed diamond mine), contributing to a remarkable growth
significantly to this outcome through wool and in gross value addition of 15.5 per cent in 2014, after
mohair production. However, owing to drought and a serious dip of 9.2 per cent the year before. Overall,
flooding experienced in 2011/12 and 2012/13, the the gross value addition growth rate averaged at
crops recorded a decline of 23.9 and 1.8 per cent in 20.6 per cent over 2011-2012. It is expected that
2012 and 2013, respectively, leading to an average production will further expand in the short-term
contraction of the agricultural sector of 0.3 per cent future, and the GDP share of mining might increase
over the same period (Bureau of Statistics, 2015a). from the 8.8 per cent recorded in 2014 (Bureau of
It is projected that the sector will continue to grow Statistics, 2015a).
by approximately 2.4 per cent annually (Ministry of
Finance, 2015) until 2018. As for the structure of the
Figure 2: Gross value added shares and growth (2014)

Real estate & business services
Wholesale & retail trade
Public administration
Manufacturing
Education
Mining & quarrying
Construction
Agriculture
Transport & communication
Financial intermediation
Electricity & water
Health
Hotels & restaurants
Other services
0 5 10 15 -10 -5 0 5 10 15
Share of gross value added (%) Real growth (%)
Source: Lesotho Bureau of Statistics.
6
At the same time, after a drop of 3.4 per cent Opportunity Act preferences7 and hence, a shrinking
in 2012 (Ministry of Finance, 2015), the recovery of the garment sector contribution.
of the industrial sector (excluding mining) was
mainly due to developments in construction, which The service sector has been contributing positively
benefited from continuing work on Metolong Dam to growth, mainly through the health sector
and other government projects. Manufacturing (which, after the 2011 opening of the new Queen
recorded marginal growth of 1.8 per cent in 2014 ‘Mamohato Memorial Hospital, grew at an average
after contracting by 12.9, 3.4 and 11.8 per cent in of 24.1 per cent annually until 2014 (Bureau of
2013, 2012 and 2011 (Bureau of Statistics, 2015a), Statistics, 2015a)), financial intermediation (which
respectively (in particular due to falling global profited greatly from reforms to improve access
demand in the textile and clothing as well as to credit8), wholesale and retail trade and also
electronics industries). Nonetheless, the gross value transport and communications, which were boosted
added of the industrial sector as a whole6 grew by by investments in other areas of the economy. The
2.2 per cent in 2014, down from the 3.9 per cent gross value added of service sector was therefore
growth recorded in 2013, with an outlook of average increased by 3.9 per cent in 2014 and 5 per cent in
growth of 1.1 per cent annually until 2018 (Ministry 2013, and it will grow at an estimated 3.6 per cent
of Finance, 2015). At the same time, the industrial in the medium-term (Ministry of Finance, 2015).
sector’s share of GDP has stagnated in recent years, Furthermore, following the above improvements, in
recording 23.1 per cent of GDP in 2014 (versus 2014 the services sector accounted for 59.9 per cent
25.3 per cent in 2010). Manufacturing dropped, of GDP (Bureau of Statistics, 2015a).
registering 9.8 per cent in 2014 compared to 14.1
per cent in 2010 (Bureau of Statistics, 2015a). This
decline came primarily as a result of uncertainties
surrounding the extension of the African Growth and
Figure 3: Demand shares and growth (2013-2014 )
Private consumption
Exports
Investment
General government
Imports
-100 -50 0 50 100 -10 -5 0 5 10

Demand share (%) Real growth (%)
Source: Lesotho Bureau of Statistics for demand shares; Central Bank of Lesotho for growth rates.
7 The African Growth and Opportunity Act preferences were extended only
on 29 July 2015.
8 These include the Legal Capacity of Married Persons Act (2006), which
capacitated women to conduct business on their own, and the Land Act (2010)
and Land Administration Authority Act (2010), which made it possible to use
6 Mining and quarrying is excluded. fixed property as collateral.
7
Box 2: Forecast for Lesotho economy

Economic forecasts provide essential information for decision-makers in the public and private sectors. A number of
organisations produce forecasts of economic growth for Lesotho, including the African Development Bank (AfDB),
the Economist Intelligence Unit (EIU) and the International Monetary Fund (IMF). Overall, the forecasts produced by
these organisations are maintained within 1.5 per cent of each other for all years over the period of review (2008-
2014) (figure A). The only major points of departure were in 2009, when the EIU was predicting negative growth,
whereas AfDB projection was strongly optimistic; and in 2013, when the EIU was more optimistic than the others.
More recently, the three organisations produced similar forecasts for 2014, the most optimistic of which is the one
produced by the IMF (5.6 per cent), while the AfDB is the least optimistic (4.5 per cent).
The root mean squared error (RMSE) and the mean absolute percentage error (MAPE) are common measures used
to evaluate forecasts. The higher the value of these errors, the less accurate the forecasts. Our analysis suggests that
the most accurate forecasts produced for the period 2008-2014 were those made by the Economist Intelligence Unit
(RMSE criterion) or African Development Bank (MAPE criterion) (figure A). The International Monetary Fund followed
closely, generating forecasts of similar accuracy.
Forecasted GDP growth rates by institution Forecast error
(percentage) 2.5
8
2.0
6
1.5
4
1.0
2
0 0.5
-2 0.0
IMF EIU AfDB
'08 '09 '10 '11 '12 '13 '14 Root mean squared error
IMF EIU AfDB Mean absolute percentage error
On the demand side (see figure 3), increases of 12.3 remittances from Basotho migrant workers and a
per cent in public spending in 2014 were the main stable inflation rate. Investment dropped by 3.7 per
driver behind demand growth, with government cent in 2014 and by 17 per cent in 2013, respectively,
projects benefitting in particular the construction, contrary to robust growth of 30 per cent in 2012
transport, communications and health sectors over (Central Bank of Lesotho, 2015b). Gross fixed capital
the last couple of years. Private consumption, which formation was spurred by the completion of various
is the largest component of the aggregate demand investment projects, amounting to 36.4 per cent of
(97.8 per cent in 2013 (Bureau of Statistics, 2015b)), GDP in 2013 (Bureau of Statistics, 2015b).
registered in contrast a modest increase of 2.9 per
cent in 2014 on account of better access to credit,
8
Table1: Lesotho fiscal accounts, millions of maloti

3.2 Fiscal policy 2012/2013 2013/2014 2014/2015 2015/2016
Fiscal interventions remain the country’s main
REVENUES 12,624 13,198 14,109 15,321
macroeconomic policy instrument and are aligned
Taxes 4,596 5,148 5,715 6,517
with the National Strategic Development Plan. Table
1 presents a detailed split of the budget. Currently, Grants 1,704 1,047 496 956
the main allocation of public spending is recurrent Water royalties 636 717 740 782
expenditure owing to the soaring civil service wage SACU 5,163 6,032 6,789 6,398
bill, which cannot be sustained in the medium- and EXPENSES -12,615 -12,486 -13,885 -16,350
long-term (estimated at 22.7 per cent of GDP and Wages -3,749 -4,589 -5,211 -5,978
37.5 per cent of total expenditure in financial year Use of goods and
-2,385 -3,026 -2,908 -3,527
2014/159) and which compromises the Government’s services
ability to stimulate growth. It is therefore crucial Interest payments -166 -192 -227 -284
that the Government shifts from recurrent to Social benefits -613 -763 -670 -937
development expenditure to ensure an adequate FISCAL BALANCE 9 713 224 1,028
level of public investment. Among the other
% GDP 0.0 3.3 1.0 4.0
expense elements, interest payments amounted to
GDP 19,833 21,007 22,918 25,387
227 million maloti in 2014/15, rising from 192 million
and 166 million maloti in 2013/14 and 2012/13, Source: Ministry of Finance; Central Bank of Lesotho; the figures
for 2015/16 are estimates.
respectively. That represented a minor increase in
relative terms from 0.8 per cent of GDP to 1.0 per
cent over the period. In addition, the Government The overall budget performance resulted in a slight
cut down on social benefits, from 763 million maloti surplus of 1 per cent of GDP in 2014/15 and of
in 2013/14 to 670 million maloti in 2014/15 (Ministry 3.3 per cent in the previous year (Central Bank of
of Finance, 2015; Central Bank of Lesotho, 2015b). Lesotho, 2015b). This positive outcome in 2014/15
was mainly due to higher SACU revenue that rose
On the revenue side, taxes constitute roughly 40 by 12.5 per cent to 6,789 million maloti. At the same
per cent of the total revenue, while water royalties time, compensation expenditure increased by 13.6
from South Africa account for around 5 per cent (3.2 per cent reaching 5,211 million maloti and capital
per cent of GDP in 2014/15). However, the budget is expenditure rose marginally by 0.8 to the level of
financed to the largest extent by SACU receipts (48.1 4,166.2 million maloti (Central Bank of Lesotho,
per cent of the total revenue in 2014/15, versus 45.7 2015a; Ministry of Finance, 2015).
per cent in the previous fiscal year), whose volatility
remains a major risk to planning fiscal consolidation. With respect to debt policy, Lesotho maintains
Moreover, modifications to the SACU revenue- sustainable debt levels and the country is able
sharing formula may further jeopardize the country’s to meet its debt obligations. The government
revenues in the future, and it is thus pressing to gross debt reached 46.2 per cent of GDP in 2014.
generate income from sustainable domestic sources, The external debt is the major component of
such as national manufacturing value chains10 the country’s financial liabilities. In 2014, the total
(Ministry of Finance, 2015; Central Bank of Lesotho, external debt stood at US$ 837 million, in a gradual
2015b). decline from US$ 867 million and US$ 841 million in
2012 and 2013, respectively. The debt to GDP ratio
9 The fiscal year in Lesotho runs from 1 April to 31 March.
10 As one of the few least developed countries with a strong manufacturing
was 38.5 per cent in 2014, up from 37.9 per cent in
sector, focusing on domestic value chains would be in line with the Istanbul 2013 (Bureau of Statistics, 2015c). The accumulation
Programme of Action.
9
of international reserves should further support Figure 4: Inflation and interest rates (2010-2014)
(percentage)
external debt sustainability, making Lesotho a 12
viable investment destination; however, the debt is
10 Lending (max)
projected to rise to 1,197 million maloti in 2015/16,
growing to 47.4 per cent of GDP in relative terms 8
(Central Bank of Lesotho, 2015b). 6 Central Bank

Interbank
4
Inflation
3.3 Inflation and monetary policy 2
In terms of monetary policy, the country has very 0

limited scope to act owing to its membership in the 2010 2011 2012 2013 2014
Common Monetary Area. This integrated market

Source: Central Bank of Lesotho.
system results in certain restrictions which prevent
excessive money creation by its members. As a
consequence, the national currency, the loti, is
pegged to the South African rand. As with the latter,
the exchange rate of loti to the United States dollar a significant decrease in prices of liquid fuels (mainly
rose gradually from 7.32 in 2010 to 12.85 in 2015 gasoline and diesel) by 14.5 per cent, following
(Central Bank of Lesotho, 2015a).The broad money a drop in the global price of oil. Some non-food
supply (M2) growth rate increased from 2.9 per cent products, such as furniture, also recorded slight
in 2011 to 7.8 in 2014 (Bureau of Statistics, 2015c). drops in prices. In turn, food inflation reached 5.3
per cent in 2014 due to the higher cost of food
The influence of the South African Reserve Bank on imports, the large majority of which come from
the monetary developments is often reflected in South Africa (Bureau of Statistics, 2015d). A recent
price indices and interest rates. In order to maintain monthly consumer price index report indicated
price stability, Lesotho focuses on keeping the loti an annual inflation rate of 4.8 per cent. Annual
at parity with the rand by maintaining an adequate increases in food (8.9 per cent), clothing and
level of net international reserves (Ministry of footwear (4.3 per cent) and education prices (3.9 per
Development Planning, 2012). In terms of interest cent), as recorded in the report (Bureau of Statistics,
rates, the Central Bank of Lesotho announced 2015e), were the main cause of a rising consumer
in December 2015 that the policy rate, which is price index. It is projected that inflation will average
currently 6.25 per cent, will be the Central Bank 3.3 per cent by the end of the year and 5.7 per cent
reference rate. Previously, the reference rate had in 2016-2017 (Central Bank of Lesotho, 2015a).
been the 91-day treasury bill rate, which is shown
in figure 4. The interbank rate is on average 15
basis points below the Central Bank reference rate 3.4 Current account
(Central Bank of Lesotho, 2015b). For the last five years the current account balance
has remained negative and relatively stable.
In 2014 the inflation rate reported by national Besides a more pronounced drop in 2012 to -3,015
sources as a year-on-year change was at 3.6 per million maloti, the current account deficit oscillated
cent,11 a remarkable fall by 1.5 percentage points between -2,491 and -1,166 million maloti from 2010
compared to the 2013 value of 5.1 per cent. The to 2014. As illustrated in figure 5, the very high trade
main reason behind this downward movement was deficit is the driver behind the negative current
account balance and a 2012 dip in the latter was also
11 The average annual rate was 5.4 per cent.
10
Figure 5: Balance of payments (2010-2014) owing to remittances from abroad, mainly from the
(Maloti billion)
15
Basotho migrant mine workers in South Africa. With
regard to their flows, remittances from migrants fell
10
Secondary income from 22.5 per cent of GDP in 2010 to 19.5 per cent
5 of GDP in 2014, reaching 4,971 million maloti by the
Primary income
0 -1.2 -1.5 -1.5
-2.5
end of 2014 (Bureau of Statistics, 2015c).
-3.0
Current account
-5
Trade balance Lesotho’s geographic location influences the
-10
foreign trade patterns to a large extent. It is highly
-15
2010 2011 2012 2013 2014
concentrated both in terms of exports and imports.
In 2012, South Africa was the origin of 88.9 per
Source: Lesotho Bureau of Statistics. cent of the total imports value, and it was a major
destination for exports, accounting for 47.3 per
attributed to the strongly negative trade balance. cent. Owing to the African Growth and Opportunity
The trade deficit reached 14,512 million maloti in Act preferences, the United States of America was
2014, a significant rise from 10,921 million maloti in the second largest export destination with 43.9
2010, which in relative terms represented an increase per cent in 2012. Other major partners included
from 55.1 per cent of GDP in 2010 to 57.2 per cent in Taiwan, China and Hong Kong for imports, and
2014 (Bureau of Statistics, 2015c). The coverage rate the European Union, United Arab Emirates and
of imports by exports rebounded to 42.6 per cent other SACU member States for exports (Bureau of
in 2014, after a decade low of 39.9 per cent in 2013 Statistics, 2014a).
(Ministry of Finance, 2015). The falling exchange rate
and high imports value are among the main factors Figure 6 presents details of import composition.
influencing the outcome. On the income side, the Food, manufactured articles and machinery were
role of primary income has been diminishing since major import products, indicating low productivity
2010, reaching 3,311 million maloti in 2014, whereas of domestic agriculture (mainly subsistence farming),
secondary income has gained growing importance little diversification of local manufacturing and
Figure 6: Foreign trade (2012)

Import composition Export composition
Animal/vegetable oils, fats & waxes 1.0% Food and live animals 4.8%
Other 3.0%
Beverages and tobacco 3.0%
Machinery and Crude materials 6.1%
Crude materials 3.4% transport equipment 18.6%
Chemicals 10.1% Manufactured goods 7.5%
13.0
(Maloti billions) Manufactured goods 18.3% Beverages and tobacco 9.5%
Mineral fuels 12.1% 5.5
(Maloti billions)
Miscellaneous
manufactured articles 13.6% Food and live animals 16.9% Machinery and
transport equipment 11.6%
Miscellaneous
manufactured articles 60.2%
11
increasing number of infrastructure projects. In Figure 7: Financial account balance, (2010-2014)

terms of value, the declining prices of oil and food (Maloti million)
3,000
offset the rising demand for imports. However, it 2,519 Financial account
Direct investment
2,062
is projected that the trade deficit will widen once 2,000
international prices pick up and new construction 1,193

1,000 734 Other investment
projects will require more machinery and equipment
inputs. In terms of exports, the recovery of the 0
Portfolio investment
global economy spurred external demand for
manufacturing exports, such as clothing, textiles, -1,000
electronics and diamonds (see figure 6). -1,359

-2,000
2010 2011 2012 2013 2014
3.5 Capital and financial accounts
Despite a high deficit recorded in 2010 owing to
outflows related to other investment, the financial this expected investment will be channelled into
account balance in Lesotho has been positive since clothing and textiles firms. The Lesotho National
2011, reaching 2,519 million maloti, that is, US$ 231 Development Corporation estimates that the total
million in 2014, the highest level over the last five employment created through FDI to date amounts
years (see figure 8). The level of FDI has remained to 45,400 jobs (Lesotho National Development
relatively stable since 2011, oscillating between Corporation, 2014) and future inflows are crucial to
445 to 505 million maloti. The country maintains maintain the high figure.
negligible investments in bonds and shares, and the
major role in the financial account is played by other Along with the National Strategic Development
investment (2,041 million maloti or US$ 187 million in Plan,12 the Government aims to attract private
2014), such as official development assistance grants investment in the form of joint ventures and FDI
and loans and their repayments. As maintaining in sectors ranging from textile and garments,
an adequate level of net international reserves is infrastructure, mining, energy, health and tourism to
a crucial means of keeping the loti at par with the food processing, electronics and plastic products.
rand, the level of those reserves is steady. Since To that end, Lesotho offers incentives ranging from
2010, net international reserves have fluctuated tax preferential corporate regimes and attractive
between US$ 1.0 billion and US$ 1.4 billion, with the market access to facilitating services offered by
2014 stock of US$ 1.12 billion slightly down from the Lesotho National Development Corporation,13
US$ 1.14 billion in 2013 (Bureau of Statistics, 2015c). such as assistance with company registration or the
Similarly, months of import coverage recorded only acquisition of permits and licences.
minor fluctuations, from 4.3 in 2012 to 4.4 in 2015
(Ministry of Finance, 2015).
On account of the depreciating currency, however,

inflows of FDI dropped to just US$ 46.4 million in
2014, down from US$ 60.9 million in 2011 (Central
Bank of Lesotho, 2015b). However, it is estimated 12 Along with agriculture, manufacturing and tourism, the improving
investment climate is one of the Lesotho National Development Strategy’s
that FDI will increase at an annual average of 1.0 pillars for long-term job creation and growth.
per cent of GDP between 2014 and 2016 (KPMG, 13 The main objective of the Lesotho National Development Corporation is
implementation of the country’s industrial development policies. The entity is
2015). Similarly to the current FDI flow, much of fully owned by the Government of Lesotho and reports to the Ministry of Trade
and Industry, Cooperatives and Marketing.
12
4
SOCIAL DEVELOPMENTS
4.1 Demography The Basotho are principally a young society, as close
In 2014, the country counted 1.92 million inhabitants, to 60 per cent are aged under 24 years and just 5
with a virtually unchanged population level since per cent are over 65 years. At the same time, the
2000 (see figure 8). Women account for a higher dependency ratio remains high, oscillating between
share of the population aged 25-65+ and men 65.7 and 72 per cent between 2000 and 2014, due
amongst 0-24 year-olds. Due to migration, a to an extensive proportion of children below 14
heavy HIV/AIDS burden and poor health care, the years old (see figure 9) (Bureau of Statistics, 2015c).
annual population growth rates are particularly However, this age distribution augurs well for
low and in 2014 the rate was only 0.4 per cent, an Lesotho, if the economy is able to generate quality
increase from 0.2 per cent in 2010 or 0.1 in per cent jobs for its young population to benefit from the
in 2005. Overall, the population grew by 2.7 per demographic dividend.
cent between 2000 and 2014 and by 19.6 per cent
since 1990. The rate of urbanization is also low and
relatively stagnant, with 26.6 per cent of people 4.2 Poverty and employment
living in urban areas in 2014 compared to 20 per Lesotho is still struggling to alleviate the overarching
cent in 2000 (Bureau of Statistics, 2015c). poverty of its inhabitants and the poverty incidence
is very high. Despite positive growth rates of
real GDP per capita, economic development is
Figure 8: Population by age group (1990-2014) benefitting only a limited fraction of the population
(million)
2.0
(see figure 10) and the wealth distribution is skewed
0.1 0.1 0.1 0.1 towards urban areas. The share of the population
1.5 0.1 65+ living below the national poverty line increased from
0.6 0.7 0.7
0.7
0.5
49.2 per cent in 1993 to 57.1 per cent in 2010, with
25-64
1.0
the population affected mainly in rural areas (in 2010,
0.4 0.4
0.3 0.4 0.4
15-24 61.2 per cent versus 39.6 per cent in urban areas,
0.5
as opposed to 68.9 versus 36.7 per cent in 1994).
0-14
0.7 0.8
0.6 0.7 0.7 The most recent Gini coefficient of 53.8, reported in
0.0 2010, has changed slightly from its 1993 level of 57.9,
1990 2000 2005 2010 2014
suggesting persistent and large inequalities among
Source: Lesotho Bureau of Statistics. the population (Bureau of Statistics, 2013; Bureau of
Statistics, 2015c)).
13
Figure 9: Poverty and economic growth per capita In turn, the total unemployment rate stood at
(2002-2014) 25.3 per cent in 2008, distributed almost equally
between men and women; among young people
60 16 (15-24 years), however, the rate was significantly
50 higher, 32 per cent for men and 40.7 per cent for
women (Bureau of Statistics, 2008). It is worth noting
Poverty rate (%)
40
that registered unemployment is mostly an urban
30 7.6
problem, with half of the job seekers15residing in the
5.5
20 4.6 4.2 4.6 3.8
4.8
4.1 Maseru area, and every fifth a university graduate or
3.2 3.2 GDP per capita
10 2.2 2.6
growth rate (%) postgraduate student (Bureau of Statistics, 2014b).
0
In an attempt to step up the efforts to fight high
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
poverty levels and inequalities, in February 2015

Lesotho officially launched the National Social
Protection Strategy. The Strategy is based on the
With regard to the labour market, it was estimated life-cycle concept and it embraces infant, child,
that 51.5 per cent of men and 28.1 per cent of disability and assistance grants, as well as an
women actively participated in the labour force employment guarantee and an old age pension
in 2011. Nevertheless, a large proportion of the scheme. In addition, the agricultural input subsidies,
working population, 39 per cent in 2011, had cropping projects and national fertilizer programmes
vulnerable employment, that is, they were own- focus on narrowing the urban-rural divide. Although
account workers and contributing family members14 the Strategy is aimed at the most disadvantaged
(Bureau of Statistics, 2013). groups, its impact may not be sustainable.
Expanding the social safety net without giving
The 2011 national figures indicate that 38.4 people access to productive assets raises the risk of
per cent of the Basotho make their living from deepening poverty and inequality in the long term.
agriculture (51.5 and 16.3 per cent for men and
women, respectively), many of them as subsistence
farmers. Industry provided employment to 21.2
per cent (19 per cent and 24.8 per cent for men
and women, respectively) and services to 40.6 per
cent (29.5 and 58.8 per cent) (Bureau of Statistics,
2013). Public administration remains the biggest
formal employment creator in the country, whereas
manufacturing provides the highest number
of formal jobs in the private sector, to a large
extent owing to the textile industry that employs
up to 43,000 mainly female workers (Ministry of
Development Planning, 2012).
15 The term ”job seekers” refers only to those unemployed that were
14 For instance, 43.6 per cent of all economically active women declared registered with the National Employment Services in 2013, and does not reflect
”housewife” as their main activity. all the unemployed.
14
Box 3: The National Social Protection Strategy in Lesotho

The Strategy is divided into a long-term vision with 2025 targets, and intermediary objectives for 2018/19
with a detailed action plan. The cost of the Strategy is estimated at 1,275 million maloti, representing 3.9
per cent of GDP, which is significantly less than the estimated current level of social protection of 7.8 per
cent of GDP. At the same time, the Strategy is expected to result in increased coverage of 41 per cent of
the population, as opposed to 23 per cent in 2011 (Freeland and Khondker, 2015).
The Child Grant Programme is one of the most successful examples of the Strategy’s implementation.
From a pilot phase that provided transfers to about 5,000 children, the programme has gradually expanded
coverage to 80,000 in 2015, and currently benefits children in every district of the country. Starting from the
fiscal year 2013/2014, the Government fully took over the funding and administration of the programme,
committing 36 million maloti from the budget (Doyle, 2015). The Child Grant Programme is unique in sub-
Saharan Africa with its effective transition from a donor-led pilot into a national programme.
As a result, Lesotho’s National Information System for Social Assistance was introduced as a support tool
for the Programme. Currently, over a quarter of Basotho households are covered by the system, and the
System has the potential to become a single registry for all social assistance and security programmes, as it
is expected to be linked to the national identification system.
In addition, launched in 2005, the Lesotho Old Age Pension is a universal pension scheme that is
unprecedented among low-income African countries. It targets all the population above 70 years old,
that is, about 83,000 Lesotho citizens. The programme began with a monthly transfer of 150 maloti and is
currently at 450 maloti a month and will be increased to 500 maloti, as announced in the current budget
(Freeland and Khondker, 2015).
4.3 Health children; and they are greater among children in

The soaring HIV/AIDS burden and insufficient health rural areas (Ministry of Health, 2015). At the same
infrastructure, strongly undermine the health status time, the maternal mortality ratio reached 1,143
of the population and translate into persistently high (per 100,000 live births) in 2011 (Bureau of Statistics,
mortality rates. In 2014, men lived on average 42.5 2013), up from the 2000 level of 419 (Bureau of
years and women 45.6, which was a mean of 44 years Statistics, 2015c), even though the recent health
for the whole Basotho population. The number in survey reports significant improvements in delivery
2000 equalled 47.2 years (46.7 – men, 47.6 – women) care, as 78 per cent of mothers were attended by
and 59.3 (58 versus 60.8) in 1990 (Bureau of Statistics, skilled personnel and 77 per cent gave birth in a
2015c). Also, in 2014 the neo-natal mortality rate health facility. Antenatal care was provided at least
was 34,16 the infant mortality rate stood at 59 and once to 95 per cent of women and three-quarters
the under-5 mortality rate was 85 (Ministry of Health, received it at least four times. Urban women,
2015), and this represented a significant drop from however, were more likely than rural women to have
2004 figures; however, the progress in all but infant received antenatal care or to be attended in a health
mortality rates was limited compared to 1994 (see institution or by skilled personnel (Ministry of Health,
figure 10). In addition, 33 per cent of Basotho 2015). The increase in the maternal mortality ratio,
children are stunted, 3 per cent are wasted, while 10 despite improved delivery and antenatal care, may
per cent are underweight. For all three phenomena, be partly due to better administrative records as
the proportion is higher for male than female more women give birth in health facilities.17
17 As a result, any differences in the maternal mortality ratio between
16 All child mortality rates are per 1,000 live births. sources, including the African Gender Scorecard, may be due to the varying
15
Figure 10: Neo-natal, infant and under-5 mortality Figure 11: HIV prevalence rates by sex and age group
rates (1994-2014) (2004-2009)
(per 1,000 live births) (percentage)
120 40
104
99
100 1994
90 30
86 85
82 79 Male
80 72 75 1999
59 20
60 2004
44 Female
40 39
40 33 34 2009 10
20 2014
0
2004 2009
0 Age: 15-24 Age: 15-49
Neo-natal Infant Under-five
Source: Demographic and Health Survey 2014 (Ministry of Source: DHS 2009 (MOH, 2010);DHS 2004 (MOH, 2005).
Health, 2015); Demographic and Health Survey 2004 (Ministry
of Health, 2005).
With low rates of tuberculosis prevalence and no 4.4 Education

malaria incidence on account of the high altitude, In the area of education, in contrast, substantive
the major health problem of Lesotho is the HIV/ progress has been achieved. With an 87.4 per cent
AIDS epidemic as seen in figure 12, with the adult adult literacy rate in 2011 (Bureau of Statistics, 2013),
(15-49 years old) prevalence rate at 23 per cent the country has a comparably high rate for Africa (in
in 2009 (the rate reduces to 9.3 per cent for the 2015, for youths aged 15-24,18 the rate was 76.9 for
population aged 15-24 years). Over 26 per cent of men and 93.4 for women, and 85.1 per cent in total
women aged 15-49 were HIV positive (13.6 per cent (United Nations Educational, Scientific and Cultural
amongst 15-24 year-olds) as opposed to only 18 Organization Institute for Statistics, 2015)). School
per cent of men in the same age group (or 4.2 per enrolment rates are high and progressing rapidly
cent for male youths) (Bureau of Statistics, 2015c). (see figure 12). The net enrolment rate was 76.6
Limited access to antiretroviral therapy (57.5 per per cent in primary education and 37.7 per cent in
cent in 2011) (Millennium Development Goals, 2015) secondary education in 2014, whereas gross rates
and poor quality of health services lie at the basis were 102.3 and 55.7 per cent, respectively, and the
of the alarming HIV and AIDS incidence. Despite representation of girls is higher at all levels because
high public spending on the sector (15.1 per cent many families keep boys out of school for household
of the 2015/16 budget (Ministry of Finance, 2015)), work such as pasturing livestock. In 2014, the gender
the lack of skilled personnel remains a major parity index stood at 1.04 for primary education, 1.6
limitation to the proper functioning of the health at the secondary level and 1.42 for tertiary (Bureau
care system. The doctor-patient ratio is less than 1 of Statistics, 2015f). High dropout rates, however,
to 10,000 (Tlale, 2012), which is much lower than the are a serious issue. It was reported that in 2011, 59.6
regional average and the World Health Organization per cent of females in urban areas aged between 6
recommendation of 1 to 1,500. and 24 years left school, as opposed to 44.4 per cent
of their counterparts in rural areas. The respective
numbers for males were 40.4 and 55.6 per cent
(Bureau of Statistics, 2013).The lowest percentage of
methodologies. 18 National data are not available.
16
dropouts is at the primary level (3.2 per cent in 2013 Figure 12: Gross enrolment rate in primary and
(Bureau of Statistics, 2015f)). secondary education by sex (2002-2014)
(rate)
140
Overall, the quality of education is also rising as
120
a result of the high public investment. The sector
claims the largest proportion of government social 100
Male
spending (18.4 per cent of GDP in the 2015/16 80
budget (Ministry of Finance, 2015)). On the one 60
hand, the pupil-teacher ratio has improved over 40

Female
the years, reaching 33 and 24 for primary and 20

secondary levels in 2014; down from 42 and 26 0
in 2005; nevertheless, teachers are not equally Primary Secondary
2005 2008 2011 2014
distributed and are still scarce in remote rural areas
(Bureau of Statistics, 2015f). On the other hand, Source: Lesotho Bureau of Statistics (Bureau of
social development programmes such as free Statistics, 2015f).
primary education, school meals and bursaries for
orphans and vulnerable children (OVC), in addition
to the tertiary bursary scheme, contribute to higher
education enrolment at all levels.
17
4.5 Gender scorecard of the African Union Commission*
The African Union declared 2015 as the Year and women’s empowerment in seven core sectors
of Women’s Empowerment and Development that have a transformative impact on women’s
towards Africa’s Agenda 2063, with a view to lives through their contribution to broad-based,
building momentum for gender equality and sustainable and inclusive growth. These core
women’s empowerment on the continent. Based sectors are: employment, the business sector,
on this commitment, the African Union developed access to credit, access to land, women in politics
the African gender scorecard. The Scorecard is and decision-making, health, and education at the
designed to measure the status of gender equality secondary and tertiary levels.
Interpretation of the pie chart: The scoring is between 0–10, with 0 being the worst level of inequality, 5 suggesting middle parity, and 10 indicating perfect
parity. Perfect parity connotes a situation where the proportion of men and women is equal, irrespective of the developmental level of the variable or indicator
being assessed. Some countries go beyond the score of 10, thus showing that women may be more highly empowered in that subsector than men for that
country. However, caution is needed when drawing conclusions based only on the scores, particularly when there are large variations in levels of developmental
achievements between countries.**
* The data used in the calculation of the Scorecard are drawn from several international databases and sources, including: United Nations, Statistical Division;
World Development Indicators, Global Financial Inclusion Database and Enterprise Surveys of the World Bank; the Gender and Land Rights Database of the
Food and Agriculture Organization of the United Nations; International Labour Organization; United Nations Children’s Fund; Joint United Nations Programme
on HIV/AIDs; World Health Organization; International Food Policy Research Institute; United Nations Educational, Scientific and Cultural Organization; United
Nations Population Division; United Nations Population Fund; Inter-Parliamentary Union; and some national data sources. Data on access to land were drawn
from several sources, with the scoring and harmonization of legislative frameworks done in-house by the African Centre for Statistics and the African Centre for
Gender.
** The pie chart is based on the African genders scorecard, which was presented to the Heads of State and Government at the twenty-fifth ordinary session of
the Assembly of the African Union in June 2015.
18
5
MAJOR POLICY CHALLENGE: WATER FOR
ECONOMIC TRANSFORMATION
Water, popularly known as “White Gold”, is Project-related activities cease, the economy may
Lesotho’s most abundant and most valuable natural experience a downturn and drops in employment
resource, greatly exceeding domestic needs. On if positive spillovers are not maintained. Also, the
the one hand, the country is one of Southern Africa’s water sector presents opportunities that remain
major water catchment areas. The rainfall in the largely unexplored, even though they could play a
highlands averages at 1,400 mm per year (Ministry significant role in fostering sustainable growth and
of Water Affairs, 2015), feeding the Senqu (Orange), transforming the economy further.
Mohokare (Caledon) and Makhaleng river systems.
Every year, rain and snowfall bring an estimated 5.5 In order for the country to benefit from this rich
billion m3 of water, and renewable groundwater natural resource, the Government has recognized
resources provide a further 340 million m3 (Embassy the need to set up a number of institutions. Most
of the Kingdom of Lesotho in Ireland, 2015). On the importantly, the Lesotho Highlands Development
other hand, after the introduction of the Lesotho Authority is the implementing agency for the
Highlands Water Project, water has become the Lesotho Highlands Water Project. In turn, since
largest single source of non-tax revenue, creating 2013 the Lesotho Electricity and Water Authority
3.5 per cent of GDP per year (Ministry of Finance, has overseen the regulation of urban water and
2015)19 and contributing to development and job
creation in various sectors.
Figure 13: Access to safe drinking water and improved
sanitation (2014)
Despite such a rich natural endowment and revenue (percentage)
100
91
source, few Basotho people profit from it fully. As
78
seen in figure 13, access to water is particularly 80 73
Urban
limited in rural areas, where only 73 per cent of the
60
population had access to safe drinking water in Rural
2014 and 24 per cent had the benefit of improved 40
32
sanitation facilities. The proportions in urban areas 24 26
Total
20
were 91 per cent and 32 per cent, respectively
(Bureau of Statistics, 2015c). The figures fall short 0
of the country’s potential. In addition, once the Safe drinking water Improved sanitation
Source: Bureau of Statistics, 2015c.

19 Outturn for the 2014/15 fiscal year, including royalties from water
and water-generated electricity sales; SACU receipts are not taken into
consideration.
19
sewerage services, establishing quality standards20 developments. The main assets include dams22
to improve access to clean water, prevent and hydropower stations that are modern
waterborne diseases and ensure uninterrupted engineering feats, nature reserves and botanical
supply to individuals as well as businesses. The gardens created as part of the biodiversity
recently formed Ministry of Water Affairs21 protection programmes,23housing unique mountain
highlights the central role that the Government species of fauna and flora, as well as the water
attaches to water resources in the economy. reservoirs themselves, which are already attracting
Importantly, recognizing the need to institutionalize an influx of tourists. An opportunity therefore
the sector has been key to ensuring that the exists for private investors to build accommodation
country can profit from the resources in the long facilities such as lodges, hotels and resorts at
run. At the same time, effective functioning of Katse and Mohale. Furthermore, the Project has
the new management structure is a challenge provided Lesotho with the infrastructure for water-
that policymakers must address in order to retain based sports and other recreational activities, with
oversight mechanisms, attract investors and turn a special emphasis on leisure cruise boats and
water into a sustainable growth driver. extreme sports, for which the dams are perfectly
suited. Currently, the Lesotho National Development
In that regard, the Lesotho Highlands Water Corporation is running a small cruise service at
Project since its inception has offered vast scope Mohale dam, which it plans to pass over to a private
for transforming the economy. Nonetheless, the operator for further developments. The prospective
biggest challenge to sustaining the growth spurred infrastructure of Phase II will broaden the scope of
by the Project is to maintain long-lasting spillover existing opportunities. It is also expected that the
effects in other sectors of the economy. The project impact on job creation will be pronounced, with an
itself, even as a strong growth driver in the medium estimated increase in tourism employment of 25
term, cannot continue to propel economic and per cent if demand in the sector rises by 50 per cent
social developments after its completion. It is (Ministry of Development Planning, 2012). Moreover,
expected that employment related to the Project many of those jobs would be created in rural areas,
will drop significantly in 2021-2022 (World Bank, where the highest underemployment occurs.
2015), and the growth rates of some sectors, in
particular construction, will start declining sharply, In addition to the investment opportunities in
which may lead to an economic downturn unless tourism described above, there is great scope for
other industries can absorb the labour force, private setting up lucrative businesses in the Lesotho water
investment takes off, technology transfer occurs and sector, which needs adequate policy support in
domestic capacity-building is maintained. On the order to prosper. The high quality of water in the
other hand, the spread of already abject levels of country constitutes a natural comparative advantage
poverty and deepening inequalities is the biggest that, if used, could generate long-lasting job
risk if the recently drafted income restoration and creation and sustainable growth sources. The policy
resettlement strategy is ill-designed and myopic. of concentrating on creating a conducive business
environment in the water sector could thus lead to
Importantly, the Lesotho Highlands Water Project the desired investments. One of the priority projects
area has opened new opportunities for tourism at present is water bottling. Lesotho abounds
20 Urban Water Quality of Service and Supply Standards (May 2013) set up 22 Katse Dam is the highest dam in Africa, one of less than 30 dams in the
as main objectives the protection of customers and environment, the sufficient world of a double curvature arch design and one of the world’s 10 largest
water supply and assuring water quality adequate for human consumption. concrete arch dams in terms of volume.
21 Water resources management was previously coordinated by the Ministry 23 The affected communities in such areas have been entitled to 10 per cent
of Energy, Meteorology and Water Affairs. of all park collections in the form of community development projects.
20
Figure 14: Classification of water springs the public health sector, as safe drinking water could
Commercially used : be more widely distributed to the areas with a poor
18 (13.1 %)
water supply. In addition, Lesotho’s springs, rivers
and other water reservoirs are ideal for setting up
the fisheries business aimed at exporting quality
trout or tilapia.
Documented
/Unmonitored :
31 (22.6 %) Total Finally, water is undoubtedly one of Lesotho’s richest
137 springs natural resources; however, the Basotho people’s
limited access to it has been an impediment to
both social and economic development. The
Monitored/Unused : adverse impact on health is pronounced, which
88 (64.2 %) has cascading repercussions on education and
employment. In turn, this undermines labour
productivity significantly and restrains the potential
Source: Lesotho National Development Corporation.
of the economy in the long run. The problem is
particularly pertinent to the lowlands areas of the
country, where roughly two-thirds of the Basotho
in natural springs with water that is physically, live. Improved water supplies are crucial in the
chemically and biologically clean. Currently, it Maseru district, where the majority of manufacturing
is reported that only 18 out of 106 monitored industry, especially textiles, is concentrated.
springs scattered across all ten districts are used Simultaneously, a rising share of urban population
commercially (Lesotho National Development in the area sparks growing demand for reliable
Corporation, 2015), leaving at least 88 springs that residential supplies. The emphasis is therefore
have water adequate for bottling and being sold placed on overcoming this challenge, through a set
both locally and internationally (see figure 15). It of programmes and projects (see annex I). However,
is essential to mention that developments in the high dependence on donor capital creates a risk of
business would also have positive externalities in interruptions in financial flows and underutilization
Box 4: The water bottling sector presents a lucrative business opportunity

• The country boasts about 137 documented springs, at least 106 of which are monitored
• Only 18 springs are commercially used at the moment, leaving at least 88 springs for business
developments
• A total of 6 springs lie in close proximity to Maseru
• There are also 90 boreholes countrywide
• Opportunity: establishing a procurement plant and equipment to bottle water
• Product: bottled spring and mineral water
• Potential markets: Lesotho, South Africa, the European Union and the United States of America
• Collaboration sought: joint ventures or new projects
21
of resources, which should be mitigated through • Good governance, including good institutions, is
internal efforts, in both organizational and financial a cornerstone of durable economic development,
terms. which the State could foster through the
right policies. One line is to ensure that the
The best illustration of a well-targeted project is institutional environment, in particular that of
the completion of the Metolong Dam, which is a water resources management, is efficient and
breakthrough in ensuring a supply of clean water for transparent, with the minimal level of bureaucracy
Maseru. Not only will it provide the much needed that is conducive to business. Meanwhile, in
supply, but it will also give a strong stimulus to reference to the recent political turmoil, the
the national economy. Taking into consideration focus could be combined with strengthening the
the textile sector only, one of the biggest in the recovering stability. Well-targeted policies in both
Maseru area, it is estimated that 48,000 jobs in the areas could play a fundamental role in reassuring
sector will be preserved and 6,000 more jobs will potential investors and making efficient use of
be created, thanks to the operationalization of resources.
the dam (Public Eye News, 2015). Moreover, it is
estimated that the Metolong Dam Water Supply • In relation to the spillovers triggered by the
Programme will add capacity of 75 million litres of Lesotho Highlands Water Project, adequate
water supply per day (Metolong Authority, 2015), policies could support developments in sectors
which will relieve the currently overstretched system that profit directly from the project and have
with the capacity of barely 44 million litres a day and the potential to provide lasting impacts to the
is believed to meet Maseru residential and industrial economy beyond the duration of the Project, with
demand for roughly forty years (Public Eye News, tourism being a flagship example.
2015). Complementing the direct effects of the
Programme, the Metolong Dam construction has • In combination with the above, policies aimed
led to the creation of almost 50 kilometres of new at enhancing the investment climate and
roads, rural access roads, vehicle and pedestrian promoting the natural comparative advantage of
bridges, sanitation systems, developments in the country’s water and tourist assets could be a
telecommunications and construction of staff reinforcing element in bringing more investors to
housing and a visitors’ centre. Promoting similar those sectors and a deciding factor in developing
undertakings, even on a much lower scale, in other other water-related business areas, such as
areas of the country could accelerate positive social fisheries or water bottling.
transformation.
• In addition, the social facet of exploiting water
resources in Lesotho cannot be neglected.
Policy implications On one hand, there needs to be an ongoing
Taking into consideration the various aspects domestic effort, not relying uniquely on external
and interlinkages that the water sector creates in donors, to provide access to drinking water and
Lesotho, there is great scope for the country to sanitation to all the Basotho people. At the same
focus on policies that could benefit developments time, it is fundamental that the communities
in the sector, and hence, to bolster the structural affected by the Lesotho Highlands Water Project
transformation engendered by it. Below are the are provided with the productive means of
focus areas that policymakers could explore further: making their living, either in the Project-related
activities or through other occupations which
22
can contribute to higher and more sustainable
incomes in the future.
• Finally, to preserve the high quality of water,

monitoring and environmental protection
mechanisms could be put in place to ensure
that water remains a long-lasting source of both
human and economic development. A set of
environmental studies24 is being conducted with
relation to the impact of the Project, which could
be further used to shape the policy direction in
that regard.
24 The most significant are the Flow, Water Quality and Geomorphology and
IFR Baseline Study and the Biological and Archaeological (including Heritage)
Baseline Study.
23
6. NATIONAL DATA QUALITY EVALUATION
Methodological note on data quality evaluation

The quality of national data sources for key indicators in the country profiles was evaluated. The result is presented in colour codes, with green
indicating a “good” data source, yellow for “satisfactory”, and red for “needs improvement”.
The evaluation focused on the transparency and accessibility of each national data source. The evaluation took into consideration the timeliness
and periodicity of data publishing, based on the punctuality of publication and frequency of data updates in accordance with international
standards. It also measured the comparability of the data series, based on their length, definition and standard units of measurement. It evaluated
database accessibility, specifically whether the data were open and freely available to the general public, the format of the data, and the ease
of downloading and sharing. Data citation, together with references to primary or secondary sources, was also assessed. Finally, the evaluation
checked the completeness of metadata for data release and the completeness and clarity of documentation and notes.
Demography Value Evaluation Education and employment Value Evaluation

Population (millions) 1.9 (2014) 1 Net enrolment ratio in primary education (%) 76.6 (2014) 1
Proportion of pupils starting grade 1 who reach last grade of

Children (0-14 years, million) 0.7 (2014) 1 96.8 (2013) 1
primary (%)
Adults (15-60 years, million) 1.1 (2014) 1 Ratio of girls to boys in primary 1.04 (2014) 1
Elderly (60+ years, million) 0.1 (2014) 1 Ratio of girls to boys in secondary 1.6 (2014) 1
Urban population (%) 26.6% (2014) 1 Ratio of girls to boys in tertiary education 1.42 (2013) 1
Growth rate (%) 0.4 (2014) 1 Share of employed in primary sector (%) 38.4 (2011) 1
Crude death rate (deaths per 1,000 population) 20.3 (2014) 1 Share of employed in tertiary sector (%) 40.6 (2011) 1
Crude birth rate (births per 1,000 population) 29.8 (2014) 1 Unemployment rate (%) 25.3 (2008) 1
Proportion of own-account and contributing family workers in

39.1 (2011) 1
total employment (%)
Key macroeconomic and sectoral performance Value Health Value
GDP, constant price (Maloti billion) 12.5 (2014) 1 Prevalence of underweight children under 5 years of age (%) 10.3 (2014) 2
GDP, current prices (billions of maloti) 23.7 (2014) 1 Under-5 mortality rate (per 1,000 live births) 85 (2014) 2
Real GDP growth rate (%) 3.6 (2014) 1 Infant mortality rate per (per 1,000 live births) 59 (2014) 2
Inflation rate (%) 4.8 (2015) 1 Neo-natal mortality rate (per 1,000 live births) 34 (2014) 2
Maternal mortality ratio (per 100,000 live births) 1143 (2011) 1
Economic trends and performance Indicators Value Proportion of births attended by skilled health personnel (%) 77.9 (2014) 2
Gross fixed capital formation (billions of

7.5 (2013) 1 HIV prevalence among population aged 15-24 years 9.3 (2009) 2
maloti)
Data sources code index

1. Lesotho Bureau of Statistics
2. Ministry of Health
24
REFERENCES
Bureau of Statistics (2008). 2008 Lesotho Integrated the official launch of the National Policy on Social
Labour Force Survey. Development and National Social Protection
Strategy. Available from http://eeas.europa.
__________ (2013). Lesotho Demographic Survey eu/delegations/lesotho/documents/press_
2011. corner/20150211-lesotho_en.pdf.
__________ (2014a). Foreign Trade Statistics Report Economic Commission for Africa, African
2012. Statistical Report No. 27:2014. Development Bank and African Union Commission
(2012). Assessing Regional Integration in Africa V:
__________ (2014b). 2013 Labour Statistics Report. Towards an African Continental Free Trade Area.
Statistical Report No. 38:2014. Addis Ababa: Economic Commission for Africa.
__________ (2015a). National Accounts of Lesotho __________ (2013). Assessing Regional Integration
2005-2014. Statistical Report No. 31:2015. in Africa VI: Harmonizing Policies to Transform
the Trading Environment, pp.3-4. Addis Ababa:
__________ (2015b). National Accounts 2013, Economic Commission for Africa. Economic
Publication Tables 2013. Available from http://www. Commission for Africa and African Union
bos.gov.ls/ Commission (2015). Report on the state-of-play of
progress towards regional free trade areas (FTAs)
__________ (2015c). Preliminary indicators for the at regional economic community level, both in the
2014 SADC Statistical Yearbook (unpublished), Tripartite and other regional economic communities.
compiled and shared by the Lesotho Bureau of Paper presented to the tenth meeting of African
Statistics for preparation of the country profile. Union Ministers of Trade, Addis Ababa, Ethiopia,
8-15 May 2015.
__________ (2015d). Consumer Price Index
December 2014, Statistical Report No. 3:2015. Embassy of the Kingdom of Lesotho in Ireland
(2015). Available from http://www.lesothoembassy.
__________ (2015e). Consumer Price Index ie/trade-investment/trade-investment-opportunities.
November 2015, Statistical Report No. 36:2015. html .
__________ (2015f). 2014 Education Statistics Freeland, N. and B. Khondker (2015). Launch of
Report, Statistical Report No. 28:2015. Lesotho’s National Social Protection Strategy.
Pathways’ Perspective on social policy in
Central Bank of Lesotho (2015a). Data shared international development, Issue No. 18.
directly by the Bank.
Inter-Parliamentary Union (2015). http://ipu.org/
__________ (2015b). Lesotho Economic Outlook wmn-e/classif.htm.
2015-2017.
ITC (2015). Authors’ calculations based on ITC
Doyle, H.E. Dr. Michael (2015). Remarks by the MAcMap database. http://www.macmap.org
Ambassador and Head of Delegation of the
European Union to the Kingdom of Lesotho at
25
KPMG (2015). Lesotho 2015 Quarter 1 Report. (2015). Aid, Trade and Development Indicators
KPMG Africa. for Lesotho, in Aid for Trade at a Glance 2015:
Reducing Trade Costs for Inclusive, Sustainable
Lesotho Highlands Development Authority (2015). Growth. Paris: OECD Publishing.
http://www.lhda.org.ls/Phase1/.
Public Eye News (2015). Available from www.
Lesotho National Development Corporation (2014). publiceyenews.com/site/2015/07/03/metolong-
NEWS July-Sept 2014. water-project-nears-completion.
__________ (2015). Available from http://www.lndc. Tlale, N. (2012). Health Care System and Plans
org.ls/content/water-bottling. for Medical Education in Lesotho. Presentation
delivered at the third meeting of the Consortium of
Millennium Development Goals. Database accessed New Southern African Medical Schools (CONSAMS).
on 31 July 2015. http://mdgs.un.org/unsd/mdg/ Gaborone. Available from http://consams.org/
Data.aspx documents/botswana/session5_N.T._Lesotho.pdf.
Ministry of Development Planning (2012). National UNCTADStat (2015). Authors’ calculations based on
Strategic Development Plan 2012/13-2016/17: statistics from UNCTADStat database.
Growth and Strategic Development Framework.
United Nations Educational, Scientific and Cultural
Metolong Authority (2015). http://www.metolong. Organization Institute for Statistics (2015). Database
org.ls/projects.html. accessed on 22 October 2015. http://data.uis.
unesco.org/
Ministry of Finance (2015). Budget Speech
to Parliament for the 2015/2016 Fiscal Year. United Nations, Department of Economic and
Available from http://www.lra.org.ls/Downloadable_ Social Affairs (2016). World Economic Situation and
Docs/Adverts/LESOTHO%20GOVERNMENT%20 Prospects 2016.
%20−%202015%20BUDGET%20SPEECH%20−%20
MINISTER%20OF%20FINANCE.pdf?FileID=32662 United Nations Development Programme (2015).
Human Development Report 2015: Work for Human
Ministry of Health (2015), Lesotho Demographic and Development. Sales No. E.15.III.B.1.
Health Survey: Key Indicators 2014.
United Nations Statistics Division (2015). Authors’
Ministry of Health and Social Welfare (2005), Lesotho calculations based on statistics from UN Comtrade
Demographic and Health Survey 2004. database. Available from http://comtrade.un.org
and national accounts data available at http://data.
__________ (2010), Lesotho Demographic and un.org.
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Ministry of Water Affairs (2015). Lesotho Water Sector Improvement Project: additional
Meteorological Services. http://www.lesmet.org.ls/ financing. Washington, D.C.: World Bank Group.
cimatology/climate-lesotho.
World Bank (2015). Lesotho: Systematic Country
Organization for Economic Cooperation and Diagnostic. Washington, D.C.: World Bank Group.
Development and World Trade Organization
26
ANNEX I
Major projects and programmes focusing on improving access to water
Metolong Dam and Water Supply Programme Lowlands Rural Water Supply and Sanitation Project
- Total initial cost of US$ 200 million, currently estimated at US$ 430 million (according to - Estimated cost of US$ 17.16 million
CDM Smith)
- Financed by African Development Fund, World Bank and Government
- Funders: Governments of Lesotho and South Africa, European Investment Bank, Millen- of Lesotho
nium Challenge Corporation, World Bank, Arab Bank for Economic Development in Africa,
Organization of Petroleum Exporting Countries Fund for International Development, - Bound to benefit directly 65,000 Basotho living in villages along the
Kuwait Fund, Abu Dhabi Fund and Saudi Fund Metolong Dam pipelines in Berea and Maseru districts, 75 per cent of
which do not yet have an adequate level of clean water and sanitation
- Water treatment plant with a capacity of 75 million liters of water per day
- Completion expected by the end of 2017
- Downstream conveyance system to Maseru, Roma, Mazenod, Morija, Teyateyaneng
- Central part of the Lesotho Lowlands Water Supply Scheme (LLWSS), which aims at
providing more than 1.2 million people with access to clean water by 2020
Urban and Peri-Urban Water Supply Network Rural Water Supply and Sanitation Project
- Part of Water Supply Projects of a total budget exceeding US$ 164 million - Part of MCC’s Water Supply Projects
- Financed by the US’s Millennium Challenge Corporation (MCC) through the Lesotho - Targeted a total population of 160,000, providing improved water
Millennium Challenge Account and sanitation services to nearly 27,500 households, scattered over 250
villages
- Implemented in 11 urban centres, providing approximately 41.5 per cent of urban dwell-
ers with access to reliable water supply services - Construction of up to 30,000 Ventilated Improved Pit (VIP) latrines
Maseru Wastewater Project The National Indicative Programme (NIP) for Lesotho
- The total cost of nearly 33 million euro - Total budget of 142 million euro spread over 2014-2020, of which 78
million euro for the expansion of water supply and sanitation infra-
- Co-financed by European Investment Bank, European Union and the Government of structure and rain water collection
Lesotho
- Funded by the EU through the 11th European Development Fund
- Aiming to increase by 2015 the sanitation coverage in the capital from 49 to 85 per cent,
with over 100,000 Maseru inhabitants directly profiting from the project - The focal areas of water, energy and governance for development
cooperation
- 3,100 households provided with dry sanitation system toilets
Sources: Metolong Authority, Water and Sewerage Company Lesotho, European Investment Bank, Millennium Challenge Corporation,
European Union Delegation in Lesotho, the Lesotho Review.
27

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COUNTRY PROFILE 2015

Tel: +251 11 544-9900

© 2016 Economic Commission for Africa

Material in this publication may be freely quoted or reprinted. Acknowledgement is

Lesotho at a glance vii

2. National and subregional context 2

5. Major policy challenge: water for economic transformation 19

6. National data quality evaluation 24

General information Rankings

CAPITAL AND FINANCIAL ACCOUNTS

GENDER SCORECARD OF THE AFRICAN UNION COMMISSION

in 2012 and stabilizing at 3.3-3.4 per cent in 2013-

construction and services, boosted by extensive

Box 1: Africa regional integration index: Lesotho

Figure 2: Gross value added shares and growth (2014)

Source: Lesotho Bureau of Statistics.

Figure 3: Demand shares and growth (2013-2014 )

-100 -50 0 50 100 -10 -5 0 5 10

Box 2: Forecast for Lesotho economy

Forecasted GDP growth rates by institution Forecast error

Table1: Lesotho fiscal accounts, millions of maloti

(Central Bank of Lesotho, 2015b). 6 Central Bank

3.3 Inflation and monetary policy 2

In terms of monetary policy, the country has very 0

Common Monetary Area. This integrated market

Figure 6: Foreign trade (2012)

Chemicals 10.1% Manufactured goods 7.5%

Source: Lesotho Bureau of Statistics.

increasing number of infrastructure projects. In Figure 7: Financial account balance, (2010-2014)

international prices pick up and new construction 1,193

electronics and diamonds (see figure 6). -1,359

On account of the depreciating currency, however,

poverty levels and inequalities, in February 2015

Box 3: The National Social Protection Strategy in Lesotho

4.3 Health children; and they are greater among children in

With low rates of tuberculosis prevalence and no 4.4 Education

methodologies. 18 National data are not available.

budget (Ministry of Finance, 2015)). On the one 60

hand, the pupil-teacher ratio has improved over 40

the years, reaching 33 and 24 for primary and 20

4.5 Gender scorecard of the African Union Commission*

Source: Bureau of Statistics, 2015c.

Box 4: The water bottling sector presents a lucrative business opportunity

• Finally, to preserve the high quality of water,

Methodological note on data quality evaluation

Demography Value Evaluation Education and employment Value Evaluation

Proportion of pupils starting grade 1 who reach last grade of

Proportion of own-account and contributing family workers in

Maternal mortality ratio (per 100,000 live births) 1143 (2011) 1

Gross fixed capital formation (billions of

Data sources code index

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