As Lesotho’s coalition government led by Thomas Thabane and the All Basotho Congress (ABC) enters its third year, the political landscape continues to stabilise. The current atmosphere of peace and cooperation is founded on good governance and a commitment to engage in dialogue which seeks to find solutions to political and socioeconomic issues. The reform process, which has been guided by the Southern African Development Community (SADC), encompasses issues such as the constitution, security, judiciary, economy and media.
In recognition of Government’s achievements in seeking to secure justice and the rule of law, the United States and the Millennium Development Corporation have re-selected Lesotho for the development of a second compact. Representatives from Lesotho’s Government are expected to travel to the US in May 2019 to sign the Compact II Agreement, with a host of new development projects to begin in mid-2020.
Several financing agreements have been signed to support child grants, the roll-out of road infrastructure, reticulation of water to households, empowering civil society in its function of mediation, and improving tax administration. Furthermore, the Ha Belo Industrial Hub has been launched and a contractor selected. Other important development projects include the construction of the Mpiti-Sekake to Sehlabathebe bitumen road and the 40-megawatt solar-power investment at Ha Ramarothole. In addition, a private investor, OnePower, has been selected to produce 20 megawatts of solar electricity.
Future growth is premised on activities under Phase II of the Lesotho Highlands Water Project (LHWP), which has recently kicked off following the awarding of the construction contract for the North-East Access Road to the Polihali Dam site. Further, the strong performance of the diamond mining industry should buoy growth as existing mines ramp up production and the Mothae Mine begins commercial production.
While Lesotho faces a variety of global and regional macroeconomic challenges, Government is working to create jobs in the private sector through a judicious mix of economic and structural policies. The four chosen priority sectors for accelerated employment generation include: commercial agriculture; manufacturing; tourism and creative arts; and technology. The Second Private Sector Competitiveness and Economic Diversification Project is currently being implemented with the assistance of the World Bank in order to drive development in selected non-textile sectors with the aim of increasing private sector investment, firm growth and job creation.
Spurring economic growth and diversification as well as improving export competitiveness is at the forefront of Government’s development initiatives. The economic ministries are concentrating their efforts on escalating domestic and foreign private investment. This includes dialogue with the private sector, focusing on jobs to be created and investor needs, and has seen the establishment of the Investment Climate Reform Committee, which is addressing issues such as a lack of start-up and working capital, among others. The launch of the Lesotho Standards Authority during 2018 will help support investors in the manufacturing sector, particularly those focusing on exports to South Africa and further afield.
The National University of Lesotho (NUL) Innovation Hub launched in November 2018 provides a platform for the incubation of businesses from conception up to mass production. A number of successful projects have already been incubated at the Hub and have achieved market exposure.
Technology is also at the forefront of development initiatives to improve the business climate as well as government capability and efficiency. In this regard the new Lesotho Government e-Portal, comprising a website, intranet and e-services, went live on 22 November 2018. The online service component includes Tourism Licensing e-services, a Labour Skills Data Base and already existing linkages from other ministries and parastatals, such as the e-Visa provided by the Ministry of Home Affairs and e-Customs by the Lesotho Revenue Services.
Developments in the financial sector highlight capital and financial markets, financial institution supervision and regulation, and non-bank financial institutions. The Credit Bureau is now operational, and the Maseru Securities Market (MSM) has been launched. Although the potential of the MSM is yet to be exploited, it promises to become a powerful vehicle for raising capital and also diluting Government’s shareholding in privatised companies. Furthermore, the Payment Systems (Issuers of Electronic Payment Instruments) Regulations of 2017 will focus on strengthening mobile money regulation in the country.
Lesotho’s future growth is highly dependent on attracting increased attention from global and regional investors, and it is thus important that the opportunities which presently exist for private sector investment are marketed and promoted to potential investors and business leaders. The Lesotho Review provides a comprehensive overview of the country’s business climate and major economic sectors, as well as current policies, development programmes and investment incentives, making it the ideal medium for showcasing Lesotho as a viable investment destination to the business community and investors worldwide.