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the Change Drivers


Socio-economic context

Lesotho is a Kingdom situated in the Eastern part of Southern Africa, and is surrounded by the Republic of South Africa (RSA). The kingdom covers 30,350 km2 of 60% represents rangelands, 9% arable land and the remaining part mainly mountains and steep hills. The country is divided into four regions; the lowlands along the western plateau, the Senqu valley, the foothills and the mountains. The altitudes vary from 1,500 metres to almost 3,400 metres. Due to the high altitudes, many houses need to be heated for large parts of the night.

It is estimated that Lesotho has a population of 2.6 million. The population growth rate is around 2,6% per annum. The average population density in Lesotho is 69 persons per km2. This rises to 745 persons per km2 on arable land. Literacy in Lesotho is among the highest in Africa. In 1997/8, the Lesotho Government successfully completed 239 classrooms at primary level, as well as 2 government high schools in the last fiscal year. Seventy five percent (75%) of all children are enrolled in the primary education. Nevertheless, the quality of primary education is reported to be declining. Additionally, problems with school dropouts and pupils repeating classes are growing. The primary health care system supports more than 80% of the population. As in most African countries, the prevalence of AIDS is increasing with 3,563 cases reported in December 1999 (Ministry of Health: Lesotho Disease Control STD / AIDS Unit). A prevention and control programme has been put into effect.

The country has rich water resources in the mountains. Some of this resource is utilised by the Lesotho Highlands Water Project (LHWP), which exports to industrial centres situated in RSA. In the 1996 / 7 financial year, the Lesotho Government received a royalty payment of M 142.8 million for these water exports. A 72 MW hydropower plant has been constructed at Muela in the northern part of the country and the plant came on stream in 1998 and now covers the major part Lesotho’s need for electrical power, thereby reducing the country’s dependence on imported coal-based power from SA.

Other exportable natural resources include sandstone, diamonds and clay, the latter being processed into bricks and ceramic tiles. The closure of the De Beers large operation in 1982 has resulted in a decrease in diamond production: mining activity was left to small-scale diggers co-operatives at Liqhobong. Average production is now 11,000 carats per year, valued at M 7 million. These figures are expected to improve as the Letseng-la-Terae mine resumes its large-scale operations (a South African Company has been awarded the contract to manage this process).

Although the tourist industry is not fully developed, attractions such as bushman paintings, dinosaur footprints, wildlife and environmental parks and pony trekking could support an eco-tourism industry. Despite this potential, however, relatively few tourists are recorded each year. The recent licensing of gambling in many of SA towns is likely to affect the gambling-related revenues in the country as in the past the majority of tourists came to gamble at Lesotho’s hotels.

The Government sector is the main formal employer in the country. Its workforce consists of civil servants, teachers, daily paid workers and the armed forces. Employment in the manufacturing sub-sector is mostly accounted for by labour intensive, export-oriented companies assisted by the Lesotho National Development Corporation (LNDC). At the end of 1998, employment generated by these firms was estimated to have slightly declined from the 1997 level of 18,113 people. Firms assisted by the Basotho Enterprise Development Corporation (BEDCO) employed 692 people in 1998 compared with 616 in 1997. Agriculture and the informal sector in the rural and urban areas employ about 72% of the country labour force.

Unemployment is estimated at 42% of the labour force, and it is expected to grow further due to rising youth unemployment and the continuing retrenchment of Basotho migrant workers in the mines of RSA (see below). The problem is further exacerbated by the rapid migration from the rural to urban areas, and general increase in population. It is believed that 22,000 to 25,000 people enter the labour force every year, while the economy has the capacity to generate only 6,000 jobs per year. Job creation in the formal sector is about 1,000 new jobs per annum.

National development and economic objectives

The sixth National Development Plan (1996/97 - 1998/99) states that the primary objective of national policy is to enhance sustainable human development. It further outlines the objectives of human development as enabling people to:

Lead long and healthy lives

Acquire knowledge, and

Have resources needed to accommodate acceptable levels of human needs

The Government of Lesotho’s Vision 2020 document (3) outlines the pathway to the achievement of its vision, which has been provisionally stated as follows: Lesotho shall be a democratic, peaceful prosperous, secure and self-reliant nation by the year 2020. These strategies will seek to promote:

Employment creation. This should be achieved through the utilisation of labour intensive methods, creation of sustainable employment schemes and programmes, promotion of rural development opportunities and establishment of programmes targeted at small and medium scale enterprises.

Sustainable human capacity enhancement. This should be achieved by ensuring that appropriate education and training and excellent health services are accessible to all.

Sustainable development and growth from own resources. Aggressive programmes for entrepreneurship should be embarked upon, as well as programmes to intensify and diversify agricultural production. Local materials and resources should be cost-effectively used and aggressive environmental management practices should be adopted. The tourism industry should also be promoted.

Reform, democratisation and empowerment. The democratic dispensation and modern institutions should be aligned with chieftainships. Law enforcement structures should be enforced, and plans to establish local governments should be given priority.

Poverty reduction continues to be the major national development objective and is seen as a major component of sustainable human development. Growth in employment is considered critical to sustainable human development.



Lesotho’s economy

In economic terms, Lesotho is one of the world’s least developed countries. The Gross National Product (GNP) in 1997 was Maloti 4,740 million, equivalent to about US$ 790 per capita. In 1998, the Gross Domestic Product (GDP) had declined in real terms by 5.5% to US$ 747. The nominal GDP, however, increased somewhat over the 1997 level, reflecting a domestic inflation rate of about 9%. The average nominal income per person amounted to M 3,133 (US$ 570), which was slightly lower than the 1997 level (Central Bank of Lesotho Annual Report 1999).

In 1996 / 97, manufacturing export grew at an average of about 18% per annum, but in 1997 / 98 dropped to 6% and to 2% in 1998 / 99. On the other hand, the sub-sector’s contribution to the Gross Domestic Product rose from 14% in 1993 / 94 to an average of 17% per annum during 1994 / 95 to 1997 / 98. This was largely attributable to the activities of the LHWP exports in 1998, which had shown a steady growth in earlier years declined by 7.6% in volume.

The country’s revenue base continues to depend disproportionately on customs revenue. For the past ten years customs receipts (including grants) have accounted, on average, for 54% of total government revenue, and has financed 78% of recurrent expenditures. Economic dependence on customs revenue is likely to be significantly affected by a number of events currently taking place in the world economy and including the outcome of the negotiations on the SACU Agreement, the European Union (EU) / South African Free Trade Agreement, the negotiations of a Post-Lorne relationship with the EU, the ratification and implementation of the SADC Trade Protocol and the anticipated next round of World Trade Organisation negotiations.

Lesotho’s economy is highly influenced by external factors. In general terms, the country’s overall economic performance is affected by trends in the world economy. The decline in world output from a growth rate of 4.2% in 1997 to 2.2% in 1998, for example, has resulted in decrease in volume of world trade from 9.9% in 1997 to 3.3% in 1998. In particular, Lesotho’s economy is influenced by the South African economy. The net income from abroad is largely derived from Basotho working in RSA’s mines. However, employment of migrant mine workers has been declining in the recent years. Current figures by The Employment Bureau of Africa (TEBA) offices show that the total number of contracts renewed in the first months of 1999 to be 22,8867 compared to 27,693 in the corresponding period last year. It is because of factors including:

increased mechanisation of mines (coal mines in particular)

mine closure due to escalating costs and falling mineral prices

retirement of senior migrants without recruitment of novices

offer of South African permanent residency to Lesotho migrant workers at their discretion

relatively high mine wages which now attract black South Africans in larger numbers than previously

Lesotho’s economy is also affected by internal developments and constraints. It is argued, for instance, that the liquidation of the Lesotho Agricultural Development Bank and the restructuring of the Lesotho Bank have had a significant impact on domestic economic productivity. Declining activity of the Lesotho Highlands Water Project (LHWP) has also affected the economic growth, as have reduced agricultural production, poor performance in public sector utilities, and political instability.

The relative share of agriculture to GDP has declined from 45% at the time of Independence to just 10% in 1992. Even accounting for the impact of drought, it is apparent that the sector’s contribution to GDP is in persistent decline.

In general, arable agriculture, which constitutes about 28% of agricultural GDP, is a low-input, low-output activity based upon cereal mono cropping for subsistence purposes. The most important crops are maize (the preferred staple), sorghum and wheat. Following a brief period of surplus at the turn of the century when Lesotho was a net grain exporter, productivity has persistently declined, accelerating alarmingly from the mid 1970s onwards. Yields have fallen and output growth since Independence (-1.5% per annum) has lagged far behind the dependence ratio of 32 in 1965 to 52 in 1990 (UNDP 1994). The prognosis is bleak, projections (Sechaba, 1994) indicate that, if present trends in population and agricultural production continue then, other things being equal, a continuing decline in Lesotho’s ability to feed itself is inevitable.

Livestock accounts for 78% of agricultural GDP and virtually all agricultural exports: mainly wool and mohair. Its contribution relative to arable agriculture has increased rapidly over the last thirty years. The increasingly skewed pattern of livestock ownership however means that the benefit of this activity is concentrated amongst relatively few Basotho.


The role and status of women

Women play a key role in household maintenance throughout the developing world - they collect water and fuel, and along with children are involved in agricultural production. In Lesotho, this role and the associated burden imposed on women are particularly acute given the large number of female headed households (27.6%) and the difficulties posed by a seriously degraded environment.

Women undertake a substantial proportion of agricultural activities and are extensively involved in the informal business sector. This importance is not matched by control over most disadvantaged in terms of access to land having user rights only through their husbands although many women have found strategies to cope with this such as share cropping or (illegal) leasing.



Definitions of poverty vary, although whichever criteria are adopted, a consensus emerges that poverty in Lesotho is widespread and increasing rapidly. UNDP estimates based on household income for 1990, suggest that 55% of all households (rural and urban) existed below the poverty line; a figure rising to 60% in 1994 (UNDP, 1994). A view was corroborated by a World Bank study completed in 1994 (World Bank, 1994a).

Perhaps the most comprehensive and compelling analysis of poverty in Lesotho has emerged from the local poverty mapping study, commissioned by government in 1990 (Sechaba Consultants, 1990). This survey, based on estimates of 20 indicators combining traditional and modern measures of wealth and poverty such as: food self sufficiency, cattle ownership, access to education and health facilities, ownership of household goods, the incidence of child malnutrition, revealed the following key dimensions of poverty:

The incidence of poverty is unequally spread across Lesotho - it is greatest in the central Mountains, followed by the more remote areas of the Foothills and Lowlands

Poverty is least in the urban areas, although it appears to be increasing rapidly in line with the expansion of population

Female headed households are more prone to poverty than male headed households

An update of the exercise in 1994 concluded that the situation is deteriorating rapidly. Household incomes are falling as a result of retrenchment from the mines of RSA and to a lesser extent as a consequence of the implementation of the SAP, while agricultural production has continued its persistent long term decline.

The prognosis is equally bleak:

without major improvements in agricultural productivity, per capita agricultural production will continue to decline

retrenchment from the mines in RSA seems set to continue leaving an impoverished rural population with reduced access to its traditional coping strategy of migrant labour. With estimates indicating that each migrant supports himself and at least five dependants (Setsabi, et al. 1992), the impact on household incomes is self evident

the domestic economy is unlikely to grow at a pace necessary to employ any more than 10 - 12,000 of the estimated 41,000 joining the labour force every year (World Bank, 1994).



The Ministry of Local Government is responsible for the current decentralisation process, which is in line with the development of democracy in the country and interpreted in the Constitution of Lesotho (Section 106). The process has three phases: conceptualisation, transition and post-election. The major goal of the process is to realise sustainable development under the control and management of the people who are directly affected, thus ensuring better coordination of development efforts and full participation of communities in poverty reduction efforts. The three objectives to be pursued are:

To ensure that decision making, resource allocation, district level planning, local development and public services move physically closer to the people

To deepen and open access to the structure of government, to give the electorate greater democratic control over the development planning process and to make public institutions more accountable to the elected representatives

To ensure equitable distribution of Lesotho’s human, institutional and infrastructure resources and capacity building



Privatisation in Lesotho aims at transforming the economy of the country in order to create an enabling environment for increased private sector participation in the development process, while limiting direct government intervention. This will foster the partnership between government and the private sector, labour and the public and generate economic activity. The objectives of the process are:

To phase out government subsidies and state control of commercial enterprises

To concentrate government effort and spending on the creation of a suitable health, education, legal and security environment for optimal economic growth

To introduce competition and discipline to promote increased production and improved service levels

To attract foreign capital and expertise

To broaden direct public participation in the economy


Policy Framework

Until very recently, Lesotho had never had a formally approved policy for its forestry sector. Notwithstanding this policy gap, the Government had always assumed the lead role in the development and maintenance of forest resources since 1876. This continues to be the case, with very little planting being done outside of government and international NGO supported initiatives. The adoption of a National Forestry Policy in 1997 marks a radical shift in direction by emphasising the role of communities in forestry management. In this policy, the government has firmly committed itself to local ownership of forest resources. To this effect, the Forestry Policy states:

It is the policy of the Lesotho Government to maximize, through actions consistent with other stated policies and development goals, the contribution that forests can make to the alleviation of poverty, livelihood security and environmental protection in Lesotho, and to enhance the participation and contribution of women in this endeavour.


Legal Framework

Land in Lesotho traditionally belongs to the people as a whole. The King as Head of State is vested with the responsibility of allocating land on behalf of the nation. The Land Act of 1979 grants Village Development Councils (VDCs) the authority to administer allocation of arable lands to individuals by issuing a permit known as 'Form C'. In so doing, it guarantees exclusive rights for a specified time period. Nonetheless, this license falls short of an officially registered title. The Land (Agricultural Lease) Regulations of 1992 enables a 90 year lease to be taken out on land, but this option is rarely applied to agricultural holdings.

Forestry activities and the status of tree ownership are governed by the Laws of Lerotholi and Forest Act of 1978. The latter, however, was enacted mainly to support the development of woodlots or Forest Reserves and does not cater for ownership of trees by communities or individuals. A new Forestry Act was drafted in 1996, in response to the policy changes proposed in the National Forestry Action Programme of 1996. The draft Forestry Act was discussed and agreed upon at a forestry workshop in Mohale’s Hoek in July- August 1996, and formally approved by the parliament in December 1998. It places tree ownership in the hands of the individual or group who planted the tree. It also empowers the Ministry of Agriculture, through the Chief Forestry Officer (CFO), to transfer ownership of trees, forest plantations or indigenous forest / woodland to groups or individuals, for a specified number of years and subject to certain terms and conditions. The CFO is to scrutinize applications and ascertain that candidates have necessary resources and management skills. Successful applicants would be required to follow a management plan approved by the CFO. Transfer of title shall be effected by means of a written agreement between the holder and Government. If the holder breaches the terms of the agreement, for example, by failing to manage the woodlot in a sustainable way as prescribed by the management plan, the government has the right to repossess the resource.

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