Overview

  • Lesotho is a small, mountainous, and landlocked country, surrounded by its much larger neighbor, South Africa. It has a population of about two million, and a per capita gross domestic product (GDP) of $1,318. Lesotho is classified as a lower-middle-income country. It is mostly highlands, with its lowest point 1,400 meters above sea level. Previously a British protectorate, the nation gained its independence in October 1966. Lesotho is a constitutional monarchy, ruled by a King as Head of State, and governed by a 33-member Senate and a 120-member National Assembly. Lesotho held elections in June 2017 for the third time in a period of five years starting from 2012. This led to the formation of a four-party, coalition government, led by Prime Minister Thomas Thabane. In keeping with recommendations made by the Southern African Development Community (SADC), the Government of Lesotho is currently undertaking key Constitutional and Security Reforms.  

    Economic growth

    Over the past four years, Lesotho’s economy has faced challenges emanating from political instability and a prolonged period of slow growth in South Africa, which has led to falling Southern Africa Customs Union (SACU) revenue and liquidity challenges. Economic growth from 2015 to 2017 averaged 1.7%. A 0.6% of GDP revenue contraction was experienced in 2017/18 fiscal year as a result of a contraction in agriculture output and fiscal challenges. Growth is projected to recover modestly in the next three years boosted by an increase in construction associated with the second phase of the Lesotho Highlands Water Project, a second compact from the Millennium Challenge Corporation and diamond mining. Unemployment remains high at 24 to 28%, coupled with high inequality and poverty. Lesotho made progress in poverty reduction in the 2000s by lowering its headcount poverty rate ($1.9/day PPP) from 61.3% in 2002 to 59.7% in 2011. Estimates for 2018 suggest that 53.7% of the population is still trapped under the $1.90 poverty line. 

    Development Challenges

    The country finds itself at a crossroads needing new engines for growth, a more streamlined role for the state, and a dynamic private sector to help it seize opportunities in regional and global markets. Lesotho has made important progress in improving its Doing Business indicators, especially in terms of streamlining business and property registration processes that hinder the growth of local businesses as well as foreign direct investment (FDI). However, more progress is needed to improve the business environment and achieve the country’s development goals. The decline in Southern African Customs Union (SACU) revenues continues to pose a challenge to the country's fiscal outlook: SACU revenues fell from 24% of GDP in 2014/15 to an estimated 17.2% of GDP in 2017/18 and is projected to decline further to 15.8% of GDP in 2019/20.

    As part of the budget bill for 2019/20, the government outlined some measures to reduce recurrent expenditures and scale up domestic revenue. However, stronger fiscal consolidation efforts would entail rationalizing the wage bill. Such consolidation, in addition to structural reforms, financial reforms, and the reconciliation of fiscal and financing data could open the way for broader support from development partners. The support would help the government to cushion reserves (which have severely fallen with lower SACU revenue.)

    Lesotho’s greatest health challenge remains its high HIV/AIDS prevalence and tuberculosis (TB)co-epidemic. The HIV prevalence rate in Lesotho is 25% in the adult population (15-49 years), the second-highest in the world. The incidence of TB stands at 724 cases per 100,000, according to the 2017 Global TB report, the second-highest globally. While high health costs contribute to the narrowing of the fiscal space, high HIV/AIDS and TB rates contribute to persistently high inequality and poverty. 

    lastupdated: Mar 25, 2019

  • Development Strategy: Lesotho’s vision

    The Lesotho government’s development goals are reflected in its Vision 2020 and in the National Strategic Development Plan (NSDP).

    World Bank Group Strategy

    The World Bank Group (WBG) completed a Systematic Country Diagnostic (SCD) in 2015, which underpins the Country Partnership Framework for 2016-2020.

    World Bank Group Portfolio

    The portfolio composition of Lesotho is made up of a total of 10 projects, with a total commitment of $192.30 million, of which about $86.2 million is disbursed.

    Projects include the Second Private Sector Competitiveness and Economic Diversification Project, the Lesotho Education Quality for Equality Project, the Lesotho Health Sector Performance Enhancement Project, the Public Financial Management Reform Project, the Southern Africa Tuberculosis and Health Systems Support Project , the Smallholder Agriculture Development Project , the Public Sector Modernization Project, the Social Assistance Project, the Agriculture Productivity Program for Southern Africa and the Lesotho Transport Infrastructure and Connectivity Project.

    lastupdated: Mar 25, 2019

  • Health Sector

    The Health Sector Performance Enhancement Project has been implementing a quality improvement program in service delivery in health facilities. Under this program and in synergy with a Performance-Based Financing (PBF) scheme rewarding quality of care, interventions include: 1) developing a new quality checklist and strategically revising its components’ weighting; 2) continuously training health care workers; 3) measuring clinical skills and processes; 4) providing training materials (such as mannequins and vignettes) and, 5) providing mentorship to hospital staff. 

    Whilst initial assessment of the skills and knowledge of participating hospitals was very low, they have substantially improved over time, from 72.1% to 81.2%. The eight district hospitals and the Public Private Partnership Queen ‘Mamohato Memorial Hospital (QMMH) showed tremendous progress in the reduction of institutional maternal mortality. Hospital staff have institutionalized regular quality reviews in their facilities. Data collection has improved, and hospitals conduct regular mortality reviews and audits to learn how to improve maternal care management and referrals. This work has been undertaken with contributions from UNICEF and UNFPA.

    Social Protection

    The Social Assistance Project aims to support the Government of Lesotho in improving the efficiency, equity and shock-responsive function of selected social assistance programs and, in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. Through the project and In partnership with UNICEF and the European Union, the Government of Lesotho has been able to (i) successfully merge the Post Primary Bursary Program (PPB) and the Orphans and Vulnerable Children Program into one program under the administration of the Ministry of Social Development, hence saving important administrative costs; (ii) expand coverage of the Child Grant Program (CGP) from 27,000 households to approximately 38,000 households, (iii) increase coverage of the National Information System for Social Assistance (NISSA) to more than 75% of Community Councils in the country: (iv) remove more than 6,000 dead beneficiaries from the Old Age Pension database, saving the equivalent of US$3.6 million; (v) conduct data cross-match with the Civil Service Pension to identify and remove double dippers; (vi) pilot a proof of life process whereby OAP pensioners without a national ID would get one; (vii) create the Department of Social Assistance, within which all managerial positions have been filled.

    The project has also financed emergency top-ups to CGP recipients in the amount of$1.9 million. A total of 27,000 beneficiaries received CGP top-up payments for two consecutive quarters, to help them mitigate the negative effects of the 2015/16 El Nino drought. 

    lastupdated: Mar 25, 2019

  • Partners in Lesotho include members of the diplomatic corps, consular missions, and international organizations. Presently, there are four Embassies/High Commissions and nine international organizations, of which seven are from the UN family, and the other two are the Delegation of the European Union and the World Bank. Development Cooperation is coordinated by the Ministry of Development Planning.

    lastupdated: Mar 25, 2019

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Additional Resources

Country Office Contacts

Main Office Contact
Letšeng Diamonds House,
Second Floor,
Corner Kingsway and Old School Road
Maseru 100, Lesotho
+266-2221-7000
For general information and inquiries
Elita Banda
Communications Associate
+266-2221-7000
ebanda@worldbank.org
For project-related issues and complaints
lesothoalert@worldbank.org