Overview

  • Overview

    Lesotho is a small, mountainous, and land-locked country, entirely surrounded by its much larger neighbor, South Africa. It has a population of about 2 million and a per capita GDP of $1,020. Lesotho is classified as a lower-middle-income country. It is mostly highlands, with its lowest point 1,400m 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 for the third time in 5 years. This led to the formation of a four-party, coalition government, led by Prime Minister Thomas Thabane. In keeping with recommendations for key governance and security reforms, made both by the Commonwealth and the Southern African Development Community (SADC), Lesotho’s leadership has committed itself to engaging in multi-stakeholder consultations to inform the reforms.   

    Economic growth

    Lesotho registered an average growth rate of 4.5% from 2011 to 2015. But growth has slowed since 2015 from 5.6% to 2.3%, due to modest growth in the services sector and drought, as well as weak regional and global growth. Domestic growth is, however, expected to pick up in 2017 and 2018 to a projected 4%, boosted by an increase in construction and 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 CY02 to 59.7% in CY11, though estimates for 2016 suggest that 57.8% of the population is still trapped under extreme poverty. 

    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 in incoming Foreign Direct Investment (FDI). However, more progress is needed to improve the business environment and achieve the country’s development goals. The decline in South African Customs Union (SACU) revenues pose a challenge to the country's fiscal outlook: revenues fell from 25% of GDP in 2014/15 to 13.6% of GDP in 2016/17, and are expected to remain low in the medium term. With public spending at 50% of GDP in 2016/17, and a wage bill of 18% of GDP, government’s ability to drive growth further is limited. As part of the budget bill for 2017/18, the government is taking additional measures to control public spending, and has made a commitment to implement reforms as part of the 2018/19 and 2019/20 budgets to maintain macroeconomic stability and fiscal sustainability.

    Lesotho’s greatest health challenge remains its high HIV/AIDS prevalence and 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 788 cases per 100,000, according to the 2016 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. 

    Last Updated: Oct 10, 2017

  • 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) approved in March 2012.

    World Bank Group Strategy

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

    World Bank Group Portfolio

    The portfolio composition of Lesotho is made up of a total of nine projects, with a total commitment of $182.44 million, of which about $80.34 million is disbursed.

    The projects are: the Lesotho Private Sector Competitiveness and Economic Diversification Project (PSCED-II), the Lesotho Education Quality for Equality Project, the Water Sector Improvement Project Phase II, 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 Financial Management Reform Project, and the Social Assistance Project.

    Last Updated: Oct 10, 2017

  • Agricultural Sector

    The Lesotho Smallholder Agriculture Development Project supports smallholder farmers in targeted areas of Lesotho, with the goal of helping them exploit what opportunities they have to increase their production and diversify their farming into market-oriented agriculture. To date, the $24.46 million project has benefited more than 55,000 farmers in 4 of the 10 districts of Lesotho.

    Private Sector

    The Second Private Sector Competitiveness and Economic Diversification Project aims to contribute to the development of select, non-textile sectors in Lesotho, which could result in increased private sector investment, the growth of firms, and more job creation. The project has endeavored to catalyze growth in the horticulture sector in Lesotho, particularly in the deciduous fruit market. Three pilot projects, from 2007 to 2013, evaluated the feasibility of growing fruit and identified promising fruit varieties and afro-climate locations, after which the project was scaled up to several farms, achieved GLOBAL G.A.P certification, and began the commercial sale of apples, plums, peaches, and apricots in Lesotho and neighboring South Africa. To date, there has been interest from commercial investors and international distributors in the farmers involved.

    Last Updated: Oct 10, 2017

  • 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.

    Last Updated: Oct 10, 2017

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LENDING

Lesotho: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
Lesotho Country Office
UN House
13 United Nations Road
Maseru 100, Lesotho
+266-2221-7000
Lesotho
Elita Banda
Communications Associate
+ 266-222-17000
ebanda@worldbank.org
Washington
Emmanuel Ngankam
Country Program Coordinator
1818 H Street, NW
Washington, DC 20433
+1-202-458-7654
enoubissie@worldbank.org