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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 nominal per capita gross domestic product (GDP) of $1,299.

    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 4, 1966. A constitutional monarchy, Lesotho is ruled by a king as Head of State, and the Prime Minister as Head of Government, governed by a 33-member Senate and a 120-member National Assembly. Elections were held in June 2017 for the third time in five years, leading 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 is currently undertaking key constitutional, security, parliamentary, judicial, public sector, economic and media sector reforms.  

    Economic growth

    In recent years, Lesotho’s economic performance has been negatively affected by sluggish global economic growth amid a major downturn in both emerging markets and advanced economies. Furthermore, sustained political instability in the country, coupled with slow economic growth in the South African economy, also contributed to slow economic performance. Real GDP growth rate is estimated to have averaged 1.6% between 2015–2019 and it is projected to average 0.6% between 2019–2021, largely attributed to the expected negative impact of COVID-19 (coronavirus).

    In the medium-term, economic growth is expected to be boosted by construction-related projects including construction works associated with the second phase of the Lesotho Highlands Water Project (LHWP II), the Lesotho Lowlands Water Development Projects (LLWDP -I and-II), and government roads. The water and electricity subsectors are expected to be boosted by green energy projects, while the tertiary sector is envisaged to be supported inter alia by government initiatives to reinforce financial inclusion.

    Unemployment remains high at 23.6% in 2018 coupled with high inequality and poverty. The national poverty rate declined from 56.6% in 2002 to 49.7% in 2017. Urban areas registered strong poverty reduction of 13 percentage points, while rural areas poverty rates levels decreased marginally by 0.6 percentage points, leading to wider urban-rural inequality.

    Over the same period, extreme poverty declined from 34.1 to 24.1% while the poverty gap declined from 29.0% to 21.9% leading to a lower Gini coefficient, hence the narrowing in the income inequality in the country. As such, Lesotho is more equal than its neighbors, with a Gini coefficient of 44.6. However, it remains one of the 20% most unequal countries in the world.

    Development Challenges and Risks

    COVID–19 poses some challenges to global health systems as well as social and economic prospects at large. This has spillover effects onto Lesotho by way of slower economic activities and risks to vulnerable people.

    Lesotho’s economy is significantly open to global trade.COVID-19 is expected to impact supply chains, thus hampering trade, as most textiles and apparel firms in Lesotho source raw materials from China, which is the epicenter of the COVID-19. Furthermore, commodity exports to major economies such as Euro Area and the United States are most likely to be negatively affected. The tourism sector is also expected to be negatively affected by the advent of COVID-19.

    High HIV/AIDS prevalence and tuberculosis remain Lesotho’s greatest health challenge. The HIV prevalence rate in Lesotho is 25% percent in the adult population (15-49 years), the second highest in the world. The incidence of TB stands at 611 cases per 100,000, according to the World Health Organization’s Global TB report 2019. While high health costs exert more pressure to the fiscal burden, high HIV/AIDS and TB rates continue to contribute to persistently high inequality and poverty. 

    Last Updated: May 10, 2020

  • Development Strategy: Lesotho’s vision

    The Lesotho government’s development goals are reflected in its Vision 2020 and in the second National Strategic Development Plan (NSDP-II) 2018–2023.

    World Bank Group Strategy

    The World Bank Group (WBG) completed a Systematic Country Diagnostic (SCD) in 2015, which underpins the Country Partnership Framework (CPF) for 2016-2020. A new SCD is being conducted, the results of which will underpin the CPF for 2021–2025.

    World Bank Group Portfolio

    The portfolio composition of Lesotho is made up of a total of 10 projects, with a total commitment of $344.80 million, of which about $101.39 million is disbursed.

    Projects include the Second Private Sector Competitiveness and Economic Diversification Project, the Lesotho Education Quality for Equality Project, the Southern Africa Tuberculosis and Health Systems Support Project  , the Smallholder Agriculture Development Project-II, the Public Sector Modernization Project, the Social Assistance Project, the Agriculture Productivity Program for Southern Africa, the Lowlands Water Development Project -II, the Lesotho Renewable Energy and Energy Access Project  and the Lesotho Transport Infrastructure and Connectivity Project.

    Last Updated: May 10, 2020

  • Health Sector

    The Health Sector Performance Enhancement Project (HSPEP) has closed and is transitioning towards a Nutrition and Health System Strengthening Project. Building on the success of the quality improvement program piloted under the HSPEP, the new project will implement a quality reward system and a multisectoral package of nutrition specific and sensitive interventions.

    Lesotho’s overall progress since the Southern Africa Tuberculosis Health System Strengthening Project was launched in December 2016 is satisfactory. Overall performance include notable achievements: (i) a four-fold increase in the number of bacteriologically confirmed TB cases over the past three years, which is a marker of quality improvement; (ii) the National TB Reference Laboratory (NTRL) successfully upgraded to bio-safety level three standards and human resource capacity for the laboratory management strengthened; related to this, the NTRL and Mafeteng and Motebang labs have progressed towards accreditation to three stars and above; (iii) intensified roll-out of community-level TB case finding, which led to a 63% increase in the number of presumptive clients analyzed by Gene Xpert and an increase of 214% of TB cases detected between project baseline and the midterm review.

    Social Protection

     

    The Social Assistance Project aims to support the government  to improve 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. In partnership with UNICEF and the European Union, the government has been able to (i) successfully merge the Post Primary Bursary Program (PPB) and the Orphans and Vulnerable Children Program into one, saving important administrative costs; (ii) expand coverage of the Child Grant Program (CGP) from 27,000 households to approximately 42,000 households, (iii) increase coverage of the National Information System for Social Assistance (NISSA) to all Community Councils in the country: (iv) deactivate more than 12,000 names of deceased beneficiaries from the Old Age Pension (OAP) database, saving the equivalent of $7 million; (v) support the automation of data cross-match between the Civil Service Pension and the OAP to identify and remove double dippers; (vi) pilot a proof of life process whereby approximately 5,000 OAP pensioners and their proxies without national identification were provided with one; (vii) support the creation of 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.

    Last Updated: May 10, 2020

  • Partners in Lesotho include members of the diplomatic corps, consular missions, and international organizations. Presently, there are five 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: May 10, 2020

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LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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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
Zandi Ratshitanga
Sr. External Affairs Officer
+27 (0)12 742 3100
zratshitanga@worldbank.org
For project-related issues and complaints
lesothoalert@worldbank.org