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publication December 18, 2019

Lesotho Poverty Assessment: Poverty and Inequality Remain Widespread Despite Decline

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STORY HIGHLIGHTS

  • A new Lesotho Poverty Assessment finds that poverty and inequality fell over a 15-year period, but half of the population continues to live in poverty and inequality remains high
  • Urban areas experienced greater poverty reduction due to improvements in education and increases in incomes from well-paying jobs, largely in the services sector, the report notes, while slow growth in agricultural incomes, a fall in remittances and weather shocks stalled progress in rural areas
  • The report recommends reforms that build resilience against economic and environmental shocks, as well as policies that increase access to quality education, create an enabling environment for private sector job creation, improve agricultural productivity, and strengthen linkages between farmers and buyers

MASERUDecember 18, 2019 – While Lesotho’s poverty rate is lower today than it was 15 years ago, poverty and inequality remain persistently high, according to a recently released Poverty Assessment produced jointly by the World Bank and the Lesotho Bureau of Statistics.  

The Lesotho Poverty Assessment: Progress and Challenges in Reducing Poverty, finds that the poverty rate in Lesotho fell from 56.6% to 49.7% between 2002 and 2017, driven by a reduction in inequality as a result of the expansion of the country’s social protection programs and an increase in wage incomes among the poor. However, poverty is still widespread and economic vulnerability persists with more than 75% of the population either poor or vulnerable to poverty.  

“We welcome this report which provides us with the necessary research to inform policies to improve the lives of Basotho,” said Hon. Tlohelang Aumane, Lesotho Minister of Development Planning“Both poverty and inequality have decreased in Lesotho but much more can be done to improve access to basic public services especially in the rural areas, where most of poor people live.”   

Urban areas experienced a 13-percentage point reduction in poverty from 41.5% to 28.5%, while in rural areas, poverty decreased marginally from 61.3% to 60.7%. Poverty increased in the Rural Highlands to 67.8% in 2017, an increase of 10.9 percentage points from 56.9% in 2002. It also increased in the Rural Senqu River Valley.

This assessment shows that between 2002 to 2017, urban areas experienced greater poverty reduction following improvements in education and increases in incomes from well-paying jobs largely in the services sector. During the same period, poverty in rural areas stagnated due to slow growth in agricultural incomes, a fall in remittances, which serve as a buffer when weather shocks occur, and vulnerability of the rural population to such shocks.

Poverty remains highly concentrated in rural areas where four out five of poor citizens live. According to the 2016 census, 66% of Lesotho’s two-million population lives in rural areas where agriculture plays a major role in livelihoods. Key challenges in the agriculture sector include climate change and environmental shocks. In 2015- 2016, Lesotho endured historically low rainfall, without which, the pace of national poverty reduction would have nearly doubled, based on a simulation done in this study.

The report also shows that despite the growing urban-rural poverty divide, inequality fell as a result of expansion of Lesotho’s social protection programs and an increase in wage incomes among the poor. Lesotho is now more equal than its neighbors, but with a Gini coefficient* of 44.6, it remains one of the 20% most unequal countries in the world.

“We see from this report that improving the livelihoods of Basotho through increasing access to better quality education, addressing high unemployment, increasing agriculture productivity and building resilience to climatic shocks would further reduce poverty,” said Marie Francoise Marie-Nelly, World Bank Country Director for Lesotho, Botswana, Eswatini, Namibia and South Africa. “As the World Bank we stand ready to support Lesotho’s efforts to reduce poverty in line with our twin goals of reducing extreme poverty and promoting shared prosperity.” 

The report makes several recommendations including:

  • improving the human capital of the poor through boosting learning in primary education, increasing secondary enrollment and competition among the poor and improving efficiency of spending on education
  • improving the business environment, access to finance, and facilitating labor mobility, and argues that targeted policies that boost entrepreneurship and promote skills are key to addressing high unemployment
  • improving harmonization and synchronization of Lesotho’s already extensive social protection programs, strengthening inter-agency collaboration and improving program delivery to build resilience and reduce exposure to shocks
  • transitioning from subsistence to commercial agriculture in the lowlands and the foothills, increasing use of productivity-enhancing agricultural inputs and strengthening linkages between farmers and buyers as well as creating a resilient landscape in the highlands

Building resilience against shocks could be achieved through responsive social protection and reducing exposure to shocks, the report notes. Sustainable interventions that are important for risk mitigation include land management practices, protection of forests and woodlands, irrigation and improved management of water resources.

*The Gini coefficient is a frequent measure of inequality. It attains the value 0 if all resources are distributed equally, and value of 100 if one person has all resources.