Country FilesSouthCountry Profile 2014: LESOTHO

Sat,20Jan2018

Posted on Tuesday, 04 February 2014 17:35

Country Profile 2014: LESOTHO

 Flag LesothoTurning water into good news

With major agreements in place for work to start on the second phase of the giant Lesotho Highlands
Water Project (LHWP), this mountainous country’s fragile economic prospects could yet be transformed. For the foreseeable future, Lesotho is set to keep expanding its supply of much needed hydroelectric power and water to South Africa.

 

 TABLE OF CONTENTS:

Top Lesotho Companies

Top Lesotho Banks

theafricareport-lesotho-72dpiTurning water into good news

Work is about to begin on the construction of the Polihali dam.

Growth prospects depend on the key export industries of diamonds and textiles

With major agreements in place for work to start on the second phase of the giant Lesotho Highlands
Water Project (LHWP), this mountainous country’s fragile economic prospects could yet be transformed. For the foreseeable future, Lesotho is set to keep expanding its supply of much needed hydroelectric power and water to South Africa. The resumption of work on this huge construction project also promises over the medium term to ease the pressure of unemployment, which is a permanent issue of concern in this small and isolated land.

Thanks to a recent rise in the highly variable revenues from the Southern African Customs Union (SACU), the economic outlook is much improved right now, with the IMF projecting growthof
4.1% in 2013 and 5% in 2014, although this very much depends on continuing strong growth in the country’s key export industries of diamonds and textiles.

 

KEEPING THE MARKETS OILED

A key player in forging the second phase of LHWP has been Timothy Thahane, a former finance minister who is now the cabinet minister responsible for energy, meteorology and water affairs. His role is essential in persuading financial markets to keep funding the scheme without impacting on the government’s budget. Predictably there has been much tussling in the current coalition government over the appointment of a new management team for LHWP itself, testing the political skills of prime minister Tom Thabane.

The second phase of the LHWP is scheduled to cost in the region of R12bn ($1.2bn) for the construction of the Polihalidam, a transfer tunnel to the existing Katse dam, a pump storage scheme to generate 1,200MW of power, and related social programmes.Work isexpectedto be completed in 2020 and will provide South Africa with 45.5 cubic metres of water per second to add to the current 24.6m3/s it gets from the LHWP. In October, plans were announced for a R400m ($40.7m) cement plant to support the
construction of dams and houses.

Whilst the LHWP promises to meet South Africa’s water and power needs – not least inthewater-deprived Gauteng province – Lesotho will now also reap more direct benefits for itself. Funding from the African Development Bank has been arranged for a renewable energy project rolledout in two communities in the country and a lowlands rural water supply and sanitation project.

The government remains committed to carrying out the five-year National Strategic Development Plan initiated by the previous government, which began in 2012. This pledges to create employment, develop infrastructure, enhance the skills base, improve health, reverse environmental degradation, adapt to climate change, promote democratic governance and build effective institutions. But the government still has a huge task ahead as, according to the Lesotho Bureau of Statistics, the country still has an unemployment rate of 25.3%.

 

NO DESERTERS

The All Basotho Convention (ABC) will notch up its second year of coalition government under Tom Thabane. Other members of his cabinet come from the Lesotho Congress for Democracy (LCD)
and the Basotho National Party (BNP). It has been something of anachievement that there have as yet been no cases of MPs deserting to join other parties – usually a regular occurrence in Lesotho.

When Thabane took office he promised reform and hopes were high among the labour unions. Subsequent pay rises have been rather muted. Although some transport workers now earn up to 83%
more than they previously did, there has been no more than a 9% increase for textile workers. With some 45,000 workers, the textile industry is the country’s biggest employer.

Increases in the price of diamonds this year came at a good time as some high value diamonds were found at both the Letseng and Liqhobong mines, in which the government has respective stakes of
30% and 25%. Prices are still expected to rise annually by 6% on average until 2020.

Volatility with the South African rand directly affects prices in Lesotho as South Africa is its biggest trading partner. In June the central bank governor, Masilo Makhetha, urged South Africa to keep a tab on its interest rates. Inflation has hovered around 5% over the past year.

 

Lesotho's Top Companies

 

No companies from Lesotho featured in The Africa's Report's Top 500 Companies in Africa 2014

Lesotho's Top Banks

 

No banks from Lesotho featured in The Africa's Report's Top 200 banks Africa 2014



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