Country Profile: LESOTHO

This country profile was published in November 2010 in our annual 'Africa in 2011' issue. The next edition, 'Africa in 2012' will be on sale in November 2011.

CountryProfile StatsLesotho

Uncertainty on all fronts

Lesotho will remain vulnerable to gusts of uncertainty in 2011 as the political jostling in the lead-up to 2012 elections gets under way. In the short term, the country is struggling to find earnings that are not tied to its giant South African neighbour. Revenue from the Southern African Customs Union (SACU), which makes up about 60% of Lesotho’s tax take, may drop by 23% of GDP from the 2010-2011 financial year to 2012-2013. Continuing moves to adjust SACU’s revenue-sharing formula could have profound consequences. Announcing his 2010-2011 budget, finance minister Timothy Thahane stressed Lesotho’s need to base growth on domestic sources of revenue.?

A drop in remittances from the 50,000 Basotho working in South Africa and falling demand for textile exports have left Lesotho’s economy in a tailspin. Five years of budget surpluses turned into a deficit of 2.7% of GDP in 2009-2010, as economic growth slowed to 0.9%. The IMF forecasts that real GDP growth will pick up to reach an average of 4.3% over the next three years. One bright spot is the diamond industry: production began in 2010 at the Mothae mine and is due to restart at Liqhobong in 2011. ?

Construction of the largely donor-funded $413m Metolong dam has begun and should be completed in 2013. The dam will help secure water supplies for the lowlands and draw attention away from the paradox that Lesotho sells water to South Africa even as it suffers from its own shortages. Building of the second phase of the cross-border Lesotho Highlands Water Project, two-thirds funded by South Africa, is scheduled to begin in 2013 with completion ?expected in 2017.

?In May, South Africa changed rules that had allowed Basotho to cross the border with a simple travel document. Now they must have a passport and can only stay for 30 days. Long queues now form at border posts, souring relations between the two countries. A visit to Maseru by President Jacob Zuma in August brought little resolution. ?

The unions are seeking radical solutions. In May, the Lesotho People’s Charter Movement (LPCM) petitioned the government and the South African High Commission in Maseru for Lesotho to become a part of South Africa. “There’s no economy in Lesotho,” Vuyani Tyhali, the LPCM leader and Lesotho’s Teachers Trade Union secretary general, told The Africa Report. “We are just a labour reserve for South African mines and farm areas.” Neither side has so far given an official response. ?

Much political energy has been spent in the past four years on trying to resolve the fallout from the troubled 2007 elections. Since mediation by the Southern African Development Community to end the political impasse shuddered to a halt in July 2009, a dialogue led by the churches has had more success and reduced the risk of violence. This acrimonious chapter should soon be closed, but without fundamental political reforms. ?

Both the ruling Lesotho Congress for Democracy (LCD) and the opposition are in disarray. Some LCD factions are pushing for a change in leadership. Likely challengers to Prime Minister Pakalitha Mosisili are Monyane Moleleki and Mothetjoa Metsing. In a show of strength in early October, Mosisili announced Lesotho’s first major cabinet reshuffle for nine years. Four ministers were sacked and replaced by LCD stalwarts close to the prime minister.?

The rupture of the alliance between the All Basotho Convention (ABC) and the Lesotho Workers Party, and ensuing squabbles between their leaderships have weakened the opposition’s voice. The ABC has expressed discontent with the management of the electoral commission and may not cooperate with preparations for 2012 elections.