MASERU — Lesotho’s economy is set to grow by three percent this year on the back of massive construction and mining projects that are currently underway, Nedbank Lesotho managing director Lazarus Murahwa has said.
Murahwa told a business meeting in Maseru last Friday that large construction projects will likely drive economic growth by three percent, up from last year’s 1.1 percent.
The meeting was organised by the bank to interact with its business clients and exchange ideas between the two parties.
“Projections indicate that economic growth for this year will be about three percent which is an improvement from last year’s figure of 1.1 percent.
“The main contributors behind the growth are the construction and mining sectors,” Murahwa said.
He said projects being funded by the Millennium Challenge Account (MCA) and the revival of the mining sector will increase investments and boost the local economy.
The MCA is currently involved in projects to improve the supply of water in urban, peri-urban as well as rural areas.
It is also heavily involved in the construction of Metolong Dam which is expected to improve the supply of water to urban and rural households.
The MCA is also heavily involved in the health sector.
The project focuses on three main areas — infrastructure development, health system strengthening and health care waste management.
The MCA is involved in the renovation and rehabilitation of about 150 health centres in Lesotho.
Murahwa said the MCA construction projects could spur massive economic growth.
“The second phase of the Lesotho Highlands Water Project which is going to begin soon will also boost local businesses,” Murahwa said.
Nedbank Lesotho says it performed satisfactorily in the last financial year recording a nine percent increase in profits.
The bank’s total assets also increased by 18 percent to M2.2 billion, Murahwa told the Lesotho Times.
Nedbank head of corporate banking, Tsepo Ntaopane, said the low interest rates that have been recorded since January bode well for investments.
“The low inflation rates are ideal for more borrowing. This bodes well with the high liquidity of Lesotho banks.
“There are funds that could finance sizable investments. This is an ideal time to borrow,” Ntaopane said.
He said he expected Lesotho’s annual inflation rate to hover around four percent for the remainder of the year.
He added that the mining sector’s contribution could improve from the current seven percent of gross domestic product to 15 percent.
“There are projects in the mining sector. Once the mines are in full commercial production employment will increase and so will our export earnings.
“There has been talk that contribution of the mining sector to GDP could almost double to 15 percent which would really be good for local businesses,” Ntaopane said.
He urged investors to look for sustainable projects that can be financed by the bank as conditions for borrowing were conducive for investment projects.
There is normally an increase in investment capital such as huge buildings and business start-ups or expansions when inflation rates are low due to the low cost of borrowing funds.
