Economy records 2% growth
LESOTHO’s gross domestic product (GDP) recorded a marginal growth of 1, 9 percent during the year 2018, making a slight recovery from the 0, 4 percent contraction it experienced in 2017.
The economy, which was expected to grow by 1, 5 percent in 2018, is however expected to reach a 2, 6 percent growth in 2019 as it continues on an upward recovery trajectory.
Finance Minister Moeketsi Majoro attributed the improved performance to improved performances in the mining, manufacturing and financial service sectors.
He said the projected growth for 2019 is expected to be driven by strong performance in the construction sector.
Dr Majoro further indicated that slower growth in the South African economy, which decelerated in 2017 and resulted into a recession in 2018, has had a negative impact on Lesotho’s overall economic performance.
“The Lesotho economy contracted by 0, 4 percent in 2017 but has posted a recovery of 1, 9 percent in 2018, as a result of improved performance in the mining, manufacturing and financial services,” Dr Majoro said in his recent budget speech.
“However, agricultural output remained subdued in the last farming season due to prolonged dry spells, given our dependence on rain-fed agriculture.
“The projected growth of 2, 6 percent in 2019 through the medium term is expected to be driven by strong activity in construction—several construction projects are underway, namely the Tikoe and Belo industrial estates, the Mpiti-Sehlabathebe and Marakabei-Monontša roads, and the second phase of the Lesotho Highlands Water Project.”
Meanwhile, despite the slightly positive outlook in the country’s economic development, Dr Majoro said there are concerns on the quality of the growth and its implications on job creation and poverty reduction.
While acknowledging other challenges country is facing, Dr Majoro said concrete measures were needed to address the major challenge which was that of high unemployment in the country.
“However, despite the slightly positive outlook, concern remains on the quality of the growth and its implications on inclusivity, job creation and poverty reduction.”
“The preparation of this year’s budget benefitted from the interactions government officials have had with the public and the many challenges they face. Although diverse and wide-ranging, the most common and systemic challenge is the lack of jobs. Thus, creating jobs is the underlying concern for this budget.
“Lesotho is not only facing a fiscal crisis; our people are also facing a jobs crisis…
“Mr Speaker, the government is pained by the weakness in the economy and the rampant joblessness. There are 10 000 graduates who are looking for placement but can’t find any opening and many have been waiting for more than 10 years.
“Below this group, there is even a lot more needing a job placement. The proposals in this budget will create 20 000 new jobs by the end of 2021. But to ease the current pressure and desperation, the government proposes a public works and internship programme and sets aside M300 million to cover the allowances under this programme.
“The details of the programme will be finalised by end of April but it will be a two- year transitional programme at the end of which some of the beneficiaries would either have founded their own businesses or found new jobs. In the 2019/20 financial year, 8500 youngsters, of which 3500 will be graduates, will be assisted into internships and public works programmes,” Dr Majoro said.
Dr Majoro said the government had come to the realisation that merely creating a conducive business climate was not enough and therefore it had to actively seek investment.
He said the Ministry of Trade and Industry with the Lesotho National Development Corporation (LNDC) were incubating new business ventures including eight new firms in the clothing and electrical components sectors with about 8000 jobs to be created in two years.
He said the two were also involved in a fresh produce activity and an out-grower scheme aiming at creating 500 jobs in the Maseru area.
“There is also an expansion of area under deciduous fruit production to increase from the current 34 hectares to 150 hectares in the next two years and 500 hectares in the medium term which will add 1000 jobs.
“In addition, the LNDC will finalise by mid-year, plans for large integrated piggery, poultry, aquaculture and beef operations as well as a grains initiative in Butha-Buthe, Leribe, Berea and Maseru for both domestic and export markets. One investor has plans to construct a silo for the storage of surplus grain.
“The completion of both Tikoe and Belo Industrial Estates are likely to create 23 000 jobs in the medium term (3 to 5 years) and close to 50 000 jobs in the long term (6 to 10 years). It is therefore important that government ensures that the infrastructure needs of these estates are met and on time,” Dr Majoro said