LESOTHO has recently embarked on a new initiative to accelerate growth in support of Vision 2020.
The recent financial crisis and its ensuing recession exposed various structural weaknesses inherent in the economy and the government of Lesotho decided earlier this year to launch the process of preparing the National Strategic Development Plan (NSDP) for the period 2012/13 to 2016/17.
The outcome of this process will be a document that outlines a strategy that will be followed to attain an accelerated and sustainable socio-economic transformation.
According to the January Economic review paper by the Central Bank of Lesotho “the main objectives of the NSDP include outlining the strategies for transforming the economy, improving intellectual and skills profiles and defining a future
that is characterised by the capacity to produce goods and services for global markets”.
Over the years, Lesotho has experienced economic growth but the increases in GDP growth rates have proven unsuccessful in making significant progress towards eradicating poverty by addressing the unemployment, redistribution and associated socio-economic problems in the economy.
It has been easy to build a case for the fact that the impediments to employment and consequently to shared economic growth are structural rather than cyclical.
The inability of output growth to translate into significant
employment creation and poverty reduction has created a
dualistic economy of the rich and poor.
The poor majority own part of the economy based on unstable fundamentals and limited social protection while the rich
minority have experienced an economy with high levels of growth, buoyant financial markets and strong consumer spending.
For social cohesion, long-term prosperity and political stability this type of scenario cannot be allowed to play itself out any longer. The NSDP may be the answer for Lesotho because unlike previous economic growth strategies, it looks at growth from a wider and more comprehensive perspective.
The NSDP is meant as a collaborative effort between civil society and the private sector in developing an economic framework that is as inclusive as possible.
Thus far eight important clusters have been recognised as government institutions, financial services, manufacturing and trade, environmental and climate, infrastructure, health HIV/Aids and social protection, and finally media. The important thing for all involved is to keep in mind the objectives for the economy at large.
Policy making in Lesotho has to find a new paradigm — one where employment creation and resultant poverty alleviation is not merely accepted as a by-product of economic growth, but where employment creation is viewed as a key accelerator of economic growth.
Experience has shown us that “trickle down” economics does not work.
As the various clusters of the NSDP get together and devise various economic strategies it is crucial to call for an integrated framework on development that looks to address the imbalances and structural impediments facing the poverty stricken communities.
The focus here should be on designing and implementing policies that truly empower and mobilise this untapped potential of society towards spurring higher levels of economic growth rather than merely awarding handouts.
According to the central bank publications the current unemployment rate hovers around the 30 percent mark.
This level of unemployment is unacceptable and threatens social cohesion and political
stability as a whole going forward.
Unemployment is an important economic variable as it very much also creates a cycle of a self-fulfilling prophecy.
At first the unemployed do not participate in the economy, which then means the productive capacity of the economy is underutilised, which then subsequently puts a ceiling on our economy’s growth potential and this finally leading to lower standards of living.
As a small, landlocked and mountainous country we are limited in certain respects.
Within the Common Monetary Area (CMA) agreement, our own central bank does not have independent authority in terms of influencing the movement of our currency to levels that would make our exports more competitive in international markets, which would lead to higher growth.
Furthermore with regional integration and expansion of customs union boarders, smaller economies such as Lesotho, already face huge risk revenue declines.
The country has seen further declines in remittances from migrant labour, with once a strong workforce of over one hundred thousand Basotho having declined by over 50 percent.
The continuing pressuring effects of HIV/Aids have presented further challenges going forward.
The key to sustained economic growth for any country really depends on an inclusive economy that looks to involve the greatest number of its citizens.
The economies of the world that have done well have focused on increasing their middle class and the first step in this regard is to help the poor escape the poverty trap.
The new national plan should encompass a new philosophy regarding the expanded role of social development, which should obviously be much broader than the traditional reactionist strategy aimed at providing security to society’s most vulnerable.
Social development needs to be
pro-active and needs to be perceived as an essential investment in human capital.
Unless the framework to be developed by the NSDP aims at including the poor and catapulting them within the mainstream economy the productive capacity of the economy of Lesotho will never be fully exploited.
Lechesa is a freelance writer based in Maseru