Bereng Mpaki
LESOTHO faces a ‘fiscal and unemployment crisis’ and the government must implement painful decisions including reducing its own expenditure on salaries and use the savings to stimulate economic activity and growth, Finance Minister Moeketsi Majoro has said.
Dr Majoro said this while unveiling an austere M18, 1 billion 2019/2020 budget in parliament on Tuesday.
He said the country was in a crisis whose most visible symptoms were extreme poverty and hunger, a fiscal deficit and joblessness which had to be urgently addressed by exercising the “political will” to rein in on government spending and ensure the savings are spent on stimulating job creation.
Dr Majoro delivered his speech under the theme ‘jobs,’ saying that job creation was the “underlying concern for this budget”.
The minister spoke of the need for painful decisions and sacrifices on the part of both government and civil servants to urgently address the economic challenges including the high unemployment that afflicted the nation.
Dr Majoro got the ball rolling by resisting the civil servants’ demands for salary increments and cutting the salaries of ministers by five percent. He also proposed several cost cutting measures including reductions on costly international trips by government officials, caps on their monthly spending on telecommunications and limiting the use of the government fleet.
It was also a budget which saw the introduction of various taxes including a ‘sin taxes’ on tobacco (30 percent levy) and alcohol (15 percent). The alcohol levy has already attracted strong protests from the management of the Maluti Mountain Brewery who say the move will lead to steep increases in the price of alcohol and even encourage smuggling from neighbouring South Africa.
While acknowledging other challenges, Dr Majoro said tough measures were needed to address the major challenge which was that of high unemployment in the country.
“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,” Dr Majoro said.
“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 that 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 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 (3-5 years) and close to 50 000 jobs in the long term (6-10 years). It is therefore important that government ensures that the infrastructure needs of these estates are met and on time.”
Dr Majoro also said the government was introducing the concept of economic laboratories where the government and investors would collaborate on initiatives aimed at job creation.
“In addition, the government has organised an investment laboratory in which investors and government work out all the modalities for an investment to take place. The laboratory, which starts in earnest tomorrow (yesterday), has already registered more than 80 investors with potential for investment of M10 billion and 20 000 jobs created. Interest has been expressed in agri-business, tourism and creative arts and technology and manufacturing.
“Rather than just create a conducive business climate and hope investors come on their own, the government goes out to court them. The economic or investment laboratory is essentially a one-stop solution development dialogue between government and investors. Each project requires many government services. In this laboratory, the entire political leadership and providers of public services are directly involved. Infrastructure and business climate requirements are demand driven as opposed to the traditional approach in which we supply these and wait in case they are attractive to some investor. Mr Speaker, the laboratory will run until the first week of April.
“At that point, the government…will hold a one-day job summit to announce the total value of investment committed in the laboratory, the number of jobs to be created, the roadmap of actions between government and investors and a dedicated delivery unit to coordinate and implement the investment roadmap derived from the process.”
Dr Majoro further said the economic challenges could only be overcome in an atmosphere of peace and stability which came from practising good governance, the observance of human rights and the rule of law.
He therefore set aside M358, 3 million which would be allocated to the arms of government entrusted with ensuring good governance and the observance of human rights and the rule of law.
“Mr Speaker, while the focus of this budget lies heavily on creating jobs, that aim cannot be accomplished unless peace, stability and justice reign in the land. It is therefore important that the nation enjoys security and is governed well. Governance, justice and human rights are served by the Offices of His Majesty (King Letsie III) and the Office of the Prime Minister, the investigative institutions, the judiciary, the Ministry of Law and Constitutional Rights and the Ministry of Justice and Correctional Services.
“The budget proposes that M358, 3 million be allocated to this joint sector of governance, justice and human rights. In order to perform the justice function properly, the agencies should acquire an automated case management system. When fully implemented, the system will integrate the entire chain of work from investigation to incarceration,” Dr Majoro said.
