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Political instability scaring away investors: EU

by Lesotho Times
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Ntsebeng Motsoeli

POLITICAL instability is scaring away international investors from Lesotho, the European Union ambassador, Christian Manahl, has said.

Dr Manahl said the instability had also delayed the implementation of the multi-sector reforms process and had left the EU unsure about what to do with the € 12.5 million (approximately M204 million) it had set aside to fund the reforms process.

Dr Manahl said this at a press briefing in Maseru this week.

His comments come against the background of the ongoing power struggle in Prime Minister Thomas Thabane’s All Basotho Convention (ABC) which threatens to split the party and collapse the government. (See lead story on page 2).

The two year-old governing coalition has struggled to attract meaningful foreign investment amid revelations by Finance Minister Moeketsi Majoro that sceptical foreign investors continued to sit on the fence until they have satisfied themselves that the government would not collapse before its full tenure in 2022 as have other previous regimes.

The cash-strapped government is currently struggling to meet its obligations and restive civil servants have either already gone on strike or are planning more strikes to force the government to award them salary increments.

The instability has also stalled the reforms which are now way behind schedule as the Southern African Development Community (SADC) had set last month as the deadline for the full implementation of the constitutional and security sector reforms.

The EU used to provide budgetary support to Lesotho but this has been discontinued over concerns about lack of transparency and misgovernance.

On Tuesday, Dr Manahl said instability remained a major concern even though the EU remained committed to supporting Lesotho’s social and economic development as well as the multi-sector reforms.

“The political instability affects the implementation of our programmes, it always does,” Dr Manahl said.

“But more importantly instability affects general socioeconomic development. We believe that with the National Strategic Development Plan II, the government has a very good and comprehensive programme but if the ruling parties spend their time quarrelling, that will be at the expense of implementation.”

He said the instability scared away international investors as they would rather invest in neighbouring South Africa which was more stable.

“A country that is politically unstable is not attractive to foreign and local investors. Political stability is key for investment, economic development and job creation. Even a Mosotho would rather invest in South Africa as long as the situation here is as unstable as it is.”

Dr Manahl said the instability had also affected the implementation of the multi-sector reforms and left the EU unsure about what to do with the €12.5 million it had set aside as funding for the reforms process.

“The decision has not been made (about what to with the funds) because the € 12.5 million was meant specifically to support the implementation of the reforms but the national dialogue (on the reforms) has not been concluded. We are still awaiting the second plenary session (of the political leaders) and we cannot anticipate the decisions that will be made. Based on discussions with government, we have chosen to fund key sectors of the reforms, namely, the judiciary and oversight institutions which are the Directorate on Corruption and Economic Offences (DCEO), the Public Accounts Committee (PAC) and the Attorney General’s office.

“But we are in some doubt as to what to do (due to the impact of the instability). We have to go through complex procedures at the (EU) headquarters level because it is the EU member states which provide the money for the development fund.

“But if all goes well, we want to avail the money immediately after the second plenary session so that we can kick start the implementation of the reforms. We wouldn’t like to see a gap between the plenary decisions and the implementation that should follow.”

Dr Manahl recommended that the reform process should go on irrespective of the current instability and any future government should implement the decisions that would be agreed at the national dialogue.

His sentiments were echoed by the EU Head of Cooperation, Markus Theobald, who said the toxic political atmosphere was frustrating their efforts to assist the government to implement development programmes.

Mr Theobald said the EU planned its assistance programmes on the assumption that the government would last its full term and when that did not happen, the implementation of the programmes failed.

“Our assumption is that we have a government with whom we can work with. If government changes and a new one comes with new ideas, the projects may fall through. If a new government comes with completely new ideas or we do not have a government that is responsive, then we have a problem. So the political instability impacts us tremendously,” Mr Theobald said.

On his part, the EU’s First Secretary, Jyrki Torni, said the constant changes of governments delayed the implementation of development programmes.

“It is like a relay (marathon) where a new player comes in every time. We want to work with one team because every time a new principal secretary comes in, we fall six months behind in terms of implementation,” Mr Torni said.


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