Lesotho Review 2019 by Lyn G

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PO Box 835, Umdloti Beach 4350 Tel/Fax +27 31 568 2403 E-mail: annewade@3i.co.za Website: www.lesothoreview.com

Marketing: Anne Wade, Tira Wade Editorial: Louella Morgan-Jarvis Design & Layout: Lyn Grandemange - Logo Graphics Repro & Printing: Fishwicks the Printers Afriski, Anne Wade, Lesotho Sky, LCA, LEC, LHDA, LHWC, Photography: Limkokwing University, LNDC, Morija Festival, Nedbank Lesotho, NUL, Semonkong Lodge, Standard Lesotho Bank.

Contents FOREWORD 2 INTRODUCTION 3 FOREIGN TRADE & INVESTMENT

COMMERCE, INDUSTRY & MINING

TOURISM 27 ENVIRONMENTAL CONSERVATION

AGRICULTURE 39 TRANSPORT INFRASTRUCTURE

CONSTRUCTION 47

The Lesotho Review provides a comprehensive overview of each sector of the Kingdom of Lesotho’s economy, along with useful information for potential investors and other interested parties, and is updated and published annually. This edition pertains to the 2019 period, and has been compiled with the support of the Lesotho National Development Corporation (LNDC), Lesotho Tourism Development Corporation (LTDC), the Central Bank of Lesotho (CBL) and several business enterprises and organisations that have advertised in the review. Their kind assistance is gratefully acknowledged. The publishers also acknowledge particular sources of editorial information, which include: Lesotho National Budget Speech 2018/19; Budget Strategy Paper 2018/19-2020/21; CBL Annual Report 2017, Monetary Policy Committee Statement of November 2018, Economic Outlook 2018-2020, and Quarterly Review of June 2018; Lesotho Bureau of Statistics 2016 National Population Census, 2016 Education Statistics Report, 2016/17 Agricultural Production Survey; African Economic Outlook 2018; IMF ‘World Economic Outlook: October 2018’; World Bank: Doing Business 2019; World Travel & Tourism Council Report of 2018; LTDC Arrivals and Accommodation Statistics; Lesotho Revenue Authority Strategy 2018-2023; Lesotho’s Nationally Determined Contribution under the UNFCCC: December 2017; Lesotho National Climate Change Policy 2017; Lesotho Communications Authority: State of ICT in Lesotho 2017; ITU Lesotho Profile 2018; Revised National Health Strategic Plan 2017-2022; PEPFAR Country Operational Plan 2018.

WATER & ENERGY

INFORMATION & COMMUNICATIONS TECHNOLOGY

FINANCIAL SERVICES, INSURANCE & INVESTMENT

HEALTHCARE 90 EDUCATION & TRAINING

INDEX TO ADVERTISERS

103

While every care has been taken in the preparation of this publication, the publishers can accept no liability for any errors or omissions that may occur. This publication is the exclusive property of the publishers and no part of the contents may be reproduced in any form without prior written permission of the publishers. All editorial material and photographs are copyrighted.

In recognition of Government’s achievements in seeking to secure justice and the rule of law, the United States and the Millennium Development Corporation have re-selected Lesotho for the development of a second compact. Representatives from Lesotho’s Government are expected to travel to the US in May 2019 to sign the Compact II Agreement, with a host of new development projects to begin in mid-2020. Several financing agreements have been signed to support child grants, the roll-out of road infrastructure, reticulation of water to households, empowering civil society in its function of mediation, and improving tax administration. Furthermore, the Ha Belo Industrial Hub has been launched and a contractor selected. Other important development projects include the construction of the Mpiti-Sekake to Sehlabathebe bitumen road and the 40-megawatt solar-power investment at Ha Ramarothole. In addition, a private investor, OnePower, has been selected to produce 20 megawatts of solar electricity. Future growth is premised on activities under Phase II of the Lesotho Highlands Water Project (LHWP), which has recently kicked off following the awarding of the construction contract for the North-East Access Road to the Polihali Dam site. Further, the strong performance of the diamond mining industry should buoy growth as existing mines ramp up production and the Mothae Mine begins commercial production. While Lesotho faces a variety of global and regional macroeconomic challenges, Government is working to create jobs in the private sector through a judicious mix of economic and structural policies. The four chosen priority sectors for accelerated employment generation include: commercial agriculture; manufacturing; tourism and creative arts; and technology. The Second Private Sector Competitiveness and Economic Diversification Project is currently being implemented with the assistance of the World Bank in order to drive development in selected non-textile sectors with the aim of increasing

02 | FOREWORD

production. A number of successful projects have already been incubated at the Hub and have achieved market exposure. Technology is also at the forefront of development initiatives to improve the business climate as well as government capability and efficiency. In this regard the new Lesotho Government e-Portal, comprising a website, intranet and e-services, went live on 22 November 2018. The online service component includes Tourism Licensing e-services, a Labour Skills Data Base and already existing linkages from other ministries and parastatals, such as the e-Visa provided by the Ministry of Home Affairs and e-Customs by the Lesotho Revenue Services.

Foreword

As Lesotho’s coalition government led by Thomas Thabane and the All Basotho Congress (AB C) enters its third year, the political landscape continues to stabilise. The current atmosphere of peace and cooperation is founded on good governance and a commitment to engage in dialogue which seeks to find solutions to political and socioeconomic issues. The reform process, which has been guided by the Southern African Development Community (SADC), encompasses issues such as the constitution, security, judiciary, economy and media. private sector investment, firm growth and job creation. Spurring economic growth and diversification as well as improving export competitiveness is at the forefront of Government’s development initiatives. The economic ministries are concentrating their efforts on escalating domestic and foreign private investment. This includes dialogue with the private sector, focusing on jobs to be created and investor needs, and has seen the establishment of the

Investment Climate Reform Committee, which is addressing issues such as a lack of start-up and working capital, among others. The launch of the Lesotho Standards Authority during 2018 will help support investors in the manufacturing sector, particularly those focusing on exports to South Africa and further afield. The National University of Lesotho (NUL) Innovation Hub launched in November 2018 provides a platform for the incubation of businesses from conception up to mass

Developments in the financial sector highlight capital and financial markets, financial institution supervision and regulation, and non-bank financial institutions. The Credit Bureau is now operational, and the Maseru Securities Market (MSM) has been launched. Although the potential of the MSM is yet to be exploited, it promises to become a powerful vehicle for raising capital and also diluting Government’s shareholding in privatised companies. Furthermore, the Payment Systems (Issuers of Electronic Payment Instruments) Regulations of 2017 will focus on strengthening mobile money regulation in the country. Lesotho’s future growth is highly dependent on attracting increased attention from global and regional investors, and it is thus important that the opportunities which presently exist for private sector investment are marketed and promoted to potential investors and business leaders. The Lesotho Review provides a comprehensive overview of the country’s business climate and major economic sectors, as well as current policies, development programmes and investment incentives, making it the ideal medium for showcasing Lesotho as a viable investment destination to the business community and investors worldwide.

The Kingdom of Lesotho boasts a rich heritage and is one of only three remaining monarchies in Africa. This small, land-locked country with a population of just over 2 million people has been referred to as the ‘Switzerland of Africa’ because of its rugged topography and high altitude: its lowest point is approximately 1 400 metres above sea level.

Highlands cover around 65 percent of Lesotho’s land area at elevations ranging between 2 300 and 3 482 metres. From the sandstone hills of the lowlands to the basalt cliffs of the highlands, this is the only independent state in the world that lies entirely above 1 000 metres. Two of the region’s principal rivers, the Senqu (Orange) and Tugela, have their source in the Malotis, as do tributaries of the Mohokare (Caledon) River, which form Lesotho’s western border. The western quarter of the country comprises lowlands, with the lowest point the junction of the Senqu and Makhaleng rivers at 1 380 metres. Lesotho’s tallest peak – and the highest in Southern Africa – is the 3 482-metre Thabana-Ntlenyana in the Maloti range.

While the country’s economy may have been founded on agriculture, these days some of its most important sectors include manufacturing, construction and mining, and its chief exports are textiles and garments, diamonds, water, wool and mohair. Notable developments over the past few decades include the multi-billion dollar Lesotho Highlands Water Project (LHWP), which harnesses the country’s most abundant asset, its water or ‘white gold’, for the industrial complex of neighbouring Gauteng Province in South Africa. Considering Lesotho’s geographical position in the middle the economic hub of South Africa, strengthening ties with the rest of the region is a top priority. It is currently a member of the Southern African Development Community (SADC), Common Monetary Area (CMA) and Southern African Customs Union (SACU), as well as benefiting from a fixed exchange rate regime with South Africa. Furthermore, trade preferences such as the United States’ African Growth and Opportunity Act (AGOA) have been beneficial for the textile and garments industry. According to Lesotho’s 2018/19 budget, the economy is estimated to have decelerated from a growth rate of 2.5 percent in 2016 to 2.3 percent in 2017 on account of a slowdown in the mining, construction, banking, transport and telecommunication sectors, as well as the prevailing political uncertainty in the 2015/16 period. Growth is forecast to slow further in 2018 and pick up slightly in 2019, with construction activities under Phase II of the Lesotho Highlands Water Project (LHWP) expected to be the main driver of the economy. Although per capita incomes have risen,

Introduction

Formerly a British colony, Lesotho gained independence on 4 October 1966 and has in the ensuing years transitioned from a predominantly subsistence-oriented economy to one that has achieved lower middle income status. propelling Lesotho to its current status as a lower middle income country, in the past five years inequality has grown, along with unemployment and the poverty rate. A more dynamic private sector is seen as being integral to the country’s future success. Although the private sector remains small, contributing just one-fifth of Lesotho’s GDP, it is steadily expanding as a result of Government’s development initiatives, and important progress has been made in improving the business climate. Further advances look likely under the Second Private Sector Competitiveness and Economic

Diversification Project (PSCEDP II).

GEOGRAPHY & CLIMATE Lesotho is surrounded by the Republic of South Africa and bounded by the province of KwaZulu-Natal to the east, the Eastern Cape to the south, and the Free State to the north and west. With a total area of 30 355 square kilometres, making it similar in size to Belgium, the country measures 434 kilometres from north to south and is encircled by a border of some 909 kilometres.

Habitats in Lesotho contain a high degree of biodiversity and endemic plant and animal varieties as well as a remarkable prehistoric and cultural heritage. The mountain highlands are home to spectacular birdlife as well as rare wildlife species which have developed specialised adaptations to the high altitude environment. Vegetation is predominantly grassland with patches of evergreen trees and shrubs. Less than 1 percent of the country is covered by indigenous forests. Situated in the highlands of Southern Africa, the Mountain Kingdom of Lesotho is known for its natural beauty and afroalpine ecosystems. The climate is classified as ‘continental’, meaning that the country experiences significant annual variations in temperature because of the absence of large bodies of water in the vicinity. Temperature deviations may be extreme. In the lowlands the range is from -7°C in winter to 30°C in summer. Winter in the highlands is more severe: heavy snowfalls sometimes cut off access to mountain settlements, and temperatures may drop to -18°C. The mean summer temperature is about 25°C and the mean winter temperature about 15°C. Because of INTRODUCTION | 03

its altitude, which is on average 2 161 metres above sea level, Lesotho remains cooler throughout the year than most other regions at the same latitude. Annual precipitation varies from some 600 millimetres in the lowland valleys to about 1 200 millimetres on the northern and eastern escarpment. Although summers, which last from November to January, are generally sunny, the weather is also notoriously unpredictable. Sudden rain, mist or localised thunderstorms are common between October and April, when approximately 85 percent of annual precipitation occurs. Winters are characterised by clear skies, with snowfalls usually occurring from May to September, although snow may fall on the highest peaks at any time of year.

HISTORY & POLITICS Lesotho’s earliest inhabitants were the San, who had made this region their home for thousands of years before any written record of their existence appeared. The accelerating competition for land and resources that marked the history of the Maloti region in the latter part of the 19th Century saw the eventual disappearance of these hardy hunter-gatherers from the area. They nonetheless left their mark on the land in a rich legacy of rock art, and smatterings of their language still survive in the Sesotho tongue.

was born in 1786 at Menkhoaneng in what is today the district of Botha-Bothe. The son of a minor chief of the Bakoena of Mokoteli, he was named Lepoqo at birth and later given the praise name Moshoeshoe after he had captured the cattle of Chief Ramonaheng. The emergence of the Basotho as a nation began around the time that Moshoeshoe became chief (1820) and started to form alliances with local clans and chiefdoms. Just prior to Moshoeshoe’s rise to power, the region entered a period of great conflict and upheaval which lasted from around 1815 to 1840. Discord among the Nguni people in Natal and the arrival of white settlers across the Orange River had a far-reaching impact on the history of the Basotho. The expanding military dictatorship of King Shaka of the Zulus, together with a region-wide drought, sparked off the ‘Lifaqane’ (Great Scattering) in a fierce competition among displaced tribes for scarce resources. When Moshoeshoe’s capital of Botha-Bothe came under attack in 1824, he gathered his people together and retreated to Qiloane plateau and the steep, flat-topped mountain which was to be known as Thaba-Bosiu – the ‘Mountain at Night’. Besieged many times during Moshoeshoe’s reign, the mountain fortress of Thaba-Bosiu, with its near-vertical cliffs, good grazing and freshwater springs, was never captured.

Lesotho’s other early settlers were pastoralist Bantu-speaking people from West and Central Africa, who first entered the southern part of the continent sometime between the 3rd and 6th centuries CE. By the 19th Century, Sotho clans were spread across the southern plateau, over the western region of present-day Lesotho and a large, fertile expanse of surrounding territory now lying in South Africa’s Free State Province. Comprising small chiefdoms which were united into loose confederations, these southern Sotho tribes came to constitute the Basotho people and speak the unique Sesotho dialect.

While many neighbouring populations were dispersed or decimated during this time, the Basotho emerged as a united force under the inspired leadership of Moshoeshoe. His policy of offering safe haven to refugees (many who were of Nguni origin) in return for their help in defending Basotho territory, helped to create a loosely federated Basotho state forged from local Sotho tribes as well as remnants of scattered clans. Moshoeshoe’s position, built on military as well as diplomatic skill, was by 1840 firmly entrenched, and his subjects numbered about 40 000.

One figure in particular looms large in the history of Lesotho: Moshoeshoe the Great, who

In the ensuing decades the Basotho came under ever greater threat from the adjoining

04 | INTRODUCTION

Orange Free State. Boer soldiers overran Morija in 1858 and, although Thaba-Bosiu stood firm, repeated onslaughts resulted in Moshoeshoe losing much of his territory. Forced into a peace treaty in 1866, he signed over most of his good land to the Orange Free State. However, further attacks from the Boers came in 1867 and, with pressure mounting, Moshoeshoe appealed to the British for help. In March 1868 the country’s present-day boundaries were established when it became the British protectorate of Basutoland. By the time of Moshoeshoe’s death in 1870, the Basotho nation comprised some 150 000 people. A wise leader who believed in maintaining peace and harmony with all those around him, Moshoeshoe’s near mythical reputation survives to this day. Control of Basutoland was transferred to the Cape Colony after Moshoeshoe’s death. Tax collection by the new administration caused increasing friction, and a rebellion in 1879 led to the Gun (Basotho) War from 1880 to 1881. This conflict seriously weakened the Cape government, and in 1884 Basutoland came once more under direct British control. Thanks to its status as a British protectorate, it managed to avoid incorporation into the Union of South Africa in 1910.

year, Chief Jonathan became the first prime minister of the Kingdom of Lesotho. Politics and democracy Lesotho is a constitutional monarchy and King Letsie III is the nominal head of state. Executive powers are held by the Prime Minister, and the country is governed by a 33-member senate and a 120-member national assembly. For many years Lesotho’s political landscape was controlled by two main parties – the Basotho National Party (BNP), which governed between 1965 and 1986, and the Basutoland Congress Party (BCP), which held power from 1993 until 1998, when a splinter group, the Lesotho Congress for Democracy (LCD) under the leadership of Pakalitha Mosisili, won the elections. The LCD remained in power for the next 14 years. A further shift in Basotho politics took place in February 2012, when Prime Minister Mosisili and 44 supporters left the LCD to form a new party, the Democratic Congress (DC). While Mosisili’s DC won the most seats in the general elections of May 2012, the second-placed All Basotho Congress (ABC), under the leadership of Thomas Thabane, achieved a majority in the 120-seat parliament after forging a coalition with the LCD and BNP.

In 1912 the Basotho King Letsie II helped to found the South African Native National Congress, which was later to become the African National Congress (ANC). In the years that followed, Lesotho gained ever more autonomy under British administration, and was granted internal self-government in the form of elections held in 1960 – the same year in which King Moshoeshoe II was crowned. The elections were won by the Basutoland Congress Party (closely allied to South Africa’s ANC), which made full independence from Britain a priority.

Despite a promising start, the coalition Government ran into trouble during 2014, when political tensions led to clashes between the army and the police, forcing Prime Minister Thabane to flee to neighbouring South Africa. A deal brokered by South African Deputy President Cyril Ramaphosa, acting on behalf of SADC, led to a further general election in February 2015. As there was no clear winner, a second consecutive coalition government was formed, with Mr Mosisili’s DC ousting former premier Thabane’s ABC by uniting with smaller parties.

The 1965 elections saw a change in government, with the conservative Basutoland National Party (BNP) headed by Chief Leabua Jonathan coming into power. When Independence eventually arrived the following

Following a vote of no-confidence in Prime Minister Pakalitha Mosisili, in June 2017 Lesotho held yet another general election. Although the ABC secured the highest number of seats (48), lacking an absolute majority it

was compelled to form a four-party coalition government (the third in five years) led by Prime Minister Thomas Thabane. Lesotho’s general elections have a track record of being free, fair and peaceful, and have produced results that have been accepted by the general population. Lesotho’s leadership is committed to fully implementing the SADC directive to undertake a series of inclusive reforms. This comprises constitutional, electoral, parliamentary, public sector and security sector reforms, and includes all relevant stakeholders in order to establish a stable political order which is conducive to economic development. Reforms to Lesotho’s electoral process are on the table, as the current one-vote MMP (mixed member proportional) system has not managed to strike the vital balance between political representation and effective governance. Options include switching to a mixed-member majoritarian (MMM) system, which would increase the probability of a single-party majority while still allowing for an effective opposition in parliament. Government is resolved to work with SADC in pursuit of lasting peace and security in Lesotho and, indeed, the wider region. Good progress has been made thus far in strengthening democratic institutions and facilitating economic growth, with the assistance of the country’s development partners as well as the African Union and the United Nations. In February 2018, the African Union and SADC found that, despite logistical challenges, their intervention has acted as a stabilising influence. The security situation has subsequently been reasonably calm and working relations between the various security agencies have improved.

in ethnicity (99.7 percent), with Europeans, Asians and ‘other’ accounting for 0.3 percent. The predominant religion is Christianity (about four-fifths of the population), with the balance of the population embracing indigenous beliefs. ‘Lesotho’ means ‘the land of the people who speak Sesotho’. This was the language spoken by the various groups which united to form the nation in the early 1800s, and today the country’s official languages are Sesotho and English. While most people speak Sesotho, English is widely used in government and commerce. The next most commonly spoken language is Zulu, which is heard in the Botha-Bothe district and the vicinity of the Caledonspoort border post, followed by Xhosa. The Basotho have developed a unique culture and traditional dress to suit their mountainous homeland. The cone-shaped Qiloane Mountain, which is one of the kingdom’s best-known landmarks, is the prototype for the iconic ‘mokorotlo’ – the conical Basotho hat made of woven straw. A common sight in the countryside is a Basotho horseman clad in ‘kobo’ (traditional cloak or blanket), who will raise his hand in the customary greeting, ‘khotso’, meaning ‘peace’. In the rural areas, beautifully patterned woollen blankets ideally suited to the high-altitude climate are the regular form of daily dress for men (especially horsemen and herd boys) as well as many women. New blankets with a unique pattern are created every year in honour of the King’s birthday, and these are bought by the general populace and worn at his public birthday celebrations, which are held in a different town every year.

THE BASOTHO

Basotho women have traditionally been responsible for the creation of ‘litema’, which are decorative etchings made on and inside their homes. Some ‘litema’ are coloured with paint or natural pigments, and their patterns are said to have inspired the designs of the Basotho blanket.

Inhabitants of Lesotho are referred to in the plural as ‘Basotho’ and in the singular as ‘Mosotho’. The people are predominantly Sotho

A little under three-quarters of all Basotho still live in the rural areas, and settlements tend to be located high in the mountains, usually well

06 | INTRODUCTION

above the deep river valleys where flooding is an ever-present reality. The typical Basotho village comprises a number of ‘kraals’ (a collection of buildings belonging to one family), each of which has an enclosure for livestock in addition to areas for sleeping, cooking and storage. Villages are encircled by fields where subsistence farming takes place and crops such as maize, wheat, sorghum, beans and peas, onions and cabbage are cultivated. Many local herbs are also gathered as green vegetables known as ‘moroho’. Animals are an important part of daily life. Most families will have some cattle, and oxen are used to plough the sloping mountain fields. Wool and mohair are major sources of income, with herds of sheep and Angora goats tended by shepherds, who are often young boys living in simple huts or ‘motebo’. The hardy Basotho pony remains one of the best forms of transport in the mountains, with donkeys often used as pack animals. Each village has a chief, or headman, who falls under the chief for that region. Although many Basotho live and work outside Lesotho, their attachment to their local village and culture remains strong. Most traditions and festivals relate to local village life and seasons of the year, based on the communities’ strong agricultural roots. 2016 Population and Housing Census The results of the 2016 Population and Housing Census provide a snapshot of Lesotho’s socioeconomic and demographic indicators, allowing the development of well-informed plans, programmes and policies to improve the living standards of the nation as a whole. The census, which took place from 10 to 24 April 2016, revealed that Lesotho’s total population has risen to 2 007 201. This is an increase of nearly 7 percent from the 1 876 633 recorded at the time of the 2006 census: a much faster growth rate than the 0.8 percent registered between the 1996 and 2006 censuses. During the ten-year period leading up to 2016, the population increased in all districts except for Mafeteng, Mohale’s Hoek

and Quthing, to reach an average population density of 66 persons per square kilometre and 349.8 people per square kilometre of arable land. The urban population has grown immensely since the census of 1996. Between the censuses of 1996 and 2006, urban dwellers increased by an estimated 43.8 percent, while in the subsequent ten-year period the urban population grew by 62.7 percent. In rural areas, the population expanded by 2.2 percent from 1996 to 2006, and then declined between 2006 and 2016 by 8.6 percent. Out of Lesotho’s total population, some 636 729 were estimated to be residing in urban areas at the time of the 2016 census, translating to an urbanisation rate of 31.7 percent. In 2016, Lesotho’s male population was 982 133, comprising 48.9 percent of the country’s total inhabitants, while there were 1 025 068 females, or 51.1 percent of the population. Life expectancy at birth has risen considerably between the census of 2006 and that of 2016, from 41.1 years to 56.0 years. For males, it is currently 51.7 years, and for females it is 59.5 years. Using the local definition of ‘youth’ adopted by the Ministry of Gender, Youth, Sports and Recreation – that is the population aged 15 to 35 years – the youth accounted for 39.6 percent of Lesotho’s total population in the 2016 census. Males made up 50.7 percent of total youth, while females constituted 49.3 percent. The Minister of Development Planning, Mr Tlohelang Aumane, has expressed hope that the census results will provide benchmarks against which the performance of the government and the nation may be measured; especially in respect of tracking Lesotho’s implementation of the United Nation’s Sustainable Development Goals, Agenda 2063, SADC Regional Indicative Strategic Development Plan (RISDP) and other developmental initiatives.

DCEO COMMITTED TO THE IDEALS OF THE AFRICAN UNION ON DECLARING 2018 AS THE AFRICAN ANTI-CORRUPTION YEAR INTRODUCTION

The Heads of State and Government in the African Union have made a very bold undertaking in declaring 2018 as the African Anti-Corruption Year with the commitment to Winning the Fight against Corruption: The Sustainable Path to Africaâ&#x20AC;&#x2122;s Transformation. In order to make sure that this commitment is translated into action, President Muhammadu Buhari of Nigeria was designated as the Champion of the programme which he effectively launched in January, 2018. As a Member State in the African Union, the Kingdom of Lesotho fully participated in this undertaking through the presence of the Prime Minister as Head of Government. With the tone well set from the top, it is of absolute significance that all those concerned take up their appropriate positions, equip themselves accordingly and fight the good fight towards freeing society from the bonds of corruption and related crime so as to help create the right climate for good governance, economic growth and political stability of countries. Given its statutory mandate of spearheading the national efforts in preventing and combating corruption, the Directorate on Corruption and Economic Offences (DCEO) has embraced the AU undertaking. This article is intended to highlight the work of the Directorate dedicated to contributing towards the achievement of the AU ideals in the context of Lesotho.

UNDERTAKING A NATIONAL BENCHMARK SURVEY ON CORRUPTION IN LESOTHO

For an anti-corruption strategy to be effective, it must take into account the nature of the corruption problem being experienced, its magnitude, the key sectors involved, and the extent to which the national anticorruption armoury is fit enough to be able to deal with the scourge, among others. The National Benchmark Survey is being undertaken currently and soon to be completed. In the main, the survey is expected to provide the country with the best measure thus far, as regards the effectiveness of the overall anti-corruption strategy employed, rather than always depending on some highly controversial international tools only. DECLARATION OF ASSETS AND INTERESTS After a long time struggling to implement the declaration of assets and interests regime, declarations have already been filed with the Directorate by Cabinet Ministers, Public Officers including Principal Secretaries and Members of the Judiciary including the Judges of the High Court. Members of Parliament are yet to be issued the declaration forms. This is a very important achievement for the country since it contributes to enhancing the culture of accountability as people acquire property and execute decisions in the public sphere in particular. RE-DEFINING THE ROLE OF SECTORS IN THE FIGHT AGAINST CORRUPTION The National Anti-Corruption Strategy and Action Plan (NACSAP) framework assigns different key sectors of

society special roles and responsibilities in addressing corruption. These sectors are the Public Sector, the Legislature, the Judiciary, the Private Sector and the Civil Society. In the African Anti-Corruption Year, these sectors, except the Legislature, have been met already and assisted to re-define their special roles at both the individual and the collective levels in fighting corruption. Each sector now has a special committee for coordinating its sectoral efforts. The Legislature is yet to re-define its roles as well. MINISTRIES OF GOVERNMENT COMMITTING TO FIGHTING CORRUPTION

The Directorate has met the Chief Accounting Officers (Principal Secretaries) of all Ministries of Government under the authority of the Government Secretary and addressed the corruption challenges that they face in their execution of duty and responsibility. A special AntiCorruption Sub-Committee of the Principal Secretaries has been established. Working in collaboration with the Sub-Committee, the Directorate is on a programme to visiting Ministries to sensitize them against corruption and assisting them revive or establish their Systems Integrity Committees as an internal mechanism towards making sure that service delivery is good enough to prevent situations of compromise to corruption on the part of both the officer and the client. INTERNATIONAL ANTI-CORRUPTION DAY CAMPAIGN 2018 Logistical arrangements for the International Anti-

Corruption Day Campaign 2018 are underway. The campaign is led through a joint effort of the DCEO, the Lesotho Revenue Authority (LRA) and the Lesotho Mounted Police Service (LMPS). The campaign for 2018 has already been formally launched through a press conference by the heads of the three agencies thus setting in motion a number of build-up activities which will culminate in the holding of the Anti-Corruption Symposium on 3rd December and the Anti-Corruption Walk led by the Prime Minister on 7th December, 2018. The AU theme will still play an integral part of the events. INVESTIGATION AND PROSECUTION OF CORRUPTION CASES Corruption cases continue to be investigated and prosecuted in accordance with the mandate of the DCEO as stipulated in the Prevention of Corruption and Economic Offences Act No. 5 of 1999 as amended and also the Money Laundering and Proceeds of Crime Act No. 4 of 2008 as amended. Through the asset forfeiture strategy, DCEO has been able to recover several assets both moveable and immovable and auctioned them with a special account open for safe-keeping of the funds. The funds are intended to be used for fighting corruption and related crime. The strategy proves to be very effective since it removes proceeds of crime from the fraudsters so that they all know that crime does not pay.

DIRECTORATE ON CORRUPTION AND ECONOMIC OFFENCES (DCEO) Former British High Commission Building P O Box 16060, Maseru 100, Lesotho Telephone: +266 2221 9200

Lesotho has been conducting censuses since 1845, when they consisted of a simple body count. The decennial and scientific census commenced in 1966.

MAIN POPULATION CENTRES Lesotho’s principal population centres had their beginnings in the administrative ‘camps’ set up during the colonial area. Urban areas gradually formed around these camps as the Basotho came to live there. Most have a nucleus of old colonial sandstone buildings housing government departments, post offices and banks. Modern houses and flats provide residential accommodation in the larger towns, while on the outskirts of rural villages typical Basotho dwellings comprise huts made of earth and stone with thatched or corrugated iron roofs. Lesotho has ten administrative districts, each with its own capital. The district towns have the same name as the district itself, with three exceptions: Leribe, where the capital is Hlotse; Berea, which has Teyateyaneng as its main town; and Quthing, where the capital is also known as Moyeni. Besides the district towns, there are two more gazetted towns in Lesotho; comprising Maputsoe in Leribe district and Semonkong in Maseru district. MASERU: The population of Lesotho’s capital city had grown to 330 760 inhabitants by the time of the 2016 census, and Maseru is now home to more than half of the country’s urban dwellers. The city’s population was 98 017 at the 1986 census, and 137 837 by the 1996 census, illustrating its rapid expansion following Lesotho’s independence. Maseru, whose name means ‘the place of red sandstone’ in Sesotho, lies in a shallow valley at the foothills of the Maloti Mountains. To the west, the Mohokare (Caledon) River marks the border with South Africa, across which the Free State town of Ladybrand may be easily accessed via the Maseru Bridge border post. From here there are good road links to the rest of southern Africa, including the harbour of Durban and the economic hub of 08 | INTRODUCTION

Johannesburg, with the latter just an hour away by air from Moshoeshoe I International Airport. The centre of Maseru, which is presently being upgraded, comprises many older colonial buildings built from local sandstone, as well as some newer structures. Kingsway, the main street, boasts multi-storeyed office blocks, banks and ministerial complexes. It runs from the border crossing, southeast through the centre of town to the central traffic circle, where it splits into two important traffic arteries – the main roads to the north and south. Central landmarks along Kingsway include the former Anglican Church, Resident Commissioner’s House, modern Post Office building and large Roman Catholic Church. Colourful markets and a plethora of informal traders give Maseru an authentically African feel. Maseru’s amenities include international hotels and restaurants, casinos and entertainment venues, as well as modern state-of-the-art shopping malls, chain stores, supermarkets and stylish boutiques. The Avani Maseru reopened in May 2018 after an extensive M25 million revamp which included the refurbishment of all 105 hotel rooms and the upgrading of technology, entertainment, business, conferencing and catering features. Maseru Mall lies 3 kilometres to the south of the capital’s central business district and offers a cross-section of department stores, financial services, grocery, clothing and homeware outlets, restaurants and takeaways. Dubbed ‘Lesotho’s largest lifestyle shopping mall’, the centre also boasts a popular family entertainment area. The refurbished Fairways Plaza on Kingsway forms part of the drive by the Lesotho National Development Corporation (LNDC) to rebuild and upgrade those properties affected by the 1998 political unrest. This is seeing a number of prime sites in the capital being made available to the private sector to develop on behalf of Government. The initiative aims to revitalise Maseru by renovating derelict properties and improving the general appearance of the capital. In

addition to the Fairways complex, which will ultimately comprise six storeys, other properties include those at Maseru’s Sanlam Centre site, Clifford Trading along Kingsway, Ha-Nyeye Western and Eastern Extensions in Maputsoe, Setsoto Design in Teyateyaneng, and the former Metro Cash and Carry in Mafeteng. A new office block – Pension Fund House – has been built in Constitution Road by the Public Officers’ Defined Contribution Pension Fund. Vodacom’s new Maseru headquarters is a further development; covered with solar panels, the building is carbon neutral, powered by renewable energy, and ranks as the biggest ‘green’ building in Lesotho. Important manufacturing activities in Maseru include electronics assembly, textiles and clothing. The state-of-the-art Queen Mamohato Memorial Hospital was opened in Botšabelo in 2011, replacing the Queen Elizabeth II Hospital built in the 1950s. Maseru is also home to Lesotho’s other university, Limkokwing University of Creative Technology (LUCT). MAZENOD: The site of Moshoeshoe I International Airport, which opened in 1985, Mazenod takes its name from Eugene de Mazenod, founder of the Oblates of Mary Immaculate. Mazenod is major centre of Catholicism in Lesotho, with educational institutions, a printing works and a conference centre. Because of its proximity to Maseru and network of tarred roads, it also has one of the most rapid population growth rates in the country. BOTHA-BOTHE: Situated about 125 kilometres from Maseru in northern Lesotho, this is one of the country’s larger towns with a population of 35 108 at the time of the 2016 census. It was first settled in the 1800s by King Moshoeshoe the Great, who made the flat-topped sandstone plateau of Botha-Bothe Mountain his stronghold up until 1824. BothaBothe means ‘The Place of Lying Down’, as it was here that Moshoeshoe and his people sought refuge from the widespread chaos and warfare of the ‘Lifaqane’.

The colonial history of Botha-Bothe dates to 1884 when it was set up as a government sub-district to enable the local Basotho to pay their taxes. These days this bustling town with its magnificent mountain backdrop is a tourism hub, boasting community and administrative buildings, a hotel and market place, as well as a mosque for its sizeable Indian population. The Lesotho Tourism Development Corporation in conjunction with Action Lesotho has assisted in the development of a monthly fleamarket showcasing the district’s arts and crafts. There are well-preserved dinosaur footprints to be found close to the town in the caves at Sekubu. ROMA: Set in a lovely valley surrounded by mountains, this attractive town is a short 30-kilometre drive from Maseru. Best known as the site of the National University of Lesotho, Roma is also home to the Lesotho Observatory Foundation, three seminaries, various novitiates and a number of secondary schools. Roma was founded in 1862 as a Catholic mission town, and contains some surviving mission buildings as well as the more recent addition of a side-chapel to the pro-cathedral that contains the grave of Father Gerard, a French missionary who was beatified by Pope John Paul II in 1988. St Joseph’s Hospital, a teaching hospital for the Roma College of Nursing, is also situated here. Visitors will enjoy the Ha Baroana rock art situated to the north of the town, as well as the nearby dinosaur footprints. MORIJA: Named after the biblical Mount Moriah, this quaint town lies about 45 kilometres to the south of Maseru at the foot of the Makhoarane Plateau. It is the site of the earliest mission in Lesotho, having been founded in 1833 by French Protestant missionaries at the invitation of King Moshoeshoe the Great. An important historical and cultural centre, Morija houses Lesotho’s national museum as well as the oldest building in the country, Maeder House (1843). The impressive Lesotho Evangelical Church built in the mid-19th Century was constructed from over 130 000 handmade bricks.

mountain range and goods being transported from the road head here into the interior. By 1910 it was known as the site of Dawson’s Store and the seat of the ward chief Peete Lesaoana. Mapoteng was also the birthplace of the political activist Josiel Lefela.

Morija was the site of the first French Protestant mission in Lesotho, founded in 1833. Although the original settlement was almost destroyed during the 1858 Basotho-Boer War by commandos from the Free State, who left only the church and Maeder House standing, Morija became known as the ‘Well-Spring of Learning’ because of its pivotal role in training Lesotho’s first educated elite. The town has remained an educational and cultural centre, and is home to a number of primary and high schools as well as a theological school. A small printing press began operating in Morija in 1861 and started the first Sesotho language newspaper: ‘Leselinyana la Lesotho’ (The Little Light of Lesotho). A printing works was subsequently established to produce books and later expanded to distribute Christian and educational literature across southern and central Africa. Situated next to Maeder House, Morija Printing Works maintains a long tradition of high quality production and is the leading press in Lesotho. The Morija Museum and Archives (MMA) is a non-profit cultural and educational institution developed by the Lesotho Evangelical Church of Southern Africa in 1956. MMA is dedicated to developing programmes and activities related to history, heritage and communitybased tourism, the arts and culture, as well as science and the environment. The Morija Cultural Precinct encompasses the MMA, the Morija Arts Centre (opened in 2011), Maeder House Gallery, Linotšing Studios, Heritage Park, the Morija Amphitheatre and Cafe Mojo, and most recently the Morija Hub, which operates as a creative technology lab and offers basic computer training as well as creative workshops. The cultural precinct is a collaborative community of arts, learning and business enterprises, and builds on Morija’s history as a cultural and tourism destination, with precinct partners sharing resources and customers. (For further information on the

The Maluti Adventist Hospital opened in 1951 and has an attached nursing school which is the largest single enterprise in Mapoteng. Originally specialising in eye diseases, the hospital has since set up an HIV/AIDS unit.

MMA and its activities, consult the ‘Tourism’ chapter.) The Morija Arts & Cultural Festival was first held in 1999 and soon became the major cultural event in Lesotho, attracting approximately 35 000 people every year thanks to the outstanding mobilisation of institutions, sponsors and communities. In 2014 the festival was postponed as a result of the uncertain political situation in Lesotho at the time.

older inhabitants – the San – whose art remains on some of the rock shelters in the vicinity. TY is also an important centre for local handicrafts such as beautiful tapestries, woollen jerseys, blankets and mohair rugs, pottery and woven goods, with craft outlets to be found both in the town and along the road to Leribe via Pitseng.

TEYATEYANENG: Teyateyaneng, which is popularly abbreviated to ‘TY’, lies on an elevated plateau approximately 40 kilometres out of Maseru on the A1 North. This pleasant town, whose name means ‘Place of Shifting Sands’ in reference to the changing course of the nearby river, was founded in 1886 as the capital of Berea district by Chief Masopha in the aftermath of the Gun War. Today its population is 24 257 (2016 census).

PEKA: As a sub-district of Leribe district with its own government reserve, Peka became one of the most densely populated rural areas during the colonial period. From the 1920s until shortly before independence, a colonial officer dealing with administrative matters was stationed at Peka Reserve. Since 1966 a post office and courthouse have been built and electricity and water are now available in the urban area while health services are supplied at two clinics. Tarred roads link Peka with Maputsoe and Leribe to the north, Teyateyaneng to the south, and South Africa via Peka Bridge border post to the west.

While Teyateyaneng’s older settlements comprise the St Agnes Mission, the surrounding area was once home to even

MAPOTENG: The Mapoteng area gained prominence in the late 19th Century with the expansion of settlements into the Maloti

MAPUTSOE: Boasting 55 541 inhabitants (2016 census), this bustling border town is the second most populous urban centre in the country after the capital city. It is located about 86 kilometres north of Maseru, and lies close to Ficksburg in the Free State, which can be reached via the bridge across the Mohokare (Caledon) River – the principal crossing point between Lesotho and South Africa. Maputsoe is also an important industrial centre, although early industries such as maize milling and the manufacturing of furniture, electric light fittings, tractors and shoes, have been overtaken in importance by the garments industry. LERIBE (HLOTSE): Situated north of Maseru and close to the Maputsoe (Ficksburg Bridge) border post, Leribe’s population had reached 38 558 by the time of the 2016 census. The town was originally named ‘Hlotse’ after the nearby river, but is more commonly called ‘Leribe’ after the district, which was in turn named after the French Catholic Mission in the vicinity. There are a number of shops as well as a busy market, with the Leribe Craft Centre selling beautiful handmade mohair items. Hlotse was important during Lesotho’s colonial era and remains one of the kingdom’s larger centres. It was founded in 1876 when the resident magistrate and an Anglican missionary were granted permission to build by the local chief. The Anglican Church dates from 1877 and is the oldest building in the town. During the Gun War of 1880-1881 the small fort at the mission was often under siege by the Basotho. Major Bell’s Tower is part of the original fort and remains a landmark on the main street. There is also a cemetery which dates back to that era of military conflict. One INTRODUCTION | 09

LESOTHO FUNERAL SERVICES With you all the way Corner Mpilo Boulevarde and Nightingale Road, Maseru • P O Box 658, Maseru, Lesotho Tel: +266 2231 3066 • Fax: +266 2231 0176 • Email:lfs@ilesotho.com • Website: www.lesothofunerals.co.ls Lesotho Funeral Services is a member of National and International Funeral Associations such as National Funeral Director of Lesotho, National Funeral Directors Association of Southern Africa, South African Funeral Practitioners Associations and International Order of the Golden Rule.

• Employee Development – We strive to create an

treasures to make a difference to those who need

Lesotho Funeral Services operates from three (3) regional headquarters in Lesotho being the Central region headquarters in Maseru, Northern region headquarters in Leribe and Southern region headquarters in Mohale’s Hoek, with a total of thirty (35) branches throughout the Kingdom of Lesotho, and one (1) Tombstone factory with the aim to bring services where they can easily be accessible at affordable prices.

it most.

atmosphere that inspires and enables people to

reach their full potential;

• Community Impact – We use our talents and

WE ARE A SOCIALLY RESPONSIBLE COMPANY We concentrate on what the customer wants by packaging the product that meets their requirements, we are constantly involved in community projects, we followup our service programmes, we donate to charitable

VISION STATEMENT Lesotho Funeral Services awarded PMR Business Excellence Award.

organisations, sporting organisations and teams, and National University of Lesotho research programme.

LESOTHO FUNERAL SERVICES strives to be in the lead of high quality funeral undertaking services.

EXECUTIVE SUMMARY

CUSTODY AND REPARTRIATION OF HUMAN REMAINS

Lesotho Funeral Services is a propriety company registered in Lesotho and was established in 1969 under Metropolitan’s life insurance, known as Homes Trust Life, and is the first funeral undertaking business in Lesotho.

MISSION STATEMENT

We keep custody of all human remains of known and

The business provides mortuary services and specialises in funeral policies, funeral services, funeral programmes, exhumation, cremation, international repatriation, transportation of human remains, coffins, tombstone sale and erection, and embalming.

We offer quality, affordable and sustainable funeral undertaking services with highly qualified, motivated, committed and empathetic professionals.

unknown corpses brought to our mortuaries by members

Lesotho Funeral Services has been awarded numerous international awards which include: • • • •

The Arch of Europe gold star award Illinois 1986 International award for excellence and business prestige New York 2000 Golden Medal for Quality and Services Argentina -2003 International Star for Quality and Services – Geneva 2008

Lesotho Funeral Services has recently (November 2018) been awarded the PMR Business Excellence Award – DIAMOND ARROW AWARD.

of Lesotho Mounted Police Services (LMPS), deceased bodies collected from hospital mortuaries, collections made by our drivers/undertakers from places of

CORE VALUES • Integrity – We do what is right all the time; • Excellence – We are constantly redefining our goals, expectations, boundaries and potential;

residence; We import and export human remains from anywhere in the world and to any country all over the world. WE ALSO OFFER AND CO-ORDINATE CREMATION SERVICES

OUR OPERATING PRINCIPLES

Lesotho Funeral Services aligns itself with the Principles of the QC 100 Total Quality Management Model. Commitment of LESOTHO FUNERAL SERVICES To Quality

COMPETITIVE PRICING SUSTAINABLE SERVICES

LOW COST SIMPLICITY

PEOPLE TO WORK WITH

EXPERIENCED STAFF CUSTOMER CENTRIC RESOLUTION OF PROBLEMS

EFFICIENT

Our company accepts quality as a factor of development to become more competitive. 1. 2. 3. 4. 5. 6. 7.

Quality is a consequence valuating customer satisfaction and obtaining positive business results. Meet the quality levels established in the Company in accordance with the QC100 Points of quality. Encourage participation and teamwork for expectations. Satisfy the needs of our clients and meet their expectations. Provide human resources both technical and economic to achieve continuous improvement for the environment. Manage human resources in our company to achieve maximum potential. Make employees aware of the importance of concentration on the most profitable area of activity to achieve the best business results.

Lesotho Funeral Services ushers.

The achievement of these seven principles by LESOTHO FUNERAL SERVICES will foster improvement for client, employees, suppliers and all of the other persons who make up the company.

One of the Lesotho Funeral Services Branch at Ha Makhakhe.

Lesotho Funeral Services fleet.

of the best examples of dinosaur footprints preserved in sandstone can be seen at Subeng Stream, about 7 kilometres north of Hlotse and an easy walk from the main HlotseBotha-Bothe road. OXBOW: This small village is situated to the east of Botha-Bothe, past the Liphofung Cave Cultural Historical Site and through spectacular mountain vistas where the tarred road traverses the Moteng Pass. Oxbow is one of the few places on the continent to offer snow-skiing, and the area contains Africa’s highest ski resort at AfriSki. The 67-kilometre road between Oxbow and Mapholaneng, which passes the Letšeng diamond mine, has been upgraded. The tarred road from Oxbow to Mokhotlong follows the original ‘Roof of Africa’ rally route through spectacular mountain ranges and over Tlaeeng Pass, which is Lesotho’s highest at 3 275 metres. MOKHOTLONG: Mokhotlong, which was founded as a police post, is the district headquarters of one of the most remote and isolated areas in Lesotho, with a population of 12 940. While the village is now linked to the rest of the country via the A1, A3 and A31, and South Africa via the Sani Pass, winter conditions can be extreme, and snowfalls are still able to cut Mokhotlong off from the outside world for several days at a time. This is a scenic locale for walking and climbing, and the mountaineers’ chalet at Sani Top is a good base from which to ascend the majestic Thabana-Ntlenyana – Africa’s highest peak south of Mount Kilimanjaro. Sani Top has one of the highest pubs in Africa and is a wonderful spot to take in the beautiful scenery of the Mountain Kingdom. The 47-kilometre road between Mokhotlong and Sani Top has been upgraded to bitumen standard and should see both trade and tourism improving in this formerly inaccessible area. In addition, the construction of Polihali Dam as part of the second phase of the Lesotho Highlands Water Project, will spur 12 | INTRODUCTION

development in the area. SEMONKONG: The small trading post of Semonkong has just 7 856 inhabitants (2016 census), and can be found approximately 130 kilometres southeast of Maseru in the beautiful Thaba Putsoa mountain range. Founded in the 1880s by Basotho fleeing the Gun War, Semonkong is today a handy base from which to see the surrounding attractions The town, whose name means the ‘Place of Smoke’, is thought to derive its name from the spray which rises from the Maletsunyane Falls some 5 kilometres downriver. In addition to the impressive 204-metre-high Maletsunyane Falls, which constitute the highest single-drop waterfall in Southern Africa, the lovely Ketane Falls (situated one day’s pony trek away) are another highlight. The steep mountain slopes surrounding Semonkong are one of the best locales to find Lesotho’s national flower: the spiral aloe, or ‘Aloe Polyphylla’. MALEALEA: Situated an 80-minute drive south of Maseru, the rural village of Malealea is a perfect base for visitors entering Lesotho. Set amidst awe-inspiring mountain scenery near the aptly-named Gates of Paradise Pass, it is also regarded as one of the country’s top adventure destinations, boasting beautiful valleys and hills that are ideal for hiking or pony trekking to attractions such as Botso’ela Waterfall, Pitseng gorge and plateau, and Ribaneng Waterfall. There are good San rock paintings here, while visits to the surrounding villages offer visitors an authentic view of local culture and the traditional Basotho way of life. THABA-TSEKA: The administrative centre of the mountainous district of Thaba-Tseka – the ‘Mountain with a Blaze’ – the town of Thaba-Tseka was built during the first phase of the Lesotho Highlands Water Project. This grand-scale water transfer scheme, which saw the construction of the enormous Katse Dam, had a profound effect on the area: from infrastructural developments such as improved road networks to a skills training centre to help residents empower themselves. The ThabaTseka Technical Institute has subsequently provided training courses, business advice and technical services to the surrounding

community for over two decades. Today the town has 15 248 inhabitants, according to the census of 2016. The full panorama of Lesotho’s scenic splendour is on view along the route from Mohale to Katse via Thaba-Tseka. The Likalaneng-Thaba-Tseka road is currently being upgraded, and further construction and renovation of roads in the district is making this centre considerably more accessible and tourist-friendly, with the completed network to link Maseru-Katse-Leribe. Places of interest in the vicinity include Katse Dam (with a renovated information centre), Katse Botanical Gardens and Bokong Nature Reserve. MAFETENG: Sitting about 76 kilometres south of Maseru, this is the closest town to the Van Rooyens Gate border post and boasts a population of 39 754. An administrative and commercial hub, Mafeteng was a garrison town during the Gun War of 1880-1881. The cemetery contains an obelisk commemorating members of the Cape forces who fell in action, while the Residency once served as a hospital. The town and its environs also played an important role in Lesotho’s early literary history. The first locally-owned printing works was established in 1904 at Ha Khojane, 10 kilometres west of the town. The newspaper ‘Naledi ea Lesotho’ was printed there from 1904 onwards and distributed across southern Africa. MOHALE’S HOEK: Situated close to the Makhaleng Bridge border post and surrounded by the lovely Mokhele Mountains, Mohale’s Hoek is some two hours’ drive along the A2 from Maseru – a distance of 123 kilometres. When Lesotho became a British protectorate in 1868, Mohale’s Hoek became the district headquarters. The years since independence have seen an airstrip constructed here as well as a small industrial estate, and the population had grown to 40 040 by the time of the 2016 census. QUTHING (Moyeni): The capital of Quthing District in the southernmost part of Lesotho, Quthing is also known as Moyeni, the ‘Place of the Wind’, and lies some 180 kilometres from Maseru. The colonial district headquarters was

originally set up at Silver Spruit in 1877, but reestablished here in 1884 after the Gun War. The town consists of the old colonial administrative centre of Upper Moyeni, which has a post office, hospital, police station and hotel, and Lower Moyeni, which is the main commercial centre. It has a current population of 27 314. The fascinating rock art to be found in the area was left by the San, who lived in this region for many centuries. Today the district is characterised by a mix of languages and cultures. Other nearby attractions worth seeing comprise Lesotho’s most accessible dinosaur footprints, Masitise (Ellenberger’s) Cave House Museum (a national monument), and the twin-spired sandstone church of Villa Maria Mission. There are guided tours to the ruins of the historical Mt Moorosi fortress, where Chief Moorosi was besieged by British troops. QACHA’S NEK: Qacha’s Nek was founded in 1888 as a mission station, and later became the district’s administrative centre. Archaeological excavations at rock shelters in the area nonetheless suggest that people have lived here for more than 50 000 years. More recent cultural attractions include the lovely St Joseph’s Church and a number of sandstone buildings dating from the colonial era. This important border town has 15 917 inhabitants (2016 census), and is the nearest entry point into Lesotho from South Africa’s Eastern Cape. However, up until 1966 it was without direct road links to the rest of the country, meaning supplies had to be procured from the South African town of Matatiele. While these days there is a tarred road all the way to Maseru, air transport remains important, and there is an airstrip that connects the town to the capital as well as other villages in the highlands of the upper Senqu Valley. Owing to the region’s high rainfall, the area around Qacha’s Nek is filled with more trees than any other place in Lesotho. There is a fairly good (though unsealed) road most of the way from Qacha’s Nek to Sehlabathebe National Park some 50 kilometres away. The last few kilometres need to be tackled by a four wheel drive vehicle.

Lesotho’s small domestic market underlines the importance of strengthening regional links to boost its export potential. It is a member of the Southern African Customs Union (SACU) and Southern African Development Community (SADC), and participates in a number of economic partnership agreements with various regional and international blocs. It is also part of the Common Monetary Area (CMA) which links South Africa, Namibia, Lesotho and Swaziland. The country is also part of two continental initiatives: the New Partnership for Africa’s Development (NEPAD) and the African Union. Regional activities are guided by SADC’s revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020 which prioritises, among others, industrial development and the realignment of existing priorities with resource allocation in terms of their relative importance and greater impact on regional integration. The Basotho economy is closely integrated with that of its neighbour, South Africa, and the countries share a fixed exchange rate regime. Imports from South Africa account for 84.1 percent of all imports, while Lesotho’s main export trading partners are South Africa (56.4 percent) and the United States (35.4 percent). The latter serves as the main market for Lesotho’s textile exports, thanks to the preferential trade terms afforded by the African Growth and Opportunity Act (AGOA). Lesotho’s investment environment has strengthened in recent years with the introduction of business reform measures and increased protections for investors. Government is committed to promoting private investment and attracting foreign direct investment (FDI) through the updated Companies Act of 2011, supported by legislation covering sectors such as mining, tourism and industry – particularly textile manufacturing. The private sector makes up around 20 percent of Lesotho’s GDP, but is slowly expanding as a result of Government’s private sector development initiatives, such as

averaged 3.3 percent. Economic activity in the 1990s was driven by the construction boom which accompanied the first phase of the Lesotho Highlands Water Project (LHWP), an extensive water transfer scheme to supply the needs of South African industry. Around the turn of the millennium the manufacturing sector, specifically the textiles and apparel industry, took over as the principal source of foreign revenue and jobs. Diamond mining has become an increasingly important industry, with its contribution to GDP having risen from 0.1 percent in 1999 to around 9 percent in 2015. In addition to diamonds and textiles, large infrastructure projects like the second phase of the LHWP are expected to attract ever greater levels of investment in the medium to long term. Strategic development Leather Assembly © LNDC

Foreign Trade

& investment

Lesotho has a free-market economy, relatively open capital markets and a favourable tax environment for the export sector. International investment is encouraged, and the business climate has improved significantly since 2011. financial sector reforms and implementation of the Land Act. Efforts to improve the efficiency and effectiveness of the public sector and promote high quality job creation in the private sector through strategic investments are taking place under the new private sector growth model and the World Bank’s country partnership framework (CPF).

THE BASOTHO ECONOMY Lesotho’s economy, like many small economies, is relatively undiversified. It is

predominately based on agriculture and textile manufacturing, and highly dependent on trade as the main avenue for growth, with the export of diamonds as well as water being important foreign exchange earners. This makes Lesotho particularly vulnerable to international or regional shocks. Diversifying into further economic activities is vital, and requires strong industrial policy and strategic governance to encourage the discovery of new sectors and the establishment of infant industries. Growth over the past two decades has

Lesotho’s National Strategic Development Plan II (NSDP II) has identified commercial agriculture, manufacturing, tourism and creative industries, and technology as the strategic sectors that can be prioritised for growth and job creation for the period 2018/19 to 2023/24. To unlock this latent potential, Government is implementing a two-pronged strategy of: attracting private investment (both domestic and foreign investment) into these sectors; and resolving the constraints that hinder their growth and development. This involves creating an enabling investment climate and supportive regulatory framework by:

•

Accelerating investment climate reforms and related legislation (residence and work permits, access to land, electricity, customs clearance)

• •

Maintaining macroeconomic stability

•

Reforming the land tenure system, with the focus mostly in rural areas

•

Reviewing current land policies and

Improving access to finance through the development of capital markets and other innovative products for Small, Medium and Micro Enterprises (SMMEs)

FOREIGN TRADE & INVESTMENT | 13

legislation to ease access to land, especially to support commercial agriculture, private investment in industrial infrastructure and tourism establishments

•

Implementing key reforms for promoting democracy and political stability

NSDP II integrates emerging issues, national, regional and international policy commitments and programmes, particularly the United Nation’s Sustainable Development Goals (SDGs), the African Union Agenda 2063, and the SADC Regional Indicative Strategic Development Plan (RISDP). Expansion and diversification of the economic base has been prioritised, along with increased productivity in key growth sectors and in the green economy.

some importers. Growth was revised down for Argentina, Brazil, Iran and Turkey, among others, reflecting country-specific factors, tighter financial conditions, geopolitical tensions and higher oil import bills. China and a number of Asian economies are also expected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade measures. Some 45 emerging market and developing economies – accounting for 10 percent of world GDP in purchasing-power-parity terms – are projected to grow by less than advanced economies in per capita terms over the 2018 to 2023 period, and hence to fall further behind in living standards.

The steady expansion of the global economy which has been underway since mid-2016 continues, with growth for 2018/19 projected at 3.7 percent, according to the International Monetary Fund (IMF) in its World Economic Outlook (WEO) report of October 2018. Nonetheless, expansion has become less balanced and may have peaked in some major economies.

In sub-Saharan Africa, growth of 2.7 percent was recorded in 2017, with projections of 3.1 percent and 3.8 percent for 2018 and 2019, respectively. Growth performance varies, however, across countries. Despite the ongoing recovery, the medium-term outlook for commodity exporters remains generally subdued, with a need for further economic diversification and fiscal adjustment. In South Africa, prospects remain modest amid uncertainty in the run-up to the 2019 general elections, with growth projected to fall to 0.8 percent in 2018 from 1.3 percent in 2017, before recovering to 1.8 percent in the medium term.

In advanced economies, economic activity lost some momentum in the first half of 2018 after peaking in the second half of 2017. Outcomes fell short of projections in the euro area and the United Kingdom (UK); growth in world trade and industrial production declined; and some high-frequency indicators moderated. In the United States (US), momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on US $200 billion of US imports from China.

The domestic economy: 2017-2020 Lesotho’s economy slipped into recession in 2017 for the first time in a decade. The majority of the services industries contracted during the year, on the back of weak domestic demand driven by, amongst others, spillovers from the weak performance of the South African economy, given the historically strong economic ties between the two countries. Despite employment (real household incomes) remaining stable in key sectors such as manufacturing and government, domestic demand remains restrained.

Across emerging market and developing economies, activity continued to improve gradually in energy exporters but softened in

According to the Central Bank of Lesotho’s Economic Outlook (2018-2020) projections released in June 2018, growth has been

Global growth

14 | FOREIGN TRADE & INVESTMENT

marked down by 5.7 percent and 2.0 percent for 2017 and 2018, respectively. This revision follows on the heels of a number of developments, including the recently released National Accounts, which revised the 2016 growth estimate upwards by 1.9 percent to 3.3 percent, changing some estimates and therefore the base for the forecasts. In the primary sector, significant downward revisions in mining and agriculture have overshadowed both sectoral growth and the overall growth of the economy. The revisions in construction activities are mainly in line with recent government capital budget estimates and the revised implementation schedule of major capital projects, particularly the construction of the Polihali dam and transfer tunnel which will be preceded by the construction of advance infrastructure works. While the domestic outlook is subdued, growth is expected to recover marginally from the preliminary real GDP growth contraction. The annual growth rate is expected to average just 1.1 percent in the medium term, underpinned by expected low aggregate demand from both the private sector and government. This is far lower than the past 20-year average of 3.3 percent, and is mainly accounted for by the slowdown across all sectors – particularly the contractions in the agriculture, wholesale and retail trade, and government activities subsectors, and lower growth in manufacturing. The strong growth expected in the mining industry in 2018 is in line with the synchronised global economic upswing, and is forecast to offset the poor performance in other sectors before moderating towards the end of the forecast period. Construction activity is also expected to recover with the commencement of the auxiliary works associated with the LHWP Phase II. There is, however, uncertainty relating to adherence to implementation schedules for most construction projects. Fiscal policy is expected to contract over the next two years in line with the deterioration in revenue and the decline in government deposits. The overall fiscal performance

marginally improved in 2017 when compared with 2016, with the fiscal deficit narrowing from 8.8 percent to 5.7 percent of GDP. Revenues for 2017 fell by 1.2 percent on account of a reduction in tax revenue (particularly corporate income tax) and non-tax revenue. While SACU revenue collections improved by 15.7 percent in 2017, this was not sufficient to offset the lacklustre performance of domestic revenue collection. The fiscal deficit is projected to narrow to 3.0 percent in the medium term. Despite subdued domestic demand, there should be marginal improvements in domestic tax revenue as the revenue authorities intensify tax compliance efforts for both individuals and corporates. In particular, corporate income tax is expected to rise in line with the robust performance of the mining sector. Revenue from SACU is predicted to remain subdued in 2018 and 2019, but to recover in 2020 in line with the anticipated recovery of South Africa’s economy. The external balance registered a deficit equivalent to 5.7 percent of GDP in 2017 relative to 5.4 percent of GDP in 2016. The current account deficit narrowed due to the improvement in the primary and secondary income account balances. In addition, the financial account deficit contracted during the period, thus contributing to the observed improvement in the external sector position. However, the official reserve assets, measured in months of imports, declined from 5.1 months in 2016 to 4.1 months in 2017. Projections point to the widening of the current account deficit due to a higher trade account deficit. Export growth is anticipated to remain strong, supported largely by sustained external demand. Diamond exports are expected to grow by 19.6 percent in 2018 and 7.0 percent in 2020, thanks to favourable prices as well as demand from international markets. New mining industry entrants are also likely to boost the performance of the sector. The forecast for textiles is that exports will remain flat at 3.5 percent in the medium term as the industry

continues to face tight competition from its Asian counterparts. Other factors, such as the recent appreciation of the exchange rate, relatively higher wages, low labour productivity and inefficiencies in service delivery continue put pressure on the performance of the industry.

INVESTMENT ENVIRONMENT Lesotho has realised major improvements in its business environment in terms of licensing, getting passports, identification cards, water and electricity connections, with the rollout of the one-stop-shop pilot project improving availability of services in the districts. While the country has made progress in areas such as the control of corruption, regulatory quality and accountability, factors such as government effectiveness and political stability require further work. Being centrally situated in Southern Africa gives Lesotho access to a substantial consumer market in South Africa, as well as the more sophisticated transport and communication networks of its larger neighbour. There are good road connections to both the economic hub of Gauteng and the port of Durban on the Indian Ocean, and thus links to the wider international community, making it suitable for export-orientated manufacturing industries. Globally, Lesotho is ranked 40th out of 190 economies worldwide in the World Bank’s ‘Doing Business’ report for 2018 when it comes to the ‘Ease of Trading Across Borders’ indicator. Lesotho has benefited from a customs modernisation programme supported by South Africa which seeks to facilitate regional trade and reduce the time and cost of cross-border movement of goods. Lesotho’s labour force is young, predominantly English-speaking, literate and well-motivated, with a tradition of manual dexterity at competitive wage rates. Serviced industrial sites, factory shells and commercial buildings

are available for rental, and there are special incentives provided to investors who erect their own factories at designated sites. Backstopping services from the Lesotho National Development Corporation (LNDC) and a one-stop-shop for business brings together a streamlined and integrated suite of services for investors, and includes trading and manufacturing licences, import and export issuances, residency visas and work permits. Import and export procedures have been greatly improved in terms of number of procedures, length of time and cost. Current tax and financial incentives are as follows: • 10 percent corporate tax on profits earned by manufacturing companies exporting outside SACU • Manufacturing corporate tax rate of 10 percent on profits for intra-SACU trade • No withholding tax on dividends distributed by manufacturing companies to local or foreign shareholders • No advance corporation taxes paid by companies on the distribution of manufacturing profits • Training costs are allowable at 125 percent for tax purposes • Payments made in respect of external management skills and royalties related to manufacturing operations are subject to withholding tax of 10 percent • Easy repatriation of manufacturing profits • A VAT rate of 15 percent (ensuring harmonisation with the RSA)

•

Furthermore, the Lesotho Revenue Authority has introduced flexible VAT payment systems to tax compliant firms to ease cash flows

Traditionally, areas which have attracted the greatest investment include large infrastructure projects like the LHWP, and initiatives that aim at developing the hydroelectric power industry will likely attract new investors in the coming years. Lesotho’s textiles and garments

subsector is another potent attractor of investors, who come mainly from South Africa and South-East Asia, with the country’s dutyfree access to the US under AGOA having been extended until 2025. The mining industry also brings in a great deal of FDI. Current developments Government announced a number of measures in the 2018/19 budget which are expected to stimulate investment and job creation. As such, each of the economic ministries has been instructed to devote its energies and efforts to catalysing domestic and foreign private investment, as well as to report on businesses it has helped start or expand. To support these aims, Government established the Investment Climate Reform Committee in 2018, chaired by the Deputy Prime Minister and consisting of technical and policy input from key investment ministries. The committee is tasked with implementing a variety of reforms to make it easier to invest in Lesotho, including issues such as access to capital for starting a business. Other initiatives are seeing the construction of industrial infrastructure, including a threeyear, M800-million project to develop Ha Belo industrial estate, which will put industry closer to South Africa’s port of Durban. There are also plans to upgrade roads as well as the border crossing along this route.

LESOTHO NATIONAL DEVELOPMENT CORPORATION The Lesotho National Development Corporation (LNDC) strives to facilitate economic growth and development in the kingdom and implement its industrial development policies, while promoting Lesotho as an attractive investment destination to foreign and local investors. In addition to a robust Government-administered incentive regime, the LNDC enjoys clear channels of communication with relevant state departments and parastatal organisations in

order to speed up service delivery. LNDC has developed and launched a Strategic Plan 2018-2022 with the objective of mobilising the private sector and all available resources around industrial development, particular focusing on rural areas. The LNDC is the first point of contact for investors who intend setting up operations in Lesotho. The corporation offers pre-investment and after-care services to both prospective and existing investors as an expedient means of simplifying and shortening the processes related to investment. Examples include facilitating the procurement of all permits and licenses, as well as providing assistance with company registration. Investment project appraisals are undertaken, along with equity participation in projects considered to be of strategic importance to the national economy and demonstrating long-term viability. Subsidies are given to investors wishing to construct their own industrial buildings at LNDC-serviced sites. Factory inspections are conducted to assess workplace circumstances and thereby ensure harmonious relations between employers and employees, as well as investor-compliance with the country’s labour laws. A specificallydesigned checklist of all labour-related issues facilitates prompt detection and intervention where necessary. The corporation administers the Partial Credit Guarantee Scheme, where the commercial banks provide loan guarantees (on a 50/50 risk sharing basis) to entrepreneurs who wish to start or expand medium to large businesses but do not have sufficient collateral/security. Furthermore, the launch of the M20 million Supply Chain Finance facility, one of the four components of LNDC’s Enterprise Development Facility (EDF), is an important step. The LNDC was one of the winners at FOREIGN TRADE & INVESTMENT | 15

the United Nations Conference on Trade and Development (UNCTAD) Investment Promotion Awards at the World Investment Forum in Nairobi, Kenya, in July 2016. The corporation was honoured for its instrumental role in forging effective collaborations with strategic partners, in particular the Industrial Development Corporation of South Africa and the China-Africa Development Fund, to promote investment in strategic projects in infrastructure, agriculture, energy and manufacturing. Its efforts have attracted investment in renewable energy and in rural areas. Promoting investment and competitiveness LNDC is a member of the Africa Investment Promotion Agency Network (AfrIPANet). This is a programme developed by the United Nations Industrial Development Organisation (UNIDO), with the aim of providing investment promotion agencies with up-to-date and accurate investor survey information, thus enabling them to readjust investment promotion interventions in areas expected to realise the most impact in terms of linking domestic investment to FDI. Roadshows and joint ventures are the preferred method of catalysing FDI. These can help exploit the 6 400 product lines under AGOA as well as previously untapped European preferential trade opportunities. Events held during the year include the investor roadshow in London in April 2018 in conjunction with the Commonwealth Heads of Government Meeting (CHOGM). Government is also working with USAID to increase the number of products Lesotho exports to the United States. This includes a roadshow in Lesotho for US investors with the purpose of establishing links with Basotho investors. USAID is also assisting Lesotho to brand food and medicinal products for export to the US. Investment opportunities The LNDC has identified 21 priority products which already have international market access or hold a great potential to do so. These 16 | FOREIGN TRADE & INVESTMENT

include high-tech agriculture and agribusiness in respect of meat and meat products, fruits and vegetables. In addition, the textiles and apparel manufacturing value chains have the potential for expansion, as does the light-engineering value chain. In line with the NSDP II, the LNDC aims to facilitate further investment into national priority sectors such as tourism and the creative industries, while also developing infrastructure and technologybased industries. Support is being given to leading exportoriented companies by scaling up their productive capacity, facilitating international market access and integrating these companies into supply chains. Also in the spotlight is the setting up of new companies in the abovementioned priority areas and related product categories. In order to bring in higher levels of FDI, partnerships have been initiated with renowned regional and global players in targeted product lines. The intention is to establish national champions that are capable of competing on par with their regional and global peers in strategic industries, particularly in manufacturing and high-tech agro-processing. This foresees cross-border acquisitions of strategic assets, raw materials, distribution channels and technology, with companies to be enabled with the requisite technology, product and process certifications as well as human capital. The launch of the Lesotho Standards Authority in 2018 to accredit and certify local products for safe entry into domestic and international markets will support export-oriented investors. Among others, LNDC currently has a stake in Basotho Canners, CashBuild, Shoprite stores, Avani Maseru/Lesotho hotels, LNDC Centre Property, Maluti Mountain Brewery, Loti Brick, Lesotho Milling Company and Defcort Flats, as well as factory shells in different parts of the country.

SOUTHERN AFRICAN TRADE & INVESTMENT HUB The Southern Africa Trade and Investment Hub (SATIH) engages with partners across Southern Africa to deepen regional economic integration, promote two-way trade with the US under the African Growth and Opportunity Act and attract investment that drives commercial expansion of Southern African companies into global markets. SATIH works with the five SACU countries – Botswana, Lesotho, Namibia, South Africa and Swaziland – as well as Malawi, Mozambique, Zambia and Zimbabwe, in collaboration with governments and the private sector to advance international trade. By building a vibrant, broad-based and exportoriented private sector, and promoting an attractive business environment, SATIH fosters resilience among Southern African economies. From 2013 to 2017, the Hub facilitated US $41 million in private sector investment, reduced the time it takes to trade by 20 percent across the region, and promoted US $40 million in intra-regional trade. In Lesotho, SATIH is supporting economic diversification and job creation, while fostering a business environment conducive to trade and investment. The Hub implements activities in four critical areas:

• • • •

Finance and Investment – Accelerating US and international investment to businesses to promote strategic value chains and expand international trade links Export Competitiveness – Helping companies to leverage AGOA to increase exports to the US Enabling Environment and Trade Facilitation – Fostering transparent, reliable, efficient and cost-effective trade policies and related infrastructure Agribusiness – Increasing the competitiveness of agricultural value chains for export through investment, technology transfer and greater private sector participation

The Hub links export-oriented companies in key sectors such as textile/apparel and specialty foods to potential buyers and investors, as well as including them in regional directories. It partners with the LNDC to facilitate trade links, and promotes awareness of Worldwide Responsible Accredited Production (WRAP) standards. Further, it supports private sector initiatives to increase market transparency and trade in textiles and apparel. SATIH assists local companies and the mohair wool industry association in complying with cross-border pesticides control and grading. It supports the development of an Authorised Economic Operator (AEO) facility to assist cross-border trade.

TRADE & MARKET ACCESS Regional integration is of prime importance, given Lesotho’s small size and geographical position within the larger economy of South Africa. Benefits to this relationship include ready access to its neighbour’s excellent transport network, technology, expertise, goods markets, investment resources and capital and financial markets. To take full advantage of these opportunities, Lesotho has been involved in the upgrading of border post facilities and access roads, and the establishment of a dry port. Furthermore, it has undertaken several initiatives in the form of bilateral, sub-regional and regional agreements to facilitate regional trade relations. These include a Joint Bilateral Commission on Cooperation between Lesotho and South Africa on issues of infrastructure and transport. The Lesotho Revenue Authority’s Asycuda customs border control system is part of the broader Customs Modernisation Programme meant to simplify clearing processes and reduce the costs of doing business, while also reducing levels of corruption at the border and increasing revenue collection. The system entails non-intrusive methods of inspections, such as the use of X-rays to scan goods and baggage at both the border and airport.

Trade facilitation is of prime importance in lowering cross border transaction and transport costs for a Land Locked Developing Country (LLDC) such as Lesotho. The LLDC group lobbies for special consideration to be shown to export-driven countries lacking their own direct sea-freight facilities. Trade agreements Lesotho has signed a number of trade agreements which afford expanded access to regional and international markets. In addition, its status as a Least Developed Country (LDC) in the World Trade Organisation (WTO) gives it duty-free access to the markets of industrialised countries. The Enhanced Integrated Framework (EIF) is an aid-for-trade partnership for LDCs that supports such countries in being more active in the global trading system by helping them to address supply-side constraints to trade. Along with South Africa, Botswana, Namibia and Swaziland, Lesotho is a member of the Southern African Customs Union (SACU), which is the oldest functioning customs union in the world, having been established in 1910. SACU is the regional framework for trade cooperation, and seeks to maintain the free interchange of goods between member countries and provide a common external tariff for the common customs area. Lesotho’s products therefore enjoy duty free access to a market of more than 62 million consumers with a combined GDP of US $307 billion. The Prime Minister of Lesotho, Dr Thomas Thabane, assumed the chairmanship of the Southern African Customs Union at the 6th Summit of the Heads of State and Government held in Gaborone, Botswana, in June 2018. The revenue realised from external trade is coordinated through a joint revenue pool and distributed proportionately to SACU member states, based on an established revenue sharing formula. A regional financing

mechanism has been established for SACUwide infrastructure and industrialisation projects.

negotiated tariff liberalisation process as well as bilateral and/or inter-regional trade arrangements.

Countries in the common customs area are able to negotiate Free Trade Area (FTA) agreements with third parties as a bloc. SACU members are party to the SADC Protocol on Trade signed in 1996, and enjoy a Free Trade Agreement with the European Free Trade Association (EFTA) states, made up of Switzerland, Norway, Iceland and Liechtenstein. In addition, there is a Preferential Trade Agreement (PTA) with the Common Market of the Southern Cone (MERCOSUR), comprising Argentina, Brazil, Uruguay and Paraguay (a total market of 385 million consumers). A Trade, Investment and Development Cooperative Agreement (TIDCA) was signed in 2008 with the USA.

The SADC FTA has been fully implemented since 2012, with 92 percent of product lines traded at zero percent. The FTA is one of the first milestones towards regional integration and a common market. An agreement has been reached on a SADC Regional Development Fund.

The US has historically proven a ready market for Lesotho’s exports of apparel. The African Growth and Opportunity Act (AGOA) provides eligible African countries with duty and quota-free access to the US market – the largest consumer market on earth with a GDP of US $20 trillion and 325 million people. Lesotho, which has been exporting to the US under AGOA since 2001, is allowed to utilise third-country textile inputs because of its LDC classification. The country’s exports to the US under AGOA were worth US $308.6 million in 2017. About 40 000 jobs in Lesotho depend directly on AGOA, while the programme additionally provides indirect benefits to a further 120 000 citizens. Lesotho is a member of the Southern African Development Community (SADC), a grouping of 15 countries with a combined population of some 330 million and a cumulative GDP of US $573.597 billion. Other members of SADC include South Africa, Zimbabwe, Zambia, Malawi, Tanzania, Madagascar, Mauritius, Seychelles, Angola, Democratic Republic of Congo, Namibia, Botswana, Swaziland and Mozambique. Intra-SADC trade is governed by the SADC Protocol on Trade, while extraregional trade is aligned with both the WTO

The EU signed an Economic Partnership Agreement on 10 June 2016 with the SADC EPA Group comprising Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland. Angola has an option to join the agreement in future. The agreement became the first regional EPA in Africa to be fully operational after Mozambique joined in February 2018. The agreement grants free access to the European market while allowing member states to maintain tariffs on products sensitive to international competition; a strategy known as asymmetrical liberalisation. In exchange, these countries are removing custom duties on 86 percent of EU imports. The agreement is contingent on the provisions in Article 2 of the EPA, which include respect for human rights, rule of law and democracy. Lesotho, as well as fellow SADC members South Africa, Botswana and Namibia, exports large quantities of diamonds to the EU. At the same time, the EU exports a wide range of goods to these countries, including vehicles, machinery, electrical equipment, pharmaceuticals and processed food. There is potential to develop the services sector in Lesotho, and the EPA provides for cooperation in this area as well. Currently, SADC exports to the EU total some US $31.7 billion, while EU exports to SADC stand at around US $32 billion. The European Union is the Southern African Development Community EPA Group’s largest trading partner.

Lesotho is also a signatory to the Tripartite Free Trade Area (TFTA) between SADC, the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), which was launched in June 2015. To date, 22 of the 27 member states have signed the agreement, which is expected to boost trade among the participating countries as a result of market expansion. Negotiations are ongoing, with four countries having so far ratified the agreement, which requires 14 ratifications to enter into force. It is expected that this target will be reached by the end of April 2019. The TFTA has been used as a basis for engaging in the ongoing African Continental Free Trade Area (AfCFTA) negotiations. As of July 2018, Lesotho is among 49 African countries to have signed the agreement establishing the AfCFTA, which is meant to create one African market, bringing together all the 55 member countries of the African Union to trade tariff-free. The AfCFTA foresees the creation of a market of over 1.2 billion people with an aggregate GDP of close to US $4 trillion. Lesotho’s products also benefit from preferential market access to the Australian market of 22 million consumers, with products entering either duty-free or at reduced rates of duty. Under the GSP system, a long list of products (excluding dairy, poultry and eggs) have been granted duty-free entry to Canada with its population of 34 million people. Furthermore, close to 100 percent of Lesotho’s industrial products, including textiles and clothing, can be exported duty and quota free to Japan with its 127 million consumers. Lesotho’s products are eligible for duty free access to New Zealand in terms of a GSP scheme introduced in 1972, while Turkey also provides duty free access for Lesotho’s industrial products. In conjunction with her regional partners, Lesotho is keen to foster closer economic ties with Asian countries, including China, India and Pakistan, creating new opportunities for product and market diversification. FOREIGNTRADE TRADE&&INVESTMENT INVESTMENT || 17 FOREIGN 13

Positive activity in the primary sector during 2017 was mainly underpinned by strong mining and quarrying output growth, with mining production rising as Liqhobong mine ramped up production in the second half of the year. This looks set to improve further in 2018, with Mothae mine commencing commercial production towards the end of the year.

which, while already manufacturing a diverse array of goods, tend to operate at a subcommercial level. Private Sector Competitiveness and Economic Diversification Project Spearheading economic diversification, enterprise assistance and investment climate reform, the World Bank-funded Second Private Sector Competitiveness and Economic Diversification Project (PSCEDP II) aims to spur the development of selected non-textile sectors, resulting in increased private sector investment, growth and job creation. This is being achieved through improving the business environment, enhancing access to finance, supporting investment promotion activities in new sectors, and strengthening linkages to domestic MSMEs.

By contrast, the secondary sector contracted during 2017 against the backdrop of slower manufacturing sector output, especially the textiles and clothing subsector, as a result of reduced demand for Lesotho’s exports in the United States (US) markets. Nonetheless, the demand for manufactured exports to neighbouring countries in the Southern African Customs Union (SACU) continued to expand, although at a slower rate. In the tertiary sector there was increased activity in the transport and communications sectors, as well as the financial sector. Wholesale and retail trade real output growth increased, in part because of higher demand for consumer products during 2017 relative to 2016.

PRIVATE SECTOR INITIATIVES Contributing around 20 percent to Lesotho’s GDP, the private sector is relatively small, characterised by medium, small and micro enterprises (MSMEs) and affiliated business associations. However, Government’s private sector development initiatives are beginning to bear fruit. Top aims include improving the efficiency and effectiveness of the public sector and promoting high quality job creation in the private sector. This objective is being driven by the new private sector growth model and the World Bank’s country partnership framework. Despite Lesotho’s challenges in recent years there is an emerging dynamism in the private sector which, combined with a rehabilitated government, could place Lesotho on an upward growth trajectory. The aim of the present National Strategic Development Plan (NSDP II), which kicked off in 2018/19, is to consolidate the efforts of the private and public sectors to focus on sustainable growth and job creation. Present initiatives include the development of

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Denim Factory © LNDC

Commerce

Industry & Mining Lesotho’s current priorities are to promote inclusive, job-rich and private sector led economic growth, supported by sector-specific legislation covering mining and industry – textile manufacturing in particular.

additional industrial infrastructure at Tikoe and Ha Belo industrial estates, in addition to the recent launch of the Lesotho Standards Authority, which will accredit and certify Lesotho products for entry into the domestic and international markets. Furthermore, the operationalisation of online company registration has been achieved and One-Stop Business Facilitation Centre (OBFC) services are being rolled out. Lesotho’s economic ministries have been instructed to focus on facilitating and catalysing business development and attracting investors.

The ministries are thus pursuing in earnest a formal and structured dialogue with the private sector, focusing on jobs to be created and the needs of investors, incorporating regulatory changes and targeted infrastructure. In this regard, Government has established the Investment Climate Reform Committee, chaired by the Deputy Prime Minister. Amongst issues being addressed is the lack of capital for starting a business and for working capital. Government recognises that jobs will be increased by raising the scale of production of Basotho industries

During 2017, the World Bank approved an additional US $13.4 million in financing support under PSCEDP II for continued facilitation of reforms to reduce the time and cost associated with doing business in Lesotho. Other objectives comprise: providing easier access to finance, making trading across borders simpler, and supplying streamlined, accessible and efficient government-to-business services in order to attract private investment and boost growth. Under PSCEDP II, Lesotho’s business environment has improved markedly, particularly in respect of access to credit.Credit extended to the business sector increased by 5.9 percent during the second quarter of 2018, with the biggest expansion being recorded in the mining, wholesale and retail, hotel and restaurant, transport, storage and communication, as well as real estate sectors. Ease of doing business Thanks to a concerted programme of business reforms, Lesotho’s ranking in the World Bank’s ‘Doing Business’ report now stands at 106th out of 190 countries, which is substantially better than the regional average. When it comes to the ease of ‘Starting a Business’, at 119th it is ranked higher than Botswana (157th) and South Africa (134th). Reforms which underlie this improving scenario include the creation of a one-stop shop for company incorporation in 2013 and elimination of the requirements for paid-in

SPECIAL FEATURE

Investing in Lesotho to become easier and faster The new Lesotho National Development Corporation (LNDC) Strategic Plan is outlined by the incoming Chief Executive, Mohato A Seleke. This is not only about jobs. It is also about raising income levels and creating generational wealth and capital gains for the people of Lesotho. This is our raison d’être.

As the main parastatal of the Government of Lesotho, the Lesotho National Development Corporation (LNDC) is charged with the implementation of the country’s industrial development policies. The corporation’s role is to promote Lesotho as an attractive investment location for foreign, domestic and indigenous investors. The LNDC is the first point of contact for investors who intend to set up operations in Lesotho. In 2016, the LNDC received an Investment Promotion Award from UNCTAD (United Nations Conference on Trade and Development) at the 14th UNCTAD Conference. In 2018, LNDC was awarded the UNCTAD award for promoting investment in sustainable development. We are a commercially operated entity that has been making good profit and maintaining a healthy balance sheet in striving to pursue its founding mandate and higher purpose to the people of Lesotho. We are committed to moving into the next five years with a new and strong sense of meaning: to make an impact in a truly fundamental way in Lesotho’s economy. To this effect we have developed and launched a Strategic Plan 2018-2023 which intends to mobilise our private sector and the resources at our disposal around one common purpose, to develop the first generation of Basotho industrialists. This is crucial to lifting thousands of rural communities out of poverty and unemployment by consciously mainstreaming their participation in the supply chains of strategic investments.

We seek to put significant financial resources and technical know-how into a sector where just over 70% of our people earn a living, subsistence agriculture. This is critical to realising the ideals of shared, inclusive and sustainable growth as espoused in the National Strategic Development Plan II (NSDP II). We are repositioning the country as an agricultural powerhouse in Southern Africa by developing local supply chains and plugging into regional value chains. We have identified 21 priority products which already have international market access or hold a great potential to do so. These include meat and meat products, fruits and vegetables, utilising our abundant and quality natural resource. The textiles and apparel manufacturing value chains also hold potential and we aim to gain a bigger share in the lightengineering value chain.

National champions We are aiming to partner with, support, incentivise and reward leading exportoriented companies by scaling up their productive capacity, facilitating international market access and integrating them into supply chains.

Secondly, we are going to set up new companies, or national champions, within the priority areas and related product categories. We have already made great strides here to attract the necessary Foreign Direct Investment by initiating partnerships with renowned regional and global players in those target product lines. We can no longer afford to look only inward within the geographic borders of Lesotho in diversifying our economy. We are talking to strong partners and are seeking more of those to initiate, promote and facilitate the development of vertically integrated industrial activities. The intention is to establish national champions that are capable of competing at par with their regional and global peers in strategic industries, particularly in manufacturing and high-tech agri-processing. For the first time, building industries and diversifying our economy will mean cross-border acquisitions of strategic assets, raw materials, distribution channels and technology by these national champions. This represents a real chance to turn the tide for Lesotho. These companies will be pitched at the necessary scale and scope with the right technology, product and process certifications and with top talent to lead them. Entering foreign and regional markets early is no longer an option for us as a country, but it has now become a vital necessity. With this strategic roadmap, we are flipping our resource allocation almost completely, to cover talent, capital and time commitment. Activities in high-value manufacturing and high-tech agri-business and related supply chains will consume a significant portion of these resources. In the next five years, we are looking at modern high-tech agriculture as an area for big business, big investment, and big impact in terms of jobs, incomes and overall economic competitiveness. In manufacturing, Basotho entrepreneurs will be integrated into local, regional and global supply chains. We will meticulously assess and evaluate the impacts of these investments on the economy, on social equity and the environment. Thirdly, in line with the NSDP II, we aim to facilitate further investments in our national priority sectors such as tourism and the creative industries as well as the development of infrastructure and technology-based industries. We are keen to welcome the world to experience our mountainous scenery, green summers and snowy winters on their visits to Lesotho or in consuming film and digital products made in Lesotho. We recognise that a superior strategy and a winning business model are not enough. We are therefore building our national brand “Brand Lesotho” and undertaking a reform process to streamline our investment climate to deliver on our promise. This new strategic position also demands a reconfigured organisational platform. The LNDC is therefore being realigned to deliver on its key performance parameters with speed and excellence in execution. We invite investment and technical partners to come and build this new impactful and rewarding journey of Lesotho’s with us.

CONTACT DETAILS Lesotho National Development Corporation Address: Development House, P Bag A96, Kingsway Road, Maseru 100 Tel: +266 2231 2012 Fax: +266 2231 0038 Email: info@lndc.org.ls or ip@lndc.ls Website: www.lndc.org.ls

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minimum capital and for notarisation of the articles of association. Lesotho’s particular strengths in the 2019 Doing Business report include ‘Trading Across Borders’ (38th) and ‘Enforcing Contracts’ (95th); scoring better in both indicators than top regional business destinations such as South Africa and Botswana. Lesotho also does relatively well in the ‘Getting Credit’ indicator, where it is placed 85th, on par with Botswana. Areas where the country still faces challenges are in indicators such as ‘Dealing with Construction Permits’ (171st) and ‘Getting Electricity’ (157th). The 2019 ‘Ease of Doing Business’ report notes that Lesotho made exporting and importing easier by implementing ASYCUDA, an automated customs data management system. Lesotho has undertaken a number of reforms in recent years to enhance the business climate. According to the ‘Doing Business’ report, in addition to the recent improvement in the ‘Trading Across Borders’ indicator, these include better access to credit information through the establishment of the country’s first credit bureau, as well as the expansion of credit bureau coverage. Other noteworthy developments include: making the transferring of property easier by streamlining procedures and increasing administrative efficiency; strengthening investor protection by increasing the disclosure requirements for related-party transactions; and improving the liability regime for company directors in cases of abusive related-party transactions.

BUSINESS FACILITATION Economic growth in the country is encouraged by the Lesotho National Development Corporation (LNDC), which initiates, promotes and facilitates the development of manufacturing and processing industries, mining and commerce, in a manner calculated to raise levels of income and employment. Supported by a Governmentadministered incentive regime, LNDC enjoys clear channels of communication with relevant departments and parastatals in order to speed

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up service delivery, and has had success in attracting labour-intensive manufacturing enterprises. The LNDC also provides pre-investment and after-care services to both prospective and existing investors to help simplify and shorten the processes related to investment. Examples include facilitating the procurement of all permits and licenses, as well as providing assistance with company registration. Investment project appraisals are undertaken, along with equity participation in projects considered to be of strategic importance to the national economy and demonstrating long-term viability. The Corporation collaborates with South Africa’s Industrial Development Corporation (IDC) on matters of mutual benefit, such as capacity building, technical assistance, economic research, project financing, co-investment in projects and exchange of information for strategic cooperation regarding delegation visits and business symposiums. There have also been consultations with the IDC and African Development Bank (AfDB) to secure lines of credit to finance new investment projects and to capitalise a new equity financing scheme for local entrepreneurs. The LNDC is involved in offering training, which it undertakes through an Industrial Attachment Scheme. This exposes Basotho graduates to opportunities within the country’s various industrial sectors as well as enabling them to gain the requisite practical skills to prepare them for the job market. In terms of the LNDC’s new Strategic Plan (2018-2022), the corporation is refocusing its mandate to work on mobilising the private sector and the resources at its disposal with the objective of developing the first generation of Basotho industrialists. Key to this plan is to strengthen the links between agriculture and manufacturing through agro-processing, using modern technology and innovation to improve output. In terms of the new mandate, building the capacity of Basotho to enable them to participate meaningfully in agricultural value chains is vital. The LNDC’s new Strategic Plan (2018-2022) emphasises manufacturing and agro-processing, with the corporation intending to initiate and pilot

investments through taking an active position in providing risk capital. The Plan also concentrates on setting up new companies within priority areas and related product categories, and initiating partnerships with renowned regional and global players. This is in order to drive the development of vertically integrated industrial activities, raising output and competition. More detailed information on these plans is to be found in the ‘Manufacturing’ section which appears further on in this chapter.

ENTREPRENEURSHIP The limitations of the public sector in creating productive and sustainable jobs has seen the Lesotho Government intensify its focus on developing conditions, frameworks, institutions and facilities that support entrepreneurship. This is particularly aimed at the country’s youth, who need to be equipped with the requisite skills to make them internationally competitive in product and labour markets. Business opportunities that make optimal use of Lesotho’s own resources and generate work throughout the country are promoted, and Basotho are also encouraged to become involved in productive and exportoriented industries, and engage in joint ventures with foreign investors to facilitate the transfer of skills and technology. Medium, Small and Micro Enterprises Micro, Small and Medium Enterprises (MSMEs) have a potential to contribute to Lesotho’s economic growth, job creation and poverty alleviation. According to the Lesotho Bureau of Statistics, there are roughly 15 900 registered businesses in Lesotho, with some three-quarters of these comprising small and micro businesses. Furthermore, the NSDP estimates that MSMEs provide employment for approximately 300 000 Basotho, including those in the informal sector and subsistence agriculture. However they are also faced with challenges such as technical and management skills, access to appropriate infrastructure, limited access to finance, markets and information. With access to finance one of the constraints to entrepreneurial development, Government is ready to explore additional measures to address the shortages of much needed capital.

The Ministry of Small Business Development, Cooperatives and Marketing has since October 2017 been running the Partial Credit Guarantee Fund, and is reporting rapid lending with 61 new guarantees amounting to M11.9 million in a space of only five months. Following a rapid assessment of the scheme, Government will consider additional guarantees. The Minister of Small Business Development, Cooperatives and Marketing has vigorously promoted the local purchase of Basotho products. One programme in this regard is a plan for Government to procure vehicles on lease from various groups of Basotho, including fleet operators, youth groups, disabled groups and others. This also provides opportunities for dealers and equipment manufacturers to set up businesses in Lesotho, as Government will deal only with providers incorporated in the Kingdom. Additional services will include fleet services and maintenance. Furthermore, Cabinet has instructed the ministries of Defence and National Security and of Police and Public Safety to buy uniforms produced by Basotho companies. This example is to be followed by other departments needing to procure uniforms. Likewise, ministries with large catering needs should buy from local producers. Finally, private corporations with large procurement needs are urged to buy Lesothoproduced supplies where possible, and from Basotho suppliers where this is not possible. Fronting is to be avoided. As part of Government policy to eliminate obstacles faced by small businesses, the Ministry of Small Business Development, Cooperatives and Marketing is establishing market centres in Tsikoane, Leribe, Tikoe, Maseru and Mohale’s Hoek. Through its incentive program, the Chinese Embassy in Lesotho has awarded certificates and funding amounting to M33 000 each to six young Basotho entrepreneurs operating SMMEs. Their businesses range from fashion design and information technology to vegetable, wine, dairy and food production.

The National University of Lesotho (NUL) Innovation Hub, which was launched in November 2018, provides a platform for incubation of business models from conception up to mass production. It is helping to incubate an entrepreneurial culture and bridge the gap between the invention of a marketable product and its actual commercialisation, production and marketing. Even before the launch of the Hub, a number of successful businesses had been developed at NUL, such as the Sebabatso yoghurt brand and Pius XII Egg Incubator. More information on the Innovation Hub and proposed Industrial Park can be found under the Manufacturing section.

discovering, evaluating and formulating viable projects for financing by local financial institutions; providing manufacturing and technical assistance to small-scale enterprises; training entrepreneurs in skills to facilitate their employment in the construction and textile industries; and supplying business training courses. BEDCO is also engaged in supplying real estate services, with commercial and industrial rooms and units available for rental in a variety of locations, including industrial parks and the BEDCO Commercial Centre.

The Basotho Enterprises Development Corporation (BEDCO) was set up in 1975 as a subsidiary of the LNDC and established as a parastatal in 1980 in order to assist in developing indigenous Basotho-owned business enterprises, with particular emphasis on small-scale businesses and the promotion of entrepreneurial skills.

BEDCO partners with local organisations such as the Mineworkers Development Agency (MDA), LNDC, Action Lesotho and many others in order to utilise limited resources for the benefit of enterprise development. Furthermore, the corporation has emerged as a partner of choice among business development organisations from neighbouring countries, such as the Small Enterprise Development Agency (Seda) of South Africa, Local Enterprise Authority (LEA) of Botswana and Small Enterprises Development Company (SEDCO) of Swaziland.

BEDCO assists MSMEs in business counselling;

Furthermore, BEDCO has entered into a

Basotho Enterprises Development Corporation

Security Systems n Alarm monitoring and response n CCTV monitoring n Remote off-site monitoring (visual patrols, alarms, verification) n Vehicle tracking & fleet management n Real-time Security personnel monitoring & tracking n Intelligence gathering, analysis & dissemination Control Room Systems The Group provides on-site or remote alarm access control and CCTV monitoring via manned control room facilities. These facilities are designed to detect and manage a range of incidents such as criminal acts, unauthorised access, and fire or flooding. Integrated Security Physical security and electronic security systems are becoming increasingly inter-linked. Whilst demand for electronic security systems is

growing, in most cases these systems still require the presence, on site or remotely, of security guards. G4S meets customers’ demands for a complete secure solution with flexible combinations of manned and electronic security elements. Cash Services Working in partnership with leading financial institutions and retailers, G4S Cash Management Services provide cash management, transportation and ATM Services. From Customers in South Africa, to many of the high street banks in the UK, to Deutsch Post in Germany and Toronto-Dominion Bank in Canada, over 20,000 customers benefit from our leading position and expertise in cash services. Cash Solutions Services Include: n Cash in transit n Cash Processing n Pay Roll Deliveries n Pay packing and Payout n ATM Management

partnership with the LRA and commercial banks to ensure they contribute towards the setting up of small businesses. Established links with other financing institutions such as IDC of South Africa have played an important role in enterprise development. Ongoing programmes and projects include: ‘Ichorise Mohoebi’, which is a national entrepreneurial capacity building initiative focusing on starting, operating and growing a business; ‘Iketsetse’, which endeavours to promote rural-based productivity; Corporate Enterprise Development Investment, which taps into the corporate social investment (CSI) funds of large corporates for the benefit of MSMEs; the Creative Industries Empowerment Project, which develops markets for Basotho-made products such as mosaics, pottery, jewellery and handicrafts; and ‘Qhotsiso’, a business incubation programme. The Sebaboleng Woodwork Incubator Project is focused on developing the entrepreneurship skills of people who possess operational skills in carpentry and aspire to start businesses but lack the necessary capital and skills to do so.

Close Protection Officers / Journey Management G4S (SA) is one of only three Companies in Southern Africa, who are registered and fully licensed to train Close Protection Officers. Our service offering includes: n Close Protection Officers n Journey Management & Route Reconnaissance n Meet-and-Greet Services n Airside Protocol n Customs & Immigration n Baggage Recovery & Delivery n Secure Transportation n Executive home security Expertise:

n Fully accredited Legislated CPO Training n Close Protection protocol & etiquette n Surveillance and counter-surveillance n Unarmed combat n Advance risk & threat analysis n Tactical & advanced driving n Advance “sweeping” of embus & debus points

Launched in 2016, the 2nd Bacha Entrepreneurship Project represents a collaboration involving BEDCO, the LRA and Standard Lesotho Bank, with the goal of assisting young unemployed graduates from the ages of 21 to 35 to become employers and drivers of economic growth by developing their entrepreneurial skills. The project calls for viable, sustainable and profitable business proposals that will be financed for a combined start-up capital of M500 000.00. A five-year Memorandum of Understanding (MoU) signed between the LNDC and BEDCO in 2015 focuses on developing MSMEs through sharing research information and building the technical capacity of BEDCO to effectively deliver on its mandate. The agreement also enables MSMEs supported, monitored and mentored by BEDCO to have access to LNDC development finance services, and ensures coordinated efforts in building the skills capacity of personnel involved in enterprise development. In October 2017 BEDCO unveiled four enterprise development programmes meant to tackle the high unemployment rate: Job Creation

Acceleration through SMME Development, which aims to create over 200 new jobs over a period of six months by tapping into the potential of small enterprises; the revamped ‘Ichorise Mohoebi’ entrepreneurship capacity building initiative; Global Entrepreneurship Week; and a programme seeking to foster the development of creative arts and crafts among Basotho. Launched by BEDCO in 2018, Promoting Enterprise Development (PED) targets Lesotho’s socioeconomic challenges and is a component of Government’s Economic Diversification Support Project (EDSP), supported by the AfDB. It aims to support the development of MSMEs through business incubation services, strategies and implementation plans. The objective is to support private sector development through improving partnership, entrepreneurship and skills development in selected economic sectors, with the focus on informal and formal micro-SMEs which are expected to drive economic growth going forward.

MANUFACTURING Manufacturing, in particular textiles, apparel and footwear, has long been the main vehicle for growth and job creation in the economy, and remains Lesotho’s largest formal private sector employer. Other important subsectors include food and beverages, automotive components, plastic products, consumer electrical and electronic appliances, and packaging materials. Between 2011 and 2016, manufacturing’s contribution to the country’s GDP rose substantially, from 13.3 percent to 17.4 percent. While the sector has not regained the highs of the early 2000s (peaking at a 21.3 percent share of GDP in 2002), it nonetheless provides employment to over 49 000 workers, and its activities have a multiplier effect on many other industries and services. In recent years, the sector has benefited from the depreciating exchange rate and new entrants from Swaziland in the wake of that country’s removal from the African Growth and Opportunity Act (AGOA) in January 2015. During 2017, manufacturing output slowed in response to subdued demand for textiles and

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clothing exports, which faced stiff competition from the Asian and some East African competitors in US markets. At the same time, demand for manufactured exports to the SACU market grew steadily. According to the Central Bank of Lesotho (CBL) in its Economic Outlook of June 2018, manufacturing is forecast to remain subdued in the medium-term, averaging 1.1 percent growth. ‘Other manufacturing’, which comprises the manufacturing of construction materials, plastic products, packaging materials, furniture, electrical appliances, petroleum products and aluminium products, among others, is expected to be the best-performing subsector. Manufacturing is the largest employer in the economy, with the textiles and clothing subsector accounting for 94.1 percent of all manufacturing jobs as at the second quarter of 2018. The Manufacturing Report from Lesotho’s Bureau of Statistics, indicates that the total number of employees in the manufacturing sector rose from 45 472 during the second quarter of 2017 up to 49 390 in the second quarter of 2018 – translating to an increase of 8.6 percent on an annual basis. The major contributors to this growth in employment were ‘Leather and Footwear’ and ‘Textiles & Clothing’, with 11.8 and 11.3 percent respectively. According to the CBL’s Budget Strategy Paper, which covers the 2018/19- 2020/21 period, diversification of the manufacturing base is pivotal to its future success. Key strategic actions to be taken include the following: •

Developing a strategy and programme to increase private sector participation in the development of industrial infrastructure

•

Promoting investment and trade in selected countries, including the US, to take advantage of the remaining trade preferences and to diversify markets

•

Supporting at least two Basotho firms per year through incubation/productivity centres to create capacity to enter the textiles manufacturing value chain and to develop agro-industries

TEXTILES, CLOTHING & FOOTWEAR Manufacturing is dominated by textiles and apparel firms, which have flourished under the provisions of the African Growth and Opportunity Act (AGOA), making the subsector one of the main catalysts of growth and export earnings since the 1990s. It has also been a major job creator, in particular for low-skilled Basotho, mostly women, who in the past were excluded from formal employment. The contribution of the industry to Lesotho’s economy goes beyond the sector itself, as there are important employment and economic multipliers. A range of formal/informal activities occur that feed into or off the industry; such as small packaging industries, road freight transporters, courier services, clearing agents, security, passenger transport, traders that sell food to workers, residential accommodation, water, electricity and telecommunication utilities. Value chain development Clothing and textiles industries have formed the backbone of Lesotho’s export trade to the US market for nearly two decades, and the 2015 extension of AGOA for a further ten years ensures continued preferential market access for Lesotho. Notwithstanding the challenges within the Basotho textile and clothing industry, which have diluted some of the benefits of AGOA, the performance of the US economy remains important in sustaining export demand. Exports to the US are nonetheless expected to remain under pressure due to the continued erosion of Lesotho’s competitiveness by new multilateral and bilateral trade developments. The uncertainty in US markets has seen the textiles and clothing subsector begin a process of diversifying its exports, particularly to non-AGOA destinations such as South Africa. Lesotho’s increase in market share in the Southern African Customs Union (SACU) region has improved significantly, and exports to non-AGOA destinations are expected to grow. The CBL (Economic Outlook, June 2018), anticipates that the performance of the textile industry will be sluggish in the medium-term. The expiry of the Multi-Fibre Agreement (MFA)

in 2005 left Lesotho with diminished competitive edge, and prospects for the textile subsector’s growth are hampered by factors such as minimal domestic value addition in the supply chain, with most factories preferring to ‘cut, make and trim’, and the high cost of doing business in Lesotho. At present, with control of the industry dominated by Taiwanese and other Asian capital, linkages with the Basotho economy are limited, and participation by indigenous investors is nonexistent. Displaced control of the industry, retention of operating surpluses in Asia, and lack of Government policy are partly to blame for the current state of affairs. Government has announced its intention to enter into dialogue with the garment industry to explore deeper linkages within Lesotho’s economy. The intention is to propel the industry to move up the value chain into high value garments, giving it the potential to penetrate boutique markets in Europe. There is much to be learned from apparel company CGM, which has transformed itself and left the AGOA market to focus on the large regional market. This has enabled it to establish links with the domestic economy and to mentor Basotho to enter the garment value chain. To address some of these challenges, efforts are in place to improve manufacturing infrastructure as more factory shells are being built concurrently with the development of utilities. The LNDC’s development finance aims to support strategic projects with a variety of financial products while building local capacity.

DIVERSIFICATION & DEVELOPMENT Lesotho has a pressing need for export product and market diversification, as well as the development of value chains. Government is encouraging manufacturers in other product lines beyond textiles and garments, and has instructed key ministries to facilitate investment and resolve any impediments encountered in the investment process. The second Private Sector Competitiveness and Economic Diversification Project also concentrates on promoting diversification with the aim of building value chains and catalysing private sector efforts to scale up production.

Reports such as the ‘Lesotho Potential Export Diversification Study’ have identified products with which Lesotho could have comparative advantage, as well as potential new markets for products, and trade missions to source new buyers are ongoing. Local firms have been called on to diversify their exports to the US beyond textiles to fully benefit from the renewal of AGOA. The LNDC has identified 21 priority products which already have international market access or hold a great potential to do so. Activities in high-value manufacturing and high-tech agribusiness have been prioritised. In the agroprocessing subsector, these include meat and meat products, fruits and vegetables, all of which utilise Lesotho’s abundant natural resources. The textiles and apparel manufacturing value chains also hold potential, as does the lightengineering value chain. LNDC aims to partner with, support, incentivise and reward leading export-oriented companies by scaling up their productive capacity with the latest technology, facilitating product and process certification and international market access, and integrating them into supply chains. The LNDC is interested in partnering with local farmers adopting an out-grower model. Also known as ‘contract farming’, these schemes provide benefits to participants along the entire supply chain. Activities are concentrated in the meat, hides, wool, mohair and deciduous fruit subsectors, including chicken broiler and egg production, and their value chains. In August 2018, the LNDC sealed a M250 million deal with South African company Number Two Piggeries. The project is expected to contribute to the development of production and supply chains and create over 1 000 jobs in the agricultural sector. The LNDC’s five-year strategic plan launched during 2018 aims to secure agreements in the agro-processing sector worth M2.5 billion in the 2019/20 financial year. Basotho innovation The incubation of businesses has been underway at the National University of Lesotho (NUL) for a number of years, and an Innovation Hub was

officially launched in November 2018. Successful businesses developed at NUL include the Sebabatso yoghurt factory, with the Sebabatso brand having been introduced to a number of supermarkets and expanded its product line to include milk and sour milk. Feasibility studies are being undertaken by NUL and the LNDC for the development of a locallyinspired industrial park in the Roma Valley in the vicinity of the University. Phase One of NULLNDC industrial park will host at least 13 factories which will manufacture products conceived and developed by NUL, potentially creating thousands of jobs. The initiative is another step towards the further diversification of both products and markets, and will also help to build the requisite skills to support the industry. The businesses to be housed in the park fall broadly under two themes: ‘knowledge based’ and ‘mass production’. Precise Technical Solutions is a business which will focus on manufacturing solar energy products such as smart solar water heaters, amongst others. Mohalalitoe Natural Soaps is producing luxury soaps that were developed in the NUL laboratories over a three-year period. Work apparel and basic clothing items are also being developed, such as laboratory coats, overalls, school and corporate uniforms, pants, shirts, hoodies, etc, with the aim of achieving mass production. Another successful incubation project is Poultry Products, which aims to produce 40 000 chickens a month once fully operational. The business will incorporate the entire poultry value chain, from producing fertilised eggs, to oneday-old chicks, to selling fully grown chickens. Electronic products encompass the famous Pius XII Egg Incubator, Electric Dehydrators, Smart Supervisory Control and Data Acquisition Systems, Fleet Management and Vehicle Tracking, and Home Automation Systems. Following the success of product development and business incubation by the NUL Innovation Hub, the LNDC has proposed the creation of an industrial park in partnership with the Hub in order to advance the development of indigenous products.

PICK N PAY MASERU FAMILY STORE Welcome to a bigger, better and smarter Pick n Pay Store in Maseru. Now you can shop in comfort and enjoy our ‘new look’ store in the Pioneer Shopping Centre, a stone’s throw from the centre of Maseru. Inspired by the customers, Pick n Pay Maseru has created job opportunities while fulfilling one fundamental principle of Responsible Citizenship through empowerment and support of local producers, with ripple effect on poverty reduction. Destitute and less-privileged children remain the single focus of Pick n Pay’s corporate social investment; eleven entities are already the benefactors of this humble initiative. The family store offers the following among others: • Butchery: A pre-packed range, a bulk range & a gourmet range • Bakery: Cakes and tarts, including a selection of deluxe cakes, confectionary, rolls, speciality and health breads • Deli: Hot foods, processed meats, cheeses, salads and antipasti, fresh submarines, sandwiches and paninis The Family Store’s Mission is to provide our customers with convenient shopping experience while satisfying their needs.

Inspired to grow locally When possible, we buy produce from our local farmers. This creates jobs and opportunities in our communities and also helps you by providing high-quality fresh produce every time at the best price.

They support us. We support them. When possible, we buy from our local manufacturers. This creates jobs and opportunities in our communities and also helps you by providing high-quality bottled water every time at the best price.

PICK N PAY MASERU FAMILY STORE

Tel: +266 2231 8815 • Pioneer Shopping Centre, Corner Pioneer Road & Mpilo Boulevard, Maseru www.facebook.com/picknpaylesotho

COMMERCE, INDUSTRY & MINING | 23

In the area of processed foods, Bohlale Biscuits produce biscuits made from sorghum and a variety of other sorghum products, while there is another sorghum company producing sorghum muesli. Mushroom Biotech is a company that will process mushrooms to produce food, tea and medicinal products. Another business is producing nutritious foods for children, including healthy snacks and dried fruit.

Botha-Bothe district. The total cost of the project is estimated at about M800 million. An amount of M100 million is planned to fund 14 factory shells out of a total of 52 shells and advance infrastructure. The intention is for the private sector to develop the remaining 38 factory shells. In this respect, prospective property investors will be able to work with the LNDC and its investor services.

C-Mat Products creates innovative furniture products from waste paper, while Mafikeng Stones produces artificial stones for cladding, building and paving. Finally, to deal with the waste produced at the park, there is a company that will turn all the bio-waste into biogas and agricultural manure.

The Ha Belo Industrial Estate will cut the time taken to travel to the port of Durban in South Africa, as well as taking advantage of the planned Marakabei-Monontša road. When complete, the industrial zone will employ nearly 14 000 people.

INDUSTRIAL INFRASTRUCTURE

Mining activities have expanded substantially in the past three decades as new diamond mines have opened. While the contribution of the sector to GDP was just 1.0 percent between 1985 and 1994, by 2006-2015 it had grown to about 6 percent, and currently makes up some 9.2 percent of Lesotho’s GDP.

The construction of industrial estates is undertaken by the LNDC on land allocated by Government, with development concentrated in the Maseru and Leribe districts. Access to the estates is via tarred roads and, for freight purposes, those situated in Maseru are linked by rail from Maseru’s industrial area to the South African railway system. Maputsoe Industrial Area is close to South Africa’s Ficksburg station. The LNDC’s Industrial estates comprise: • • • •

Ha Nyenye (31 hectares) – 80 kilometres north of Maseru Ha Tikoe (80 hectares) – 7 kilometres south of Maseru City Berea (7 hectares) Ha Belo (121 hectares) – Botha-Bothe

MINING

While mining plays a significant role in promoting economic growth, it does not generate a great deal of employment due to its capital intensive nature, the high degree of mechanisation, and weak linkages with other economic sectors. Current employment figures in the diamond mining industry stand at around 3 000 Basotho. Lesotho is the world’s seventh-largest diamond producer by value, but leads the world with the highest average US dollar per carat production.

Under the Tikoe Industrial Infrastructure Phase 2 Project, the LNDC has developed 27 hectares of land into a fully-serviced estate with roads, water, electricity and 11 factory shells with sizes ranging from 2 000 to 4 000 square metres (a total rentable space of 30 000 square metres) to accommodate new investors. In 2018/19, Government investment into Tikoe Industrial Estate is being augmented, with Formosa textiles company building its own factory shell. At maximum capacity, nearly 19 000 people will be employed at Tikoe.

Mining has grown to become one of Lesotho’s most important sources of revenue. For this reason, adding value to mining products is promoted to ensure that growth is more inclusive and to increase the resilience of the country’s medium-term growth prospects. In addition, Government is looking to put in place stronger policies and strategies for managing its available mineral resources, and is reviewing the mining tax regime to cater for windfall taxation.

A three-year plan has been proposed for developing industrial infrastructure at Ha Belo in

By the end of 2018, there were four diamond mines and two sandstone quarries in full

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production. Lesotho has an estimated 405 kimberlite bodies in the form of pipes, dykes or offshoots. One of the benefits to operating a mine in Lesotho is that it is located in the heart of southern Africa, and an array of mining skills and services are available from neighbouring countries such as South Africa and Botswana. While diamond mining remains the main focus of the industry, in 2017 Government signed agreements with two mining companies to prospect for coal and shale gas. The first phase of shale gas prospecting involves research on the geological structure of the southern region, which will assist in the targeting of preferred sites for drilling, while the second phase entails the quantification of the gas resource. There is potential to find gas reserves of up to 10 trillion cubic feet. Coal exploration will take place in Mohale’s Hoek at Qhalasi and Matebang, with a view to determining whether there are significant deposits for viable commercial exploitation. Mining performance The recovery in global demand for quality diamonds is currently supporting growth in Lesotho’s diamond mining industry. The mining sector grew by 4.1 percent in 2017, reflecting broad-based production increases boosted further by Liqhobong mine ramping up to full production capacity during the year. According to the Central Bank of Lesotho (CBL) in its Economic Outlook report for the 20182020 period, strong growth is expected in the mining industry in the short to medium term, in line with the global economic upswing. While domestic output will be further bolstered by the commencement of commercial production at Mothae Mine at the end of 2018, the mining industry also faces favourable demand prospects internationally, given the positive and robust global economic prospects, particularly in the key diamond markets of India, the US and China. Mining sector growth is projected to rise to 7.8 percent in 2018, and then moderate to 3.6 percent in 2019 and 3.1 percent in 2020. Lesotho’s Central Bank estimates that diamond exports will grow by 19.6 percent in 2018 and 7.0 percent in 2020, supported by favourable prices as well as strong demand in international markets.

Mineral sector framework and policy The Ministry of Mining disseminates information on mineral resources, as well as regulating and managing prospecting and mining activities to develop the mining sector in partnership with stakeholders in an environmentally friendly and sustainable manner for the socioeconomic benefit of the Basotho nation. The Ministry issues prospecting licenses through competitive bidding, an approach which improves governance and transparency while raising the potential for securing further investment.

Through the Ministry, the Government of Lesotho has a clear mandate on the following four areas in the mining industry: •

Policy formulation, implementation and monitoring

•

Regulation of the sector

•

Investment and development, where Government is a shareholder in mining activities

•

Provision and management of geological information about mining resources in Lesotho

In order to realise this mandate, a Minerals and Mining Policy was developed by the Ministry together with key stakeholders and approved by the cabinet in June 2015. The policy was formulated in line with the Africa Mining Vision (AMV 2009) which advocates for ‘transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development’. Designed to attract investment and thus encourage growth, it provides a strategic direction for the development of the country’s mineral resources and a predictable regulatory framework for the sector. The Minerals and Mining Policy also points to the need to engage in beneficiation of diamonds to add more value, create additional jobs and secure a better deal in respect of revenues arising from the country’s resources. The capital intensive nature of the mining industry means that it is not a huge employment creator. However, Government anticipates that the more highly skilled positions currently being filled by workers from outside

Lesotho will be given to Basotho once they have acquired the requisite skills. Following consultations with industry stakeholders, Lesotho is drafting new minerals legislation to achieve institutional reform, promote investment in the sector by clarifying and securing investors’ mining assets, and ensure that international standards are adhered to in terms of environmental protection, health and safety. The Ministry of Mining’s medium-term objectives include: •

•

• •

Implementing the Minerals and Mining Policy, reviewing the existing legal framework, and developing a strategic plan for the Ministry in order to promote investment in the mining sector

Determining the country’s potential mineral resources and reserves to facilitate the discovery of available minerals as well as to diversify mineral production Increasing the number of operating mines in Lesotho by opening new mines and encouraging downstream activities Ensuring that the Ministry’s structure is responsive to its strategic objective of strengthening mining industry regulation Putting measures in place that help to maximise revenue collection

Setting up structures that will promote and enable beneficiation of minerals and increase participation of Basotho in the mining sector

During the 2018/19 fiscal year, Government is reviewing the handling of the minerals process chain in its entirety, from production up until the minerals are sold. At a bilateral level, it is consulting with Belgium, the International Monetary Fund and other experts in order to put in place a fail-safe mechanism for diamond handling. The new handling regime will most likely introduce independent diamond valuation services and domestic off-take for beneficiation. The Ministry of Mining in collaboration with the Lesotho Chamber of Mines held a two-day Mining ‘Khotla’ (forum) in November 2018, aimed at unlocking business opportunities in the mining sector value chain. The Mines and Minerals Code

requires mining companies to give preference to local goods and services, and hence the forum was important in creating a platform for the business community to engage directly with the mining sector, assisting local entrepreneurs to explore opportunities that will expand and grow their businesses. A follow-up forum is planned to ensure that indigenous locally-owned Basotho companies benefit from the industry. Research and investment Government places a great deal of emphasis on mineral research and tries to ensure that information on resources is readily available for all potential mining investors. Although commercial mining interests have up to now concentrated primarily on diamonds, there are indications that Lesotho possesses numerous other valuable mineral deposits. The geochemical mapping project presently underway includes the five base metals of platinum, niobium, tungsten, cobalt and tantalum, as well as rare earth elements. The project aims to assist in the collection of mineral information, which is important in attracting investors to the mining sector and creating exploration sites. In order to increase investment in minerals, the Ministry of Mining is spearheading the construction of a M76-million Geoscience Laboratory in Maseru. This will allow for incountry research and provide, besides other services, indicative mineral resource reports for exploration and mining companies. Expected outcomes include accelerated turnaround times for exploration and mining companies, which currently have to send test results to South Africa for analysis. Beneficiation of diamonds The Government of Lesotho is planning to benchmark the local diamond industry against the Botswana model to ensure that there is value added to gems before they are sold. The new initiative, which will help to create additional jobs for Basotho, will also ensure that all diamonds are auctioned locally. Lesotho currently exports rough diamonds to Antwerp in Belgium where they are auctioned to the highest bidder before processing.

The Ministry of Mining is in the process of reviewing laws that regulate the trading of diamonds and other precious stones as well as building capacity for diamond valuation in order to pave way for the development of a Diamond Centre. A feasibility study into developing a Jewellery Manufacturing and Diamond Centre in Maseru recommended, as a starting point, the establishment of a few select core businesses capable of: •

Competing in the international market

•

Promoting joint ventures with existing foreign jewellery businesses

•

Producing quality finished and semi-finished exportable products

•

Instituting intensive training programmes

•

Creating sustainable jobs

Lesotho’s Mining Ministry intends establishing the Lesotho Diamonds Centre (LDC) in Maseru at an estimated cost of M10 million. This will be an exchange platform for the buying and selling of diamonds. The LDC will start out as a small Ministry-driven project, which will focus on diamond valuation by grading and sorting of gems, as well as securing government revenues obtained from royalty payments, and issuing cutting and polishing licences. It will also be mandated to collate correct data on the volumes of exported diamonds, which is a key requirement of the Kimberley Process. The LDC will initially be located at the Mining Ministry’s offices in Maseru. In the long-term the plan is to establish it near Moshoeshoe I International Airport so that buyers are afforded easy access to the centre. This will also ensure greater security, as the diamonds will not need to be transported great distances. Furthermore, it is hoped that the LDC will be able to address issues of artisanal and small-scale mineworkers. This subsector has not yet been set up as a legal, state-regulated industry. Affiliated with the internationally-recognised Harry Oppenheimer School of Diamonds, the Lesotho

Diamond Academy trains students in gemmology (the study of natural or artificial gems), diamond evaluation, cutting and polishing. Diamond mining While Lesotho’s alluvial deposits have historically yielded a number of large, high-quality gem diamonds, it was not until the 1950s that the source of these gems was discovered in the Maloti Mountains. These diamondiferous kimberlite deposits were mined by artisanal diggers between 1959 and 1968, and thereafter by large mining companies such as Rio Tinto (1967-1972) and De Beers (1977-1982), with the latter mining the Letšeng-la-Terai deposit situated about 70 kilometres from Mokhotlong. Mining production reached its peak in 1980, when diamonds to the value of M24.7 million were exported. The mine was closed in 1982 as it became less profitable. The Letšeng Diamond Mine produces gem diamonds of an exceptional quality which consistently achieve the highest price per carat of any kimberlite mine in the world. The openpit mine was purchased by Gem Diamonds, a leading global producer of high value diamonds, in 2006. The company owns 70 percent of the mine, with the balance of interest being held by the Lesotho Government. The mine’s total resources have been estimated at five million carats with an in-situ value of US $10.3 billion. At an altitude of over 3 kilometres above sea level, it is the highest diamond mine in the world. Ore is processed through three treatment plants with an annual throughput of 6.4 million to 6.6 million tonnes. Although Letšeng’s grade recovery is low (averaging a little less than two carats per hundred tonnes) it is famous for producing large, high-value Type II diamonds. The mine is also a source of high-quality pink and blue diamonds. Since Gem Diamonds acquired Letšeng in 2006, the mine has produced some of the world’s most remarkable diamonds. Among these are the iconic 603-carat Lesotho Promise, the 550-carat Letšeng Star, and the 493-carat Letšeng Legacy. This is in addition to the 601-carat ‘Lesotho Brown’ recovered in 1960. In January 2018, Letšeng produced the remarkable 910-carat Lesotho Legend, the fifth-

COMMERCE, INDUSTRY & MINING | 25

largest gem quality diamond ever recovered and the largest to be recovered at the mine to date. A high-quality D colour Type IIa diamond, the Lesotho Legend achieved a price of US $40.0 million (US $43 912 per carat) on tender in March 2018. This reaffirms the unique quality and size of the mine’s diamond production, with 13 diamonds greater than 100 carats having been recovered at the mine between January and October 2018. Over the past five years, Letšeng has grown to become one of the largest open pit diamond mines in the world. It processes ore from two kimberlite pipes: the 17-hectare Main pipe and 5.2-hectare Satellite pipe. Letšeng’s Diamond Discovery Centre is a permanent interactive exhibition that tells the story of Lesotho’s diamond industry, with a specific focus on the history of diamond mining at Letšeng. Letšeng achieves the highest average US dollar per carat of any kimberlite mine in the world. During the first half of 2018, mining progressed in line with the mine plan, with 61 596 carats recovered – an improvement of 22 percent when compared with the first six months of 2017. A new scrubber shell was successfully installed in Plant 2 and feed rates returned to normal post the planned shutdown. In April 2018 the mining services complex project was completed on time and under budget. Furthermore, the mining lease for Letšeng was renewed until 2034. Gem Diamonds plans to build a US $3 million pilot plant that will use cutting-edge technology to detect large diamonds within the kimberlite ore and recover these by non-mechanical methods, which greatly reduce diamond damage. The plant is scheduled to be commissioned in the second quarter of 2019. Following improved mining efficiencies, strong production during the period and consistent grade recoveries, Letšeng’s production guidance for the full year has been revised upwards to between 120 000 and 124 000 carats. Gem diamonds remains on track to achieve its cumulative target of US $100 million in incremental revenue, productivity improvement and cost savings for the four-year period ending 2021. Liqhobong Diamond Mine lies at the head of

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the Liqhobong Valley in the Maloti Mountains. It comprises a main and satellite pipe, covering areas of 8.5 hectares and 0.8 hectares, respectively. The mine has since September 2010 been operated by Liqhobong Mining Development Company (LMDC), 75 percent of which is owned by Firestone Diamonds and 25 percent by the Government of Lesotho. The diamond resource currently extends to approximately 520 metres below surface, totalling around 23 million carats at an average grade of 28 carats per hundred tonnes. The potential exists to extend the mine life as the resource is open at depth: the deepest vertical hole drilled to date terminated in kimberlite at 650 metres below the surface. Following development of the main treatment plant and supporting infrastructure, Liqhobong was commissioned in October 2016 and the first diamond recoveries commenced, including special stones and fancy yellow diamonds. The first sale took place in February 2017. Liqhobong’s processing plant is capable of producing 3.6 million tonnes per annum and facilitating improved diamond value management by reducing breakages and enabling the recovery of intact stones in excess of 100 carats. Commercial production kicked off in June 2017, with a successful ramp-up which has seen operations working well and to plan. Challenges have, however, been experienced due to average diamond values being lower than anticipated. This led Firestone to adopt a new shorter-term mining plan to maximise cash generation, which involved extending the mining of the weathered kimberlite in order to access lower areas of the pit that have historically yielded higher grade and higher value diamonds. For the 2018 financial year ending 30 June, which encompassed the first full year of production at Liqhobong, Firestone recovered 835 832 carats of diamonds compared with the 365 891 carats recovered during the 2017 financial year. Furthermore, the grade recovered increased to 22 carats per hundred tonnes (cpht), compared with 18.6 cpht. Despite earlier challenges, Firestone managed to decrease its loss at the mine by 91 percent, while its revenue increased by 125 percent. The largest diamond recovered to date at Liqhobong is a 133-carat, gem-quality light

yellow diamond, while the most valuable diamond recovered (as measured by dollars per carat) is a fancy pink diamond which realised a sale price of US $112 781 per carat.

in Lesotho, the 36.02 carat ‘Pink Storm’, which sold for US $425 000 per carat. Kao’s top ten diamonds have generated US $38 million at an average price of US $75 000 per carat.

For 2019, the target is to treat 3.6 to 3.8 million tonnes of ore, recovering between 820 000 and 870 000 carats during the course of the year. The life of mine plan is being re-run to ensure optimal value for shareholders. While the rough diamond market is expected to remain weak for run-of-mine product in the short term, demand for quality stones continues to be robust.

Located near on the southern edge of the Kaapvaal Craton, within 5 kilometres of Letšeng mine, the Mothae Diamond Mine comprises an estimated 8.8-hectare diamondiferous kimberlite pipe containing a resource of large, high-value Type lla diamonds. Mothae is 30 percent-owned by the Government of Lesotho and 70 percent by Lucapa Diamond Company, and has a JORCclassified diamond resource of over a million carats (to a depth of 300 metres) at an average modelled diamond value of $1 063 per carat.

The owner and operator of Kao Diamond Mine, Storm Mountain Diamonds (SMD), is a subsidiary of London-listed Namakwa Diamonds, which holds a 75 percent equity interest while the Government of Lesotho holds 25 percent. At 19.8 hectares, the main kimberlite pipe at Kao is the largest in Lesotho and the fourth-largest in southern Africa. There is also a 3.2-hectare satellite pipe. Situated in the Botha-Bothe District, within a 20 kilometre radius of the Letšeng and Liqhobong mines, Kao has a total resource of 173 million tonnes, containing about 12.6 million carats. Commercial production began in March 2012, treating up to 300 000 tonnes per month. A plant expansion project intended to raise production to 400 000 tonnes per month was completed in 2016. The upgrading of plant equipment has notably enhanced processing capacity as well as helping to reduce damage to larger gems. Increased production volumes are achievable due to the large size of the kimberlite pipe. Mining flexibility in the open pit is an advantage, with a life-of-mine stripping ratio of less than one tonne of waste per tonne of ore. In addition to increasing the scope of mining in the pit, Kao’s production horizon has been extended until at least 2035. The most recent significant recovery at Kao is a 29.59-carat, fancy-pink rough stone which was discovered in June 2018 and named ‘The Rose of Kao’. Kao’s output is characterised by a high percentage of gem-quality stones and many fancy stones with colours ranging from pink, purple, yellow (vivid and light fancy) and light brown to the classic ‘blue white’. Furthermore, the mine has yielded the largest pink gem diamond recovered

Lucapa acquired Mothae in early 2017 for a sum of US $9 million, securing a ten-year mining lease with the option of extending this by a further decade. The mine’s erstwhile majority owner, Lucara Diamond Corporation, abandoned the resource in 2015. Trial mining between 2008 and 2012 demonstrated Mothae to be a source of large and premium-value diamonds, much like Letšeng. The mining development programme at Mothae consists of two phases. Under Phase 1, Lucapa decided to refurbish the mine’s existing bulk sampling plant and equipment at minimal cost and within a short timeframe to enable a bulk sampling programme to begin in parallel with construction of a new 150 tonne-per-hour (tph) commercial plant. The bulk sampling programme has the potential to add to the existing JORC resource and thus extend the life of mine, which is currently estimated at 13.5 years. Commissioning of the new 1.1 million tonne-per annum (Mtpa) treatment plant began in October 2018, and commercial diamond recoveries commenced two months later in December. The new Mothae plant incorporates advanced diamond recovery technology, including two XRT modules designed to recover large and rare Type IIa diamonds ahead of the secondary crushing circuit, thus reducing potential diamond breakage and improving the recovery of unbroken large stones. Production is scheduled to double to 2.2 Mtpa by 2021 under Phase 2 of the Mothae development plan. Two other mines are currently under development, including the Lemphane mine (Letlaka Mining) and Kolo mine (Batla Minerals).

or international tourism receipts. In the 2018 to 2028 period, visitor exports are expected to rise by 3.9 percent annually against domestic travel spending, which is forecast to grow at 3 percent per year over the same period.

Lesotho’s forthcoming National Strategic Development Plan (NSDP II), which covers the period 2018/19 to 2023/24, has identified tourism as one of the strategic sectors to be prioritised for growth and job creation. The sector has enormous potential for socioeconomic development, as it stimulates business, trade and capital investment, creating jobs while protecting heritage and cultural values. Lesotho currently shares 2 percent of Africa’s 58 million annual visitors, and nearly all of them come from South Africa. The country is fortunate to possess a wealth of tourism assets, such as outstanding natural beauty and a unique cultural identity; factors which enhance its competitive edge in the international tourism industry and make the sector ripe for investment. These assets are complemented by the Mountain Kingdom’s close proximity to South Africa, which attracts more international visitors than any other destination in Sub-Saharan Africa. The initiation of the e-visa platform is facilitating access for tourists seeking to explore Lesotho’s spectacular tourism assets, and business travellers on their quest for investment opportunities within the country. Lesotho is the ninth country in Africa to adopt the e-visa system, which is intended to reduce the visa application process to a maximum of 72 hours and also alleviate the need to apply for an exit visa. Efficient and cost effective, the e-visa will facilitate migration and diaspora engagement while stimulating economic growth. Visit http:// evisalesotho.com/ for information on particular visa requirements and application fees. Travel & Tourism Economic Impact Report 2018 Lesotho’s tourism sector is small in absolute size – 166th out of 185 countries in 2017 – according to the World Travel & Tourism Council (WTTC) in its 2018 Travel & Tourism Economic Impact Report. However, with a ranking of 60th, tourism’s relative contribution to the national economy is much higher. The WTTC report estimates that the direct contribution of travel and tourism to Lesotho’s Gross Domestic Product (GDP) was M1 915.5 million (US $143.2 million) in 2017, which

According to the WTTC, visitor exports generated M792.6 million (5.5 percent of total exports) in 2017, with this figure forecast to grow by 3.9 percent per annum between 2018 and 2028 to M1 240.5 million (US $92.8 million).

TOURISM STRATEGIES

Snowboarding © Afriski

Tourism

The tourism sector provides a growing source of jobs for Basotho, and it is increasingly being recognised as an important tourist destination in Africa. translates to 6.3 percent of total GDP. It is anticipated that the sector will grow by 3.4 percent per annum in the 2018 to 2028 period to reach M2 717.5 million (US $203.2 million) or 5.8 percent of total GDP by 2028. This indicator reflects economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services (excluding commuter services), as well as restaurant and leisure industries directly supported by tourists. At the same time, the total contribution of travel and tourism, including both direct and indirect contributions, was M4 190.3 million (US $313.3 million) in 2017, which is 13.8 percent of GDP. Between 2018 and 2028 it is forecast that this figure will rise by 3.6 percent per year to reach M6 084.3 million (US $455.0 million) in 2028 – 12.9 percent of GDP.

The travel and tourism industry directly supported 43 000 jobs in 2017, translating to 6.2 percent of total employment in that year, with this figure expected to rise by 2.7 percent per annum to 55 000 jobs (6.4 percent of total employment) in 2028. The industry’s total contribution to employment, including jobs indirectly supported by tourism, was 13.5 percent of all employment (94 500 jobs) in 2017. This is predicted to increase by 1.9 percent per year to 112 000 jobs by 2028 (13.1 percent of all jobs). At present, most spending is generated by business travel at M3 330.7 million (90.9 percent), while leisure travel is responsible for the balance of direct travel and tourism GDP. In 2017, domestic travel spending generated 78.4 percent of direct travel and tourism GDP compared with 21.6 percent for foreign visitor spending

The Government of Lesotho has identified tourism as a key pillar of development in its quest to diversify the economy. Product development, promotion and marketing are on the agenda, and a National Tourism Development Plan and Community Based Tourism (CBT) Strategy are being developed, as well as a National Marketing Strategy. Furthermore, the focus is on implementing a tourism levy, promoting tourism education and awareness, and encouraging domestic tourism. Developing infrastructure for the conservation, preservation and proper management of heritage resources is in the spotlight. This is seeing the digitisation of archival material, as well as the establishment of the National Museum and Art Gallery, which is expected to open in 2020. The three storey building has been designed in the shape of a spiral aloe, one of Lesotho’s endemic species traditionally known as ‘Lekhala-Khaletsa’. The museum will include displays on the history of Lesotho and the Basotho people up to the present day, including their attire, norms and values, beliefs, food, animals and more. In addition, research is being conducted on heritage resources throughout the districts, with the emphasis on documentation, conservation, management and presentation. Key initiatives in this area include the design, production and installation of an exhibition at Sehlabathebe National Park (oral history and rock art), establishing a copyright society, and continuation of the annual Arts, Innovation and Culture Week.

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During 2017 the World Bank approved US $13.4 million in additional financing for the Second Private Sector Competitiveness and Economic Diversification Project (PSCEDP II). Part of this funding is going towards the construction of a Tourism and Handicraft Information Centre that will serve as a reference point and retail centre for both tourists and locals.

In terms of Lesotho’s key international markets, an increase in arrivals between 2016 and 2017 was seen in a number of overseas markets, including the Netherlands (18.1 percent), China (13.8 percent), Germany (12 percent), UK (11.8 percent) and India (8.1 percent). At the same time, visitors from Swaziland, Botswana, USA and South Africa declined, by 21.5 percent, 16.3 percent, 14.3 percent and 6.6 percent, respectively.

According to the 2018/19–2020/21 Budget Strategy Paper, the current strategic objective in the tourism sector is to increase volumes and length of stay of tourists as well as to ensure community participation in the sector. Crucial strategic actions being undertaken in this regard include: •

•

• • •

Maseru handles the bulk of Lesotho’s international arrivals (497 761 in 2017), followed by Maputsoe Bridge (335 063) and Caledonspoort (130 786). While most border posts experienced a decline in visitor movements during the year, increased arrivals were seen at Peka Bridge, Van Rooyen’s Gate and Sani Pass, with numbers rising by 18 percent, 10.8 percent and 0.1 percent, respectively.

Attracting private operators to manage developed tourism facilities through partnerships.

Conducting a feasibility study for an additional ski resort on the Highlands ski route and attracting private investment to manage the ski resort, with a deliberate strategy to promote a partnership or joint venture with the domestic private sector.

Developing and implementing a Lesotho tourism brand and management strategy.

Facilitating the establishment of at least one community-based project per year. Promoting inter-institutional coordination in the tourism sector.

Current tourism developments The development of tourism infrastructure is one of Lesotho’s chief concerns. An important initiatives in this regard is the construction of the Marakabei-Monontša and Mpiti-Sehlabathebe roads, which will open up many opportunities for new investments in tourism hotspots in the northeast and southeast of the country. This underlines the need to create appropriate hospitality facilities such as those found in Clarence, Golden Gate, Qwaqwa and the Drakensberg in neighbouring South Africa. Government is committed to strengthening links with the South African provinces of Free State, KwaZulu-Natal and Eastern Cape to catalyse investment in facilities on both sides of the border. According to the 2018/19 national budget,

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Government is busy operationalising the Botha-Bothe Tourist Centre as well as chalets at Sehlabathebe National Park and Bokong Nature Reserve. Operating leases are being concluded for Molimo-Nthuse Lodge and Pony Trekking and Liphofung Caves, while leases for other Government facilities, such as Victoria Hotel, are being reviewed. In addition, feasibility studies have been concluded for Sani Top, ‘Maletsunyane Waterfall and Letsa-la-Letsie, and new brownfield investments should be possible at both Katse and Mohale dams. Another important initiative is focused on uplifting skills in the hospitality industry, and in this regard Government is working with tertiary and vocational schools, and collaborating with Limkokwing University of Technology and Lerotholi Polytechnic. A Tourism Development Fund, to be funded by the tourism levy, is being established during the 2018/19 fiscal year. Tourism statistics Tourism statistics serve as a useful source of information for reviewing and analysing the performance of the sector and helping relevant stakeholders to make informed planning and investment decisions. These statistics are also

facilitating the planning and design of marketing programmes in line with tourism sector needs and demands, as well as providing information for the provision of more competitive and attractive destinations. The Lesotho Tourism Development Corporation (LTDC) is working with the Bureau of Statistics to establish Lesotho’s own Tourism Satellite Account (TSA) – a standard statistical framework for the economic measurement of tourism. According to the LTDC’s 2017 Tourism Arrivals & Accommodation Statistics Report, although a decline of 4.9 percent was registered in arrivals during 2017, the number of international arrivals remains above the 1 million mark, which was first achieved in 2014. South African continued to dominate as the leading market, with 1 009 856 international arrivals, followed by Zimbabwe (20 991), Netherlands (9 275), Germany (8 913) and the USA (8 589). While the majority of tourists hail from South Africa, there have been impressive increases in arrivals from international markets such as the Netherlands, China, Germany and the United Kingdom.

Although there was a downturn in arrivals during 2017, accommodation expenditure grew substantially, and was up by 7 percent compared with 2016, from M844 million to M904 million. Most revenue was accrued from accommodation bookings (69 percent), followed by food & beverages (24 percent), while the rest accrued from other goods and services (7 percent). Hotels and guesthouses are the greatest contributors to revenue. Furthermore, employment in the accommodation subsector has increased by 3.7 percent, with 2 695 employees hired in 2017 against 2 597 in 2016. This underlines the tourism industry’s positive contribution to the economy.

LESOTHO TOURISM DEVELOPMENT CORPORATION The Lesotho Tourism Development Corporation (LTDC) promotes Lesotho as a preferred tourist and tourism investment destination, both locally and internationally, through strategic marketing and sustainable product and industry development in partnership with the private sector and the community. Robust private sector engagement forums are essential to improve the participation of business in all aspects of the tourism product. The Domestic Tourism Strategic Survey

revealed that there was a great deal of scope to stimulate domestic leisure tourism and thus reduce the exposure of the local tourism industry to fluctuations in international demand or seasonality, particularly because international tourism can be extremely sensitive to global political and economic factors. This resulted in the implementation of the ‘visit your country first’ campaign aimed at encouraging Basotho to travel locally.

standards consistent with the RETOSA (Regional Tourism Organisation of Southern Africa) harmonised standards. The star grading system is an internationally recognised method of classifying the quality of any accommodation facility based on a one to five star rating. This is one of the first such programmes in the region to integrate grading standards that reflect both the overall quality of the lodging facility as well as its environmental impact and suitability for guests with disabilities. The emphasis is on features such as room size, furniture and linen, structural soundness, cleanliness, cuisine, bathroom facilities, service and reception facilities. The process is benchmarked on the experiences of Botswana and South Africa.

Marketing and promotion Lesotho’s tourism product is promoted in international markets through articles in magazines and brochures (both print and electronic), as well as participation in international tourism fairs, such as Germany’s International Tourism Bourse and London’s World Travel Market. The country is also well represented at South Africa’s Indaba, the largest tourism marketing event on the African calendar and one of the top-three ‘must visit’ events of its kind internationally. The tourism brand identity and slogan for Lesotho is designed to showcase the country’s high altitude, unique landscape and culture. Lesotho’s positioning statement is ‘The Unexpected High’, while its slogan is ‘The Kingdom in the Sky’, and its brand identity incorporates the country’s signature attributes: culture, adventure, snow, peace, water and prosperity. In keeping with the 2018 United Nations World Tourism Organisation (UNWTO) theme of ‘Tourism and Digital Transformation’, Lesotho is embracing the use technology in order to promote tourism in the country. Digital technology has become a key element for visitors in planning and booking their holidays, as information on destinations is increasingly sourced and shared via the internet. In acknowledgement of the importance of a website in marketing tourist attractions, Lesotho has revamped its online presence at the LTDC tourism website: visitlesotho.travel. In addition to providing comprehensive tourism information on attractions, accommodation facilities and activities in different parts of the country, the

redeveloped site is visually engaging, more interactive, user-friendly and easy to navigate. Studies reveal that 60 percent of travel searches start on a mobile device, and that travellers increasingly rely on mobile phones when they arrive in a new destination. The activation of the Lesotho Guider Mobile Application (App) will assist in marketing Lesotho globally, and is currently available in both Sesotho and English. The App lists all tourism related points of interest, establishments, public services and private service providers, and is tailored for both international and domestic tourists. It has also been installed in automated machines at the Maseru border to assist tourists with, amongst others, directions to places of interest. Lowlands Heritage Route The Lowlands Heritage Route provides visitors with a true Basotho cultural experience, including local tour guides, community interaction and homestay opportunities, while also enhancing rural livelihoods by stimulating enterprise development and income generation prospects.

Encompassing tourist destinations in the four areas of Malimong, Ha Kome, Thaba-Bosiu and Ha Baroana, the route will help communities to benefit from tourism assets in their environment. The LTDC partnered with the STEP Foundation of the UNWTO to initiate this community-based tourism development project. The initiative builds on earlier efforts to empower communities, such as the development of the Kome Rural Homestays Project in 2014. The homestay concept aims to generate income for villagers through the provision of accommodation to tourists, who also enjoy the opportunity to experience Basotho culture and hospitality in a domestic setting. Star grading The implementation of the Quality Star Grading System (QUALStar) is helping to support private accommodation providers in improving their facilities and ensuring a world-class hospitality sector. The Grading Council, which is a division of the LTDC, was established with support funding from the World Bank and enjoys

Establishments in strategic locations are being earmarked for upgrading. The popular Maloti Route is one of those targeted in order to ensure the legitimate development of this high-value travel corridor. Focusing on locations that are close to the Lesotho-South Africa border is also important in order to encourage South Africans to stay overnight in Lesotho rather than a crossborder establishment. Enrolment in the programme since its inception in 2013 has been sluggish. An assessment study to establish the reasons for its slow uptake found that the QUALStar grading criteria was too stringent and was not in sync with local standards. Subsequently, the grading crteria were revised in 2016. More than half of Lesotho’s star-graded facilities are located in Maseru District, with the second most to be found in Leribe District. Since the revision of the star grading criteria, 22 establishments have enrolled in the programme and are graded. The majority of establishments received three stars (41 percent) or two stars (36 percent), with just 5 percent receiving five stars.

TOURISM ASSETS Lesotho’s many outstanding features, such as its high altitude and dramatic landscape of towering

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mountains and scenic river valleys, surging waterfalls and crystal clear streams, distinctive flora and fauna, and vivid cultural heritage, set it apart from other destinations on the continent. There are a variety of sites of geological, historical and archaeological importance, including rock art in the highlands and dinosaur footprints embedded in the sandstone of the lowlands. Moreover, as the only country in Africa with regular winter snowfall, it offers an exceptional African-cum-alpine experience unmatched in the region.

percent), while guest houses have 27 percent and B&Bs 7 percent. Accommodation establishments are spread across the country, with the capital city of Maseru having the most and Berea the least. Maseru boasts a total offering of 1 559 rooms – 45 percent of total rooms available – followed by Leribe at 12 percent (413 rooms). The district that has the lowest number of rooms is Qacha’s Nek (3 percent) with a total of 114 rooms.

Adventurous motorists can tackle the meandering route and spectacular views as they travel from South Africa up the Sani Pass. This route featured in the rebooted ‘Top Gear’ TV series, which tested the endurance of the new Jaguar, Porsche and Mercedes-Benz in negotiating its tortuous hairpin bends. Entering Lesotho at Sani Top, which rises 2 874 metres above sea level, visitors will be left with little doubt as to why the country is known as the ‘Kingdom in the Sky’. Sani Top has the highest pub in Africa and is a superb spot to take in the beautiful mountain scenery. Africa’s highest peak south of Kilimanjaro, Thabana-Ntlenyana, is a 15-kilometre hike from Sani Top village. Travelling further into the highlands, the dramatic ‘Roof of Africa’ route unfolds through the 3 240-metre Kotesipola Pass, down into the valley below and the town of Mokhotlong. This remarkable mountain habitat contains many rare and endemic species, and while wildlife is not prolific, the varieties to be found have made fascinating adaptations to their environment. These include rhebuck, mountain reedbuck, baboons, jackals and smaller animals such as rock hyraxes, mongoose, meerkats and ice rats. Reptiles include the small yet very rare bergadder. The mountain ranges are home to 280 different varieties of birds, some of which are endemic. It is quite common to see vultures and eagles soaring on thermals, with less usual species comprising the sentinel rock-thrush, orange-breasted rockjumper and bald ibis. Birding takes place primarily between October

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Abseiling © Semonkong Lodge and March, with the Sani Pass area ranking as one of the top ten birding spots in southern Africa. The cold mountain streams of Lesotho are good for fly fishing at most times of year, with the exception of the rainy season. Despite its subtropical latitude, Lesotho’s elevated altitude means that it is free from both bilharzia and malaria. The climate is continental, with hot summers and cold winters, marked by clear blue skies and brilliant sunshine for more than 300 days a year. Long, hot summers are followed by warm autumn days that are ideal for hiking and pony trekking. However, these high altitudes also make weather patterns unpredictable, and beautiful cloudless conditions can rapidly give way to thundershowers or snowfalls. During spring, the hillsides are adorned with a diverse variety of alpine flowers, while the valleys are covered in peach blossom and mimosa. Lesotho’s national flower, the spiral aloe, may be seen on the slopes of the Maloti Mountains. Accommodation Featuring options ranging from sophisticated

and well-appointed establishments with casinos and conference facilities, to those which offer more basic amenities, Lesotho’s accommodation sector is one of the chief sources of tourism revenue and well as employment. Establishments encompass hotels, bed & breakfasts (B&Bs), lodges and guest houses, self-catering cottages, backpackers’ hostels and farmers’ training centres (FTCs). Camping and caravan sites are also available at key attraction sites for outdoor adventures. In 2014, the LTDC introduced rural homestays, which are offered in villages where visitors are able to experience a slice of real Basotho life. These include Malimong, Ha Kome and Morija in Maseru district; Tsatsane in Quthing and Thamathu in Qacha’s Nek; as well as others in Moteng and Monontsa in Botha-Bothe district, and Matsoaing and Malubalube in Mokhotlong. According to the 2017 Tourism Arrivals & Accommodation Statistics Report, out of the different accommodation types, guest houses make up 40 percent, followed by B&Bs at 19 percent, hotels at 15 percent and lodges at 13 percent. Hotels have the most of rooms (35

Hotels have the highest bed occupancy rate (35 percent), followed by B&Bs (23 percent), guest houses (15 percent) and lodges (14 percent). In 2017, Leribe was the best performer at an occupancy rate of 26 percent, followed by Mokhotlong at 25 percent. Berea is the most improved district with a growth of 6 percent in 2017 compared with the previous year. The overall average bed occupancy rate in 2017 was 20 percent, a slight decline of 1 percent from 2016. Guest houses make up the most abundant accommodation segment in Lesotho, followed by B&Bs, hotels and lodges. Lesotho has a number of impressive accommodation facilities, and Maseru enjoys several upmarket hotels with good conference facilities, including two large international chains and an exclusive boutique hotel. A variety of new establishments have been built throughout the country in the past several years, such as the luxurious Maliba Mountain Lodge and selfcatering Riverside Lodge in Tšehlanyane National Park. The Avani Maseru Hotel was reopened in May 2018 after an extensive M25-million revamp. The refurbishment has encompassed all 105 hotel rooms – including a complete redesign of the bathrooms – the hotel’s water supply and reticulation, public areas and restaurant. Part and parcel of this upgrading is environment-friendly lighting, top-class digital entertainment and other state-of-the-art technology, such as an expanded WiFi offering. Skiing and snow sports Lesotho’s picturesque countryside boasts snow-

hiking and mountain biking to attractions such as Botsoela Waterfall, Bushman painting, Pitseng gorge and rockpool, three caves and overhanging rock sites. The rugged Menoaneng Pass on the road that connects Mokhotlong and Thaba-Tseka is a treat for mountain bikers and 4x4 drivers.

covered mountain slopes during winter, making it unique to Southern Africa and ideal for skiing and other snow-dependant activities. With most of the country lying at more than 1 500 metres above sea level, snow can fall up to nine months of the year, peaking during the winter months of June, July and August. In the highlands, snow skiing takes place below the Mahlasela Pass, which is just a five-hour drive from Johannesburg via the Caledonspoort border post.

There are motor biking and quad biking adventures, as well as 4x4 trails in the highlands, with off-road driving offering many challenging routes through breathtaking mountain scenery. Celebrating half a century in 2017, the Roof of Africa is considered to be one of the world’s toughest off-road endurance events and attracts the best international Xtreme Enduro competitors. It takes place in the Maloti Mountains every year during November or December.

Afriski Mountain Resort is a year-round mountain sports and relaxation destination that caters to every taste, from the active to the indulgent. Afriski’s cutting-edge snowmaking technology gives Nature the helping hand it needs to offer skiing and snowboarding throughout the southern hemisphere winter season. The authentic Alpine ski lodge feel and world-class facilities combine with warm African hospitality to create a superb snow sports destination. Families are especially well catered to at Afriski. Equipment hire, skiing lessons and the Pudi children’s club ensure that young and novice powder enthusiasts can improve their skills and increase their confidence in a fun, safe and supportive environment. The facilities at Afriski mean that visitors can make the most of Lesotho’s dramatic landscapes and breathtaking scenery throughout the year. Afriski truly is a destination for all seasons: as well as being the ultimate winter playground, it is also an outstanding summer venue. The melting snow reveals an inviting network of trails just waiting to be explored. Mountain bikers and trail runners can enjoy the thrill of improving their technical skills as they get fitter at altitude, while hiking, birdwatching and fishing are among the more leisurely options. Afriski’s all-year, all-mountain offering is on a par with European and North American resorts – without the need to get on a plane. The range of accommodation options means that – just like on the slopes – there is something for everyone. Superior mountain chalets deliver a luxury experience, while backpacker-style accommodation makes the mountains even more accessible. Add in Africa’s highest restaurant, and the call

Bike tourism is the fastest-growing sports tourism sector in the world. Lesotho possesses enormous potential in this regard, thanks to its many excellent mountain biking trails which follow dramatic routes through the highlands. of the mountains (whether white with snow, or dotted with summer flowers) becomes irresistible. For more information, visit www.afriski.net or email bookings@afriski.net Adventure sports and trails Lesotho’s dramatic topography is ideal for all manner of high-altitude adventure sports, and the mountainous highlands pose an exhilarating challenge for climbers, hikers and bikers against the backdrop of a pristine and scenic natural environment. Rivers, waterfalls and dams – particularly the Mohale and Katse dams and the Senqu River – offer various water sports opportunities. The Maletsunyane Falls, one of the highest single-drop waterfalls in the Southern Hemisphere and the highest in Southern Africa, plummets 192 metres into a deep gorge, creating clouds of spray which are visible from afar. The 204-metre abseil off the edge of the Maletsunyane Falls to the bottom of the gorge holds the Guinness World Record for the longest commercially operated singledrop abseil. This is abseiling at its best and most exciting, but definitely not for the fainthearted! To help visitors familiarise themselves with the equipment

and techniques used on this extreme abseil, Semonkong Lodge offers a half-day of training with qualified guides on much more modest cliffs of around 25 metres. Visitors should bring a good pair of hiking boots and quick-drying pants or a change of clothing; a water-proof jacket is also advisable. Gentler abseiling excursions are available on the pleasant cliffs around the Lodge. Semonkong Lodge, together with the local community, offers pony trekking with gentle yet sure-footed Basotho ponies, giving visitors a chance to explore the magnificent scenery and culture. There are day rides of up to five hours which take in the Maletsunyane Falls or even Mount Qoang, the highest mountain in the area. The overnight pony trekking adventures involve several hours of riding per day. While strenuous for some, this is a wonderful way to experience the wilds of Lesotho and sights such as Ketane Waterfall, the Thaba Putsoa Mountains and Ha Mojalefa. All baggage is carried on packhorses, and accommodation is in Basotho villages. The rural village of Malealea is also regarded as one of Lesotho’s top adventure destinations. Experiences include overnight pony treks,

For those who are passionate about mountain biking in Africa, the Lesotho Sky Mountain Bike Race has become a ‘ride of passage’. Covering more than 350 kilometres of raw, natural mountain trails over six day, the race takes riders to the edge of MTB Nirvana. This international event was launched in 2011 with only 22 riders, and has since grown into one of Africa’s most spectacular and toughest stage races, bringing together top athletes from across the globe. The Lesotho Sky 2019 Race takes place from the 23rd to the 28th of September. The Lesotho Sky has been recognised by the International Cycling Union (UCI) since 2013, and hosts both professional and amateur teams. In 2015, the race was awarded an upgrade from a C2 to a C1 event, which means that UCI riders earn more points and also earn more prize money. Thanks to the UCI points earned by Basotho riders, Lesotho is now ranked 32nd in the world and 2nd in Africa after South Africa, boasting two of the world’s best mountain bikers – Phetetso Monese and Malefetsane Lesofe. Cycling is also the highest ranked sport in Lesotho, ahead of football and athletics. The 2019 Kingdom Enduro, which will be taking

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place between the 22nd and 24th of March, is a three-day enduro mountain bike stage race through a network of mountain trails, developed by route director Réné Damseaux and his trail building team. There will be three to five stages per day, and riders require good fitness and solid technical skills. In 2018 the Kingdom Enduro was added to the list of 50 Enduro events from 24 countries and 4 continents around the globe as an official EWS qualifier.

the country’s diverse mountain flora and plant heritage in a natural setting, as well as preserving rare and endangered species. There are two tours per day, at 09:00 and 14:00, Monday to Friday, and 09:00 and 11:00 on weekends and public holidays. Culture and heritage Lesotho’s proud cultural traditions are underpinned by a constitutional monarchy and the legacy of the nation’s celebrated founder and leader, King Moshoeshoe I. Cultural tourism has the potential to play a central role in economic development, and Lesotho boasts a number of must-see cultural attractions, including rock art sites, cultural villages and national monuments.

The team behind the Lesotho Sky and Kingdom Enduro – Sky Events (Pty) Ltd – also offers guided mountain bike tours, organises the annual Corporate Challenge Event, road bike and mountain bike tours, as well as Team Building Events for big and small organisations. Through charitable efforts the Lesotho Sky team has revived BMX sport in Lesotho and recently built an asphalt pump track for BMX, bicycles and skateboards at Roma Trading Post. The track is free to use and competitions are hosted regularly. Roma Trading Post also hosts a fully equipped bike shop and offers servicing, rentals, sales of bicycles and equipment. The Lesotho Sky team is based at Roma Trading Post Lodge, about a 30-minute drive away from Maseru. For more information please visit: www. lesothosky.com www.tradingpostlodge.com http://kingdomenduro.com/ The Sani Pass is a magnet for running and cycling enthusiasts. In addition to the Sani Dragon, which is a two-day MTB stage race taking place every September/October, races include the Sani Stagger marathon and half marathon events in November. Held in north-east Lesotho over the rugged mountain footpaths of Tšehlanyane National Park, the Lesotho Ultra Trail offers 50-kilometre and 38-kilometre courses through breathtaking mountain landscapes. Hosted by Maliba Lodge, the race celebrated its sixth year in November 2018, once again attracting a top-class local and international field. Classed as an Ultra Skymarathon© because it exceeds 45 kilometres in length and 2 500 metres in vertical gain at high altitude – with parts venturing to over 3 200 metres – it’s a challenge for even the toughest of

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© Morija Festival participants. Lesotho is also renowned for its fly fishing opportunities. The Maletsunyane River was stocked with trout in the late 1950s, and today Semonkong Lodge offers fly fishermen a pristine piece of river, where the Maletsunyane Falls has created two distinctly different fishing zones. On the easily accessible stretch above the waterfall there’s a realistic possibility of catching a tenpound wild brown trout, while hiking (or abseiling) to the bottom of the falls reveals excellent fishing opportunities for rainbow as well as brown trout and yellowfish. The lodge also hosts extreme fly fishing adventures lasting up to seven days downstream of the falls, where the river has carved out a magnificent gorge. Only fly fishing is permitted, and this is strictly on a catch and release basis between the months of September and April. All proceeds from fishing licences go to the local guides and to the Maletsunyane River Conservation Fund. Katse Dam & Botanical Gardens Located some 2 000 metres above sea level in one of Lesotho’s most popular tourist areas, Katse is the largest of the five dams built as part

of the Lesotho Highlands Water Project – the greatest engineering project in the Southern Hemisphere when it was built in the 1990s. This impressive dam boasts the highest dam wall in Africa (185 metres) and is one of fewer than 30 double curvature concrete arch dams in the world, as well as being among the top ten biggest concrete arch dams in terms of its volume. This marvel of modern engineering has become a must-see tourist attraction which continues to draw many visitors. Katse is best viewed from the Mafika-Lisiu Pass, where there is a car park and view site. The now-renovated Katse Information Centre includes a model of the dam showing the series of tunnels and pumps which form part of the water transfer scheme. Guided tours are offered daily at 09:00 and 14:00. Lesotho’s flora is uniquely adapted to the afroalpine environment. Near the Katse Dam are the Katse Alpine Botanical Gardens, which were created to preserve some of the indigenous flora that was displaced in the construction of the dam, especially orchids and the spiral aloe, Lesotho’s national flower. The garden’s setting of paved hillside trails, rock gardens and flowers displays

Established in 1956, the Morija Museum & Archives (MMA) lies just over 40 kilometres south of Maseru. It contains valuable archival material and museum collections, which have been growing incrementally since the 19th Century and today form the basis for research and publishing as well as exhibitions and educational programmes for schools, visitors and tourists. The museum is also involved in a range of arts and culture projects, as well as heritage and community-based tourism initiatives. MMA opening hours are 08:00-17:00, MondaySaturday, and 12:00-17:00 on Sundays. It is closed on Easter Sunday, Christmas and New Year’s Day. (tel +266 2236 0308) Officially launched in August 2015, The Hub is a not-for-profit creative technology lab operating as a subsidiary project of the Morija Museum and Archives. It aims to provide the community of Morija and its surrounding areas – particularly the in- and out-of-school youth – with affordable access to computers, the internet and digital media training on a range of subjects, including basic computer training, photography, film making, and creative writing. In 2017 The Hub published WordPower 2017, a magazine which features short stories and poems by 12 young writers from Morija. Events during 2018 have included a comic book workshop, film screenings, film making and sound production workshops, and a workshop on sustainability. The Morija Arts Centre / Maeder House Gallery, another component of the Museum, offers training in drawing / painting, ceramics, mosaic and

animation, and is now opening a weaving and natural dye component. It has carried out a range of initiatives in arts education and production as well as exhibitions, and has recently begun the ‘Tiny Gallery Concert’ series which is available on YouTube. Involving interviews with 130 individuals, from members of the Royal Family and Government officials to business owners, youth leaders, clergy, professionals and educationalists, the 130 Voices Report aims to answer the question: What is the Vision for Morija and Matsieng? MMA has helped to develop and encourage a wider range of tourism services and products in the area, including tours of historic Morija and dinosaur footprints, walking trails, bird watching and pony trekking, guest houses, a conference centre, traditional village experiences and home-stays. Morija Guest House holds regular ‘Sesotho Language and Culture’ weekends where participants learn the basics of the Sesotho tongue and acquire useful knowledge of Lesotho’s history and culture. The Royal Archives, Museum and Information Resource Centre is located in Matsieng Royal Village, the 1858 settlement of Letsie I which became the traditional capital of the Basotho after Thaba-Bosiu. The Royal Archives were established in March 2008 by the royal family and are administered on its behalf by professionals in various fields of academia. It houses precolonial and post-colonial records (paper-based, digital and electronic) relating to chieftainship in Lesotho, as well as cultural objects. The Royal Palace and homestead are nearby, and the centre provides guided tours to Paramount Chief Letsie I’s settlement. The ‘Seriti sa Makhoarane’ (The Prestige of Makhoarane) initiative is based upon a stronger partnership between Morija Museum, the Royal Archives & Museum (Matsieng) and various surrounding communities, all of which are connected to the descendants of King Moshoeshoe. Many heritage features have been documented and key informants interviewed, leading to the production of a 54-minute film ‘Ho

MORIJA, CULTURAL HEART OF LESOTHO FOR THE BEST IN HERITAGE, LIVING CULTURE & THE ARTS Including Morija Museum & Archives The Hub, Amphitheatre, Café Mojo Maeder House Art Gallery, Morija Arts Centre Accommodation, Catering & other amenities Regular Calendar of Creative Activities Hiking trails & tours, dinosaur footprints, pony trekking As well as nearby Matseng, The Royal Village, and much more! Tel: +266 2236 0308 / 0324 E-mail: info@morija.co.ls Website: www.morija.co.ls Facebook: morija.co.ls P.O. Box 12, Morija 190, Lesotho llela borena’ (Yearning to reign). New tourism products and services are also emerging and these should be of interest to visitors to Lesotho. See www.morija.co.ls or the Facebook page (morija.co.ls) for more news about Lesotho’s ‘Valley of the Kings’. Once serving as the mountain fortress of King Moshoeshoe I, the national monument of ThabaBosiu is one of Lesotho’s most famous sites because it is here that the Basotho nation was built. Situated about 25 kilometres east of Maseru in the Phuthiatsana river valley, Thaba-Bosiu comprises a steep, flat-topped mountain, its summit encircled by a belt of perpendicular cliffs which tower over the surrounding valley. From here, King Moshoeshoe successfully defended the Basotho people against their attackers for many years. There is a visitors’ information centre at the base of the mountain, and guided tours are available to the summit. Moshoeshoe’s grave – a cairn of stones – can be seen at the burial place on the hilltop, as can his restored two-roomed house nearby. The summit also affords commanding views of the countryside, including Qiloane

pinnacle which inspired the top-knot on the Basotho hat. Located below the visitors’ information centre, the privately-managed Thaba-Bosiu Cultural Village (TBCV) complements the nearby national monument. It was developed to showcase the traditional Basotho lifestyle, illustrated in aspects such as housing, entertainment, arts, crafts and indigenous plants. Visitors can experience Sesotho life within a typical village setting, consult a traditional doctor, and sample Sesotho beer. There is a site museum and interpretative centre, with constituent tribes of the early Basotho represented as well as Stone Age cave-dwellers and the arrival of Colonial forces. Other features include 41 chalets providing accommodation for visitors, a 250-seat conference centre, live-performance amphitheatre with a capacity of 800, ceremonial spaces, botanical gardens and handicraft outlets. The village is also the venue for a variety of annual events. Hidden beneath an overhang in the pink and orange sandstone cliffs some 25 kilometres east of Teyateyaneng lies the mysterious Kome

Cave Village. These sheltered dwellings were built in the early decades of the 19th Century by Chief Teleka of the Basia as a refuge from the marauding cannibals who inhabited the area. Ha Kome village is near Ha ‘Matjotjo, where the notorious cannibals’ hideout of Malimong and Bokhopa Mountain is to be found. Picnics, pony trekking and a tour of the cave village may be organised from the Kome Crafts and Information Office. The Bushmen, also known as the ‘San’, left behind a fascinating array of art in caves and rock shelters across Lesotho. The Masitise (Ellenberger) Cave House Museum in the vicinity of Quthing is part of an old mission house that was built into a San rock shelter by Reverend David-Frederic Ellenberger in 1866. Today it functions as a small museum with some good displays on local history and culture. Accommodation is available in rondavels or the caretaker’s cottage, and home-stays are offered in nearby Tsatsane. One of Lesotho’s most important rock art sites can be found at Ha Baroana in Nazareth, Maseru District, en route to the Mohale Dam. The paintings, which are to be found underneath an overhanging rock facing the Liphiring River, depict scenes of everyday life, like hunting and dancing, as well as animals such as leopard, lion and eland, blue crane and guinea fowl. Fascinating dinosaur footprints preserved in sandstone may be found at Subeng Stream, about 8 kilometres north of Hlotse and an easy walk from the main Hlotse–Botha-Bothe road. The site features the footprints of several different dinosaurs that existed towards the end of the Triassic period. The fossilised footprint of ‘Kayentapus ambrokholohali’, one of the largest dinosaurs to ever roam the continent, was discovered during a university field trip to the Roma Valley in early 2016. This is a hugely important discovery, as it is a departure from established understanding of the types of dinosaurs that existed during the early Jurassic period around 200 million years ago: ‘Kayentapus ambrokholohali’ would have been some nine metres in length against the previous fossil records which point to sizes of roughly three to five metres in length.

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Cultural events Held annually in March, Moshoeshoe Day is a national holiday commemorating the life of the country’s great leader, King Moshoeshoe I, who was a staunch defender of the language, art and culture of Lesotho. The main celebrations take place in Maseru, where visitors can witness the richness of local traditions.

Flyfishing © Semonkong Lodge

The three-day Moshoeshoe Walk commemorates the legacy of Basotho’s founder, King Moshoeshoe I, as well as the richness of Basotho culture, and involves a hike which combines elements of adventure, education and history. With Maseru as a starting point, the route takes in Menkhoaneng and Malimong, with the final destination of Thaba-Bosiu. The 2019 walk takes place between 6 and 9 March. Horse racing is popular in Lesotho, and the Semonkong Horse Race is held every July with the main aim of commemorating King Letsie’s birthday. In order to make the proceedings even more interesting, betting has been incorporated into the event. Horseracing in Semonkong is currently being promoted by the LTDC as it encourages tourism while generating revenue for the surrounding community, contributing to environmental preservation and conservation, and promoting social cohesion and integration. Now in its ninth year, the annual Lesotho Film Festival features both local and foreign films and takes place in November at a variety of venues. The festival was launched in 2011 by the NPO Sesotho Media and Development (SM&D) to give Basotho youth a platform to develop and showcase their film-making skills. A lifestyle, music and food celebration, the annual Lesotho Tourism Festival takes place every December. Activities include a jazz festival, divas’ concert, poetry, comedy nights, parties and a golf tournament. The main concert takes place at Thaba-Bosiu Cultural Village and attracts visitors from the SADC region and further afield. During 2017, the tourism sector attracted capital investment of M639.0 million, or 7.3 percent of total investment, and the World Travel & Tourism Council expects this figure to grow by 4.7 percent per annum over the subsequent ten years to reach M1 124.6 million in 2028.

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First held in 1999, the Morija Arts & Cultural Festival has showcased the richness and diversity of Basotho culture and talent in an effort to promote peace, unity and confidence among Basotho, growing to become Lesotho’s premier cultural event. The emphasis of the festival has been on reviving various aspects of Basotho culture through song, music, art and dance, while boosting tourism and promoting crafters and small-scale manufacturers. This has brought together people of different backgrounds to celebrate their own culture while experiencing the culture of neighbours and other residents of Lesotho. From the outset, Morija Museum played a key role in coordinating the festival, traditionally held every September or October over a period of four days, with attractions such as arts and crafts as well as cultural groups and performers – both traditional and modern – of music, dance, comedy and poetry from across Lesotho and neighbouring countries. A number of other events are held throughout the year as part of an ongoing calendar of activities focused on art, culture, heritage and

related areas including book launches, lectures, excursions, musical events and exhibitions. (www.morija.co.ls or e-mail: info@morijafest.com) Launched in 2015, Lesotho’s annual Arts, Innovation and Culture Week takes place in September/October and focuses on Basotho culture, music, fashion, film, food, performance art and social structure. People are urged to dress in traditional outfits and eat traditional dishes, as well as to use and wear products made in Lesotho and take part in the array of activities on offer. 2016 saw the debut of Lesotho’s annual Maletsunyane Braai Festival, which is held against the backdrop of the Maletsunyane Falls in Semonkong. The two-day festival features music, comedy, pony trekking, paintball, hiking, camping and a braai competition.

NATIONAL PARKS & RESERVES Lesotho’s national parks and reserves are under the jurisdiction of two different entities – Lesotho National Parks (+266 2231 1767), which manages Sehlabathebe National Park, and

Lesotho Northern Parks (+266 2246 0723). Presently administered by Lesotho Northern Parks, Tšehlanyane National Park, Bokong Nature Reserve and the Liphofung Cave Cultural Historical Site were originally established by the Lesotho Highlands Development Authority (LHDA) to compensate for the loss of biodiversity caused by the Lesotho Highlands Water Project (LHWP). The affected communities have benefited through tourism projects in these areas, and receive a 10 percent share of all park collections in the form of community development projects. Lesotho’s first national park, Sehlabathebe National Park is situated above the Drakensberg escarpment bordering South Africa. Proclaimed in 1970, this remote and rugged park has an average elevation of 2 400 metres and covers 6 500 hectares of elevated mountain plateau, characterised by high-altitude grasslands, alpine flora, waterfalls, lakes and impressive sandstone rock formations. It is home to eland, rhebok and the secretive oribi antelope, wild cats and jackals, and birds of prey such as the black eagle and rare bearded vulture. This pristine environment makes Sehlabathebe ideal for eco-activities such as guided hiking, rock climbing and pony trekking, and there are some good fly fishing sites and San paintings. Day hikes include those to Bushman’s Pass at the edge of the escarpment or to the Tsoelikane Waterfall, with its beautiful, deep pool. Considered to be of outstanding universal value because of its exceptional natural beauty and aesthetic importance, Sehlabathebe National Park was proclaimed a World Heritage Site in 2013. As an extension of the adjoining uKhahlamba World Heritage Site, the two parks are now known as the Maloti-Drakensberg Park. Together they cover an area of 249 313 hectares: the largest protected area along the great escarpment of Southern Africa. This is not only the most important water catchment area of two countries but also an area of significant global biodiversity, characterised by unspoiled mountain scenery and a unique yet fragile ecosystem. The park provides a vital refuge for many endemic plant species and their

associated fauna, particularly endemic highland birds, and there are rock art sites with Bushman paintings and other archaeological and cultural resources of universal significance. Reaching an altitude of 3 090 metres above sea level, the Bokong Nature Reserve is the highest reserve in Africa that is accessible by motor vehicle. Bokong lies at the head of the Mafika-Lisiu pass, 72 kilometres from the border post at Ficksburg and 80 kilometres from the Caledonspoort border post. An impressive visitors’ centre has been developed on the edge of a sheer, 100-metre cliff, and affords breathtaking vistas of the highlands and the impressive waterfall which is formed where the Lepaqoa River drops down into the valley below. In winter, the waterfall becomes a dazzling ice sculpture set in a snow-dusted landscape. This 1 970-hectare reserve is home to an impressive variety of birdlife, and visitors may catch a glimpse of the rare and endangered bearded vulture as well as a number of other bird species endemic to the afro-alpine zone. Other wildlife comprises vaal rhebok and baboons, as well as colonies of endemic ice rats. Bokong also contains excellent high-altitude wetlands at the sources of the Bokong River and Lepaqoa Stream. Hikes may be taken from Bokong across the ‘Roof of Africa’ into the Tšehlanyane National Park to the north. While this challenging three-day trail covers a 40-kilometre route, with overnight accommodation in two simple huts, there are also a series of less strenuous day trails and interpretive walks. The use of a local guide is strongly encouraged due to the unpredictable nature of the weather at these high altitudes. Other attractions include interesting rock shelters close to the visitors’ centre, restful picnic sites, a reconstructed cattle post and pony trekking. Accommodation is available in self-catering units. The largest of Lesotho’s Northern Park reserves, Tšehlanyane National Park is a protected area located deep in the front range of the Maloti Mountains at the junction of the Tšehlanyane and Holomo rivers. The park is reached along a 32-kilometre gravel access road (negotiable in a two-wheel drive) that leaves the main A1 route

about six kilometres southwest of Botha-Bothe and parallels the Holomo River as it passes through a picturesque valley. Tšehlanyane encompasses over 5 600 hectares of unspoiled mountain terrain containing exceptional scenic, natural and wilderness features and preserving significant biodiversity. It has one of the very few indigenous woodland areas (Leucosidea forest) in Lesotho and contains a number of undergrowth plants that are unique to this habitat. The park also boasts some mountain fynbos as well as berg bamboo on the banks of the streams which provide a habitat for the endangered butterfly species Metisella Syrinx. Small game animals are to be seen and birdlife includes bearded vulture and ground woodpecker. The five-star Maliba Mountain Lodge and threestar Riverside Chalets are situated inside the park. In light of the spectacular scenery, there are many opportunities for photographers. Visitors may also take a six-hour circular hiking trail, go pony trekking in the mountains or swim in the reserve’s many streams and pools. Furthermore, there are moves to transform the small village of Mabeleteng, which is situated close to Tšehlanyane National Park, into a tourist hub producing local arts and crafts as well as offering pony trekking and home-stays. The 4-hectare Liphofung Nature Reserve situated in the lovely ‘Moteng Valley, surrounded by high mountains and beautiful scenery, is home to one of Lesotho’s smallest but most intriguing national heritage sites – Liphofung Cave. This large sandstone cave contains rich archaeological deposits and some of the country’s best examples of rock art, with a number of paintings featuring the eland after which this reserve is named. Once a San shelter, the cave was later used by King Moshoeshoe I when visiting the area. It can be reached along a 7-kilometre concrete road just off the main route from Botha-Bothe to Oxbow and Mokhotlong. Liphofung has been developed with the focus on cultural education and the preservation of the rock paintings along with early Basotho history. There is a small visitor’s centre and displays of Basotho culture and San rock art, along with

ablution facilities and a craft outlet. Local guides are available to interpret the historical, cultural and natural significance of the site and the area as a whole. Self-catering accommodation facilities have been built which complement the traditional huts of the visitor’s centre. Accommodation is also available at Mamohase B&B, a renowned rural home-stay facility at a nearby village.

investors to consider positioning new accommodation developments at prime tourist attractions where there are at present few or no facilities offering international quality services to travellers. •

TOURISM INVESTMENT Enjoying the highest altitudes in southern Africa, Lesotho has naturally clean, crisp mountain air and an abundance of water sources and bodies. These attributes, together with the scenic beauty of the country’s landscape, have created a host of tourism investment opportunities that cover everything from extreme adventure to eco-tourism and leisure activities. Over the years, the Government of Lesotho has invested in infrastructure programmes to make the rugged terrain more accessible and pave the way for development. The LTDC provides professional services to investors both before and after investment, assists foreign investors in obtaining clearances (residence permits, work permits, licences, etc) and provides investment advice. The following areas have been identified for investment: •

•

Ski resorts – Lesotho experiences snowfall in the mountains between May and August every year. Long south-facing slopes offer opportunities for the development of ski slopes in Kotisephola (Mokhotlong District) and Sehlabathebe (Qacha’s Nek District). Water sports and boating excursions – The Lesotho Highlands Water Project (LHWP), with its mighty dams constructed in the central highlands, has great potential for the establishment of water-based adventure centres and investment in cruise boats of not less than 100 people. Accommodation facilities – These are mostly located in Maseru city and major district towns, and the LTDC is encouraging

Health and wellness resorts – Lesotho is proud of its authentic tourism attributes that offer travellers a true African wilderness characterised by tranquillity, clean air and skies, and clean water free from equatorial diseases such as bilharzia and malaria. These features are crucial for destinations offering health and wellness facilities to outpatients and those escaping the hustle and bustle of city life to rejuvenate mind, body and soul. Lesotho’s many pristine areas offer an opportunity to establish health and wellness resorts.

The Lesotho National Development Corporation and Makeka (Pty) Ltd are presently looking for investors to assist in developing the world’s highest altitude eco-distillery for the production of spirits from agave and other sources. There are also plans to build a 20-bed, four-star boutique hotel at a demonstration farm in Botha-Bothe, with an on-site spa, restaurant and events venue. Subsidiary business activities include the production and sale of agave by-products such as cosmetics and furniture in the longer term. Contact the Lesotho Tourism Development Corporation: PO Box 1378, Maseru; tel +266 2231 2238; fax +266 2231 0189; e-mail: ltdc@ltdc.org. ls; website: www.visitlesotho.travel During 2018, the Ministry Of Tourism, Environment and Culture requested proposals for: •

Consultancy service for a feasibility study to develop a snake park

•

Consultancy on a feasibility study for upgrading Sehlabathebe National Park

•

Feasibility study to develop Morija Makhoarane as a preferred cultural heritage and tourism destination

•

Consultancy service for a feasibility study to develop Lesotho Northern Parks (Bokong Nature Reserve, Tsehlanyane National Park and Liphofung)

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Lesotho’s primary environmental challenges include severe land degradation, inappropriate agronomic practices and overgrazing. Coupled with the impact of climate change and socioeconomic issues, these challenges threaten sustainable production, nutrition and food security. Since more than half of Basotho engage in some form of subsistence farming, the economic prospects of the country and the lives of many ordinary citizens are inextricably linked to the state of the environment. On the Global Needs Assessment (GNA) Vulnerability Index, Lesotho is ranked 2/3 and on the GNA Crisis Index it scores 3/3, indicating high vulnerability. Effectively, the majority of Basotho do not have adequate adaptive capacity and resilience to climate change, and are thus more vulnerable to its negative impacts as well as extreme weather events. Lesotho has experienced natural disasters such as droughts and floods at an increasing rate in recent years. Water resources, including perennial springs, rivers and many dams, have greatly diminished, while agriculture, which is an important source of rural livelihoods, is in steady decline. According to climate change projections, Lesotho is likely to experience increased temperatures and rainfall variability, including unpredictable and extreme events. Each of these climate change manifestations has the potential to affect, both directly and indirectly, the country’s human communities, natural resources and infrastructure. The Notre Dame Global Adaptation Initiative (ND-GAIN) Country Index ranks Lesotho the 14th most vulnerable and 51st least ready country to improve resilience to climate change. Investment and innovations are thus urgently needed to improve readiness for action. Lesotho’s mountainous environment means that farming is often undertaken on slopes with fragile soil formations, and the effects of climate change are especially noticeable in excessive levels of soil erosion caused by water run-off. Soil loss and land degradation have accelerated due to the rising and combined pressures of arable and livestock production, characterised by overcultivation, overgrazing and forest conversion, with ongoing urbanisation and deforestation having also taken their toll. An estimated 40 million tonnes of soil per year is lost through erosion, and the resultant sedimentation affects

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growing energy sector and an industrial sector that is still in its infancy.

CLIMATE CHANGE INITIATIVES Lesotho has mounted numerous initiatives to address the climate change challenge. This is exemplified by, among others, the National Strategic Development Plan (NSDP), which identifies ‘to reverse environmental degradation and adapt to climate change’ as one of its key objectives. Fundamental issues include protecting water sources through integrated land and water resources management, as well as methods of boosting the environment’s natural resilience to climate change, conserving biodiversity and exploring environmentally friendly production methods.

Spiral Aloe © LHWC

Environmental Conservation

Factors such as Lesotho’s geographical and climatic characteristics, together with the prevailing socioeconomic conditions among the majority of its rural population, make the country particularly vulnerable to the effects of climate change. river ecosystems while also exacerbating air and water pollution. Natural resources are being unsustainably exploited. One example is the overharvesting of biomass such as fuel wood, which is used to provide energy for cooking and/or heating. Although there are many opportunities for the production of renewable energy in the form of wind and solar power, and the country already produces clean energy in the form of hydropower, this is not yet accessible to most citizens. In urban areas, environmental issues

relate in particular to air and water pollution, with the pace of urbanisation intensifying the existing capacity challenges among local authorities. While Lesotho’s CO2 emissions remain relatively low, they have nonetheless doubled between 2000 and 2015. The proportional contribution of the three key sectors to greenhouse gas emissions is: agriculture (63 percent), energy (31 percent) and waste management (6 percent). This depicts Lesotho’s socioeconomic circumstances, which reflect an economy dependent on natural resources, a low but

Achievements under the NSDP include the rehabilitation of areas affected by soil erosion, with 16 dams, 1 224 kilometres of stone lines, 120 kilometres of diversion furrows and 333 620 cubic metres of gully structures built between 20212/13 and 2015/16. Furthermore, forest cover rose from 13 550 hectares to 53 105 hectares over the same period. The Lesotho Meteorological Services (LMS), which falls under the Ministry of Energy and Meteorology, is the coordinating agency charged with monitoring and reporting on weather, climate and climate change issues. A National Climate Change Committee (NCCC), which serves as an advisory body to the LMS, was formally established in 2013 to coordinate the response to climate change. United Nations Framework Convention on Climate Change Lesotho was one of the first countries worldwide to ratify the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. It is thus committed to working towards halting the advance of climate change by eliminating or reducing its causes, as well as making adaptations to the emerging climate. The UNFCCC requires Lesotho to submit periodic reports on levels of greenhouse gas (GHG) emissions, climate mitigation and adaptation activities, vulnerability analyses and policy recommendations. Furthermore, the Lima Call

for Climate Action requires countries to develop and communicate their Intended Nationally Determined Contributions (INDCs) towards achieving the stabilisation of GHG concentrations in the atmosphere. As a Least Developed Country (LDC), special provisions apply to Lesotho’s INDCs to reflect its special circumstances. Against this backdrop, Lesotho submitted its INDC report in September 2015. This was followed by the Nationally Determined Contribution (NDC) of December 2017 – an improved version of the INDC. Effectively, the NDC details adaptations and mitigation actions that Lesotho will take to tackle its growing vulnerability to climate change and GHG emissions. In pursuance of Article 2 of the Paris Agreement, this will contribute towards achieving the global long-term goal on adaptation and efforts to limit global average temperature increases to less than 1.5oC above pre-industrial levels. Lesotho is committed to unconditionally lowering her net GHG emissions by 10 percent by 2030 against the Business-As-Usual (BAU) scenario. Reduction is attainable on condition that external support (finance, investment, technology development and transfer, and capacity building) is made available to cover the full cost of implementing the adaptation and mitigation actions. With external support, a combined total emission reduction of 35 percent below the BAU emission level can be achieved by 2030. Incorporating a multi-sectoral approach, Lesotho’s plan to mitigate GHG emissions is built on the following pillars: •

Adoption of climate-smart agricultural practices for greater food security and higher famers’ incomes

•

Limiting GHGs through afforestation, reforestation and protecting forests for their economic and ecosystem services

•

Energy efficiency measures, deployment of renewable energy sources in power generation (hydro, solar and wind), promotion and dissemination of clean energy technologies (efficient cook-stoves and LPGs) to reduce overreliance on fuel wood

•

Adoption of modern, efficient and advanced technologies in industry, transport and buildings

•

Sustainable waste management systems, including solid waste management, wastewater recycling, composting of biodegradable waste and possible methane recovery from landfills

Least Developed Countries Fund The Least Developed Countries Fund (LDCF) was established in November 2001 under the UNFCCC. It aims to address the needs of least developed countries whose economic and geophysical characteristics make them especially vulnerable to the impact of global warming and climate change. The ‘Strengthening Capacity for Climate Change Adaptation through Support to Integrated Watershed Management Programme’ aims to implement sustainable land and water management practices and resource conservation measures in selected watersheds to reduce vulnerability and enhance adaptive capacity at community level. The focus is on crop, livestock and agro-forestry systems in the three most vulnerable livelihood zones. Approved for implementation in 2015, the project is being financed by the Global Environment Facility (GEF) and Food and Agriculture Organisation (FAO) of the United Nations through the LDCF, and implemented with the assistance of a wide spectrum of government ministries and departments. Appreciating the fact that climate-related emergencies are increasingly becoming a way of life for Lesotho, the United Nations is supporting Lesotho’s Government in developing the Resilience Strategy to help communities cope better with recurring emergencies. Also financed through the LDCF, the six-year project titled ‘Reducing Vulnerability from Climate Change in the Foothills, Lowlands and the Lower Senqu River Basin’ is aimed at increasing ecosystem resilience to climate change in the southern parts of Lesotho, as well as reducing vulnerability of livelihoods to climate shocks. With a total cost of US $35.998 million, the project was approved in 2015 and is being implemented by the United Nations Development Programme (UNDP), with executing agencies including the Ministry of Forestry, Range and Soil Conservation

and the Ministry of Gender, Youth and Sports. Water Security and Climate Change Assessment Released in September 2016, the World Bank report entitled ‘Lesotho Water Security and Climate Change Assessment’ looks at the challenges faced with regard to water management, against the backdrop of habitual droughts, floods and future climatic variations in the region. Projected temperature increases due to climate change will have a detrimental impact of Lesotho’s water security, patterns of agricultural production and future opportunities to develop water transfer infrastructure. Simulations show that the continued development of existing water infrastructure, particularly in the lowlands, is central to improving both reliability and resilience. The report recommends investing in monitoring and enhanced data acquisition to develop more sophisticated analyses of the complex issues surrounding natural resources. Better data in respect of agriculture, water and climate will help Lesotho to seize future opportunities while avoiding risks.

POLICIES & PROGRAMMES

Lesotho has adopted natural resource and sustainable land management practices through a number of sector-specific policies which tie in with the goals of the NSDP. The National Environment Policy (1998) laid the legal foundation for the Environment Act of 2008, which provides for the protection and management of the land base against the negative impacts of infrastructure development. The Act introduced Environmental Impact Assessments (EIAs), audits and project monitoring. Other important acts include the Forestry Act of 1998, which provides for the protection and preservation of forests and calls for land to be made available for forestry activities, including fuel wood production, as a means of preserving indigenous shrubs and trees that guard against soil erosion. Introduced in 2008, the National Forestry Policy aims to increase Lesotho’s tree cover to at least 5 percent by the year 2020. The National Range Resources Management Policy of 2014 provides guidance for the

development of effective strategies that combat land and vegetation degradation and motivate for improved legislation and the implementation thereof. The goal is to attain sustainable development and management of rangeland resources for enhanced biodiversity, optimum productivity and improved livelihoods. The policy envisages a three-tier structure, comprising national, district and community grazing associations. Used in conjunction with Sustainable Land Management (SLM), it enables extension officers to support communities with expertise on SLM techniques and practices, including rangeland management, conservation agriculture, water harvesting, and wetland protection and rehabilitation. The Energy Policy of 2015 envisions that energy shall be universally accessible and affordable in a sustainable manner, with minimal negative impact on the environment. In particular, it sets goals to reduce fuel wood usage as well as other fossil fuels, and promotes renewable energy and energy efficiency, focusing on increasing energy access in remote areas through the development of private sector led off-grids and energy trading centres. Government has also developed a number of complementary projects, with up-to-date information on the status of natural resources essential for evidence-based decision making. The National Land Cover Database brings together users and generators of spatial data on one platform to facilitate analysis of land cover. This has made possible the generation of land cover maps that provide an important baseline for planning sustainable land management interventions and broader natural resource management activities. Climate Change Policy of 2017 Recognising the magnitude of the impacts of climate change as well as its international mitigation obligations, the Government of Lesotho, together with a variety of stakeholders, has developed the National Climate Change Policy (2017). The policy is based on the guiding principles of the UNFCCC, the UN’s Sustainable Development Goals, African Union Agenda 2063, the Paris Agreement, and the NSDP, and provides strategic direction and coordination, taking cognisance of the linkages between climate change and sustainable development.

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The policy identifies major vulnerable areas and risks, and sets out 22 policy statements on which the various sectoral adaptation and mitigation interventions will be anchored. It sets out implementation plans, identifies resources mobilisation strategies and advocates for private sector investment in climate change adaptation and mitigation. Finally, the policy recommends a Monitoring and Evaluation Framework in order to enhance effective policy implementation, ensure appropriate utilisation of resources, and communicate results to decision makers and stakeholders for future action.

Maloti-Drakensberg Transboundary World Heritage Site The Maloti-Drakensberg Transfrontier Conservation Area (TFCA), incorporating Lesotho’s oldest national park (Sehlabathebe) as well as the adjoining uKhahlamba Drakensberg Park in South Africa, was proclaimed in 2001. The Maloti-Drakensberg Transfrontier Conservation and Development project was launched by the two countries’ environmental ministers and the World Bank, and management plans for the TFCA were completed in 2008.

The vision of the National Climate Change Policy of 2017 is to build climate change resilience and low-carbon pathways, including a prosperous and sustainable economy and environment in Lesotho. The overarching objective of the Climate Change Policy is to ensure that all stakeholders address climate change impacts and their causes through the identification, mainstreaming and implementation of appropriate adaptation and mitigation measures, while promoting sustainable development. Specifically, the policy fosters development of processes, plans, strategies and approaches that: •

•

Promote climate-resilient, social, economic and environmental development that is compatible with, and mainstreamed into, national development planning and national budget-setting processes Explore low-carbon development opportunities, nationally and internationally, in order to promote the sustainable use of resources Strengthen a framework that promotes efficient climate change governance, strong international cooperation, capacity building, research and systematic observations, clean technology development, transfer and use, education, training and public awareness and financing in a way that also benefits the most vulnerable

BIODIVERSITY

Lesotho lies entirely within the Grassland Biome and is incredibly rich in natural and cultural diversity, with unique habitats and high levels of

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Authority (LHDA) in the 1990s to restore some of the biodiversity lost as a result of the LHWP are: Katse Botanical Gardens, Tšehlanyane National Park, Bokong Nature Reserve and the Liphofung Cave Cultural Historical Site. The Katse Botanical Garden is Southern Africa’s first botanical garden dedicated to featuring alpine species. LHDA initiatives are discussed in greater detail in the ‘Tourism’ chapter.

endemism. These resources play a fundamental role in sustaining the wellbeing of Basotho, particularly the rural poor and unemployed whose livelihoods depend heavily on rangelands, indigenous plant and animal species, wetlands and ecotourism. Climate change is identified as one of the major threats undermining the resilience and sustainability of these resources, with the likelihood of driving them to extinction. Factors threatening biological diversity include habitat loss and destruction, introduction of alien (exotic or non-native) species, human-generated pollution and contamination, population growth, exploitation due to over-hunting, over-fishing or over-collecting, and global climate change. In Lesotho, specific threats are overgrazing, unsustainable harvesting (particularly of medicinal plants), uncontrolled fires, urban and agricultural encroachment, invasive alien species and pollution. Increased activity through tourism also poses potential threats. There are three main areas of concern in terms of protection, preservation, conservation and sustainable use of the country’s biological resources and, as a consequence, its biodiversity. These comprise the establishment of an ecosystem-based protected area system,

public education and awareness of biodiversity issues, and increased capacity for nature and biodiversity conservation. The establishment of additional protected areas, public involvement in natural resource management, and the ability of Basotho to conserve and sustainably use biological components are all priority areas for Government. In order to increase biodiversity and promote the sustainable use of the environment, the Ministry of Tourism, Environment and Culture has prioritised the following medium-term goals, involving: •

•

Protecting and conserving flora and fauna resources inside and outside protected areas and ensuring their effective and efficient management Supporting communities and entrepreneurs to develop and implement sustainable projects Establishing appropriate environmental institutional bodies; for example, a Radiation Protection Agency, Lesotho Environment Management Authority, and National Biodiversity Agency

Among several conservation areas created in Lesotho by the Lesotho Highlands Development

This uniquely biodiverse region is now a World Heritage site, following the June 2013 inscribing of Sehlabathebe National Park as an extension to the uKhahlamba Drakensberg World Heritage Site in South Africa by the UNESCO World Heritage Committee. The Maloti-Drakensberg Transboundary World Heritage Site covers an extent of 14 740 square kilometres which encompasses the mountains that span the north-eastern border between Lesotho and South Africa – the magnificent Maloti and Drakensberg ranges. The area is an important centre of endemism for montane plant species and is home to more than 2 500 species of flora. In addition, this is the primary water catchment area for both Lesotho and South Africa, and its wetlands serve as an essential water purification and storage system. The caves and rock shelters of this spectacular natural location contain more than 600 sites of culturally significant and historically rich rock art, representing the spiritual life of the San people who lived in this area over a period of 4 000 years. This is the largest and most concentrated group of paintings in Africa south of the Sahara. The National Heritage Resources Act of 2011 provides for the preservation and protection of all the San engravings and paintings found in Sehlabathebe National Park.

Over the past three decades, the structure of Lesotho’s economy has changed significantly. Agriculture, which is the pillar of the rural economy and the sector that employs most of the poor, has been on a downward trajectory since the early 1990s. As a result, its contribution to Lesotho’s gross domestic product (GDP) has been declining. Between 1985 and 1994 it shrunk from 11.8 percent to approximately 7.2 percent, and today makes up around 5 percent of GDP.

rely not just on the expected above-average rainfall, but also on the assumption of timely winter cropping.

DEVELOPING AGRICULTURE Current efforts to strengthen the agricultural sector rest on sustainable commercialism and diversification, as well as the development of integrated value chains and marketing infrastructure. Medium-term priorities include increasing cereal crop production and enhancing food and nutrition security. To reduce dependency on imports, the Ministry aims to ensure that agricultural inputs are available on time, thereby enabling farmers to increase production to at least meet local demand for staple food products. Relevant technical advice is provided to farmers so as to increase agricultural production and productivity as well as improve nutrition.

The arable subsector is concerned primarily with rain-fed cereal production, while livestock farming involves extensive animal grazing, wool and mohair production, as well as a fast-growing aquaculture industry. Output from arable farming has decreased over the years, and today the livestock subsector has expanded to make up some 62 percent of the agricultural sector. Constraints related to domestic agricultural production include limited use of irrigation and technology, weak extension systems, substandard marketing infrastructure, poor access to markets for small producers, insecure land tenure and land degradation. In addition, the sector has struggled with the effects of climate change, such as unpredictable weather conditions, marked by inconsistent rains and persistent droughts. According to the International Fund for Agriculture Development (IFAD) in its Rural Poverty Portal, only 10 percent of the total land in Lesotho is arable. The majority of smallholder farmers live on what they can produce from cultivating an average of less than 1.5 hectares of land or from herding livestock on grazing land that is increasingly degraded and hit by extreme weather events. This set of challenges makes Lesotho a net food importer. In an average year, about two thirds of the cereal utilised is imported, leaving the economy highly susceptible to exogenous shocks and food price fluctuations. There is a pressing need to commercialise agriculture in Lesotho, and Government has prioritised this as an important part of its growth strategy. Efforts to promote investment have been intensified, with agro opportunities to be found in crop farming, aquaculture, horticulture, livestock and food processing. In spite of current climatic and structural challenges, the sector does hold immense potential to drive economic growth

Agriculture

Government is working to commercialise the agricultural sector, which is presently dominated by smallholder and subsistence farming. through generating employment and reducing poverty levels. Current developments According to the Central Bank of Lesotho (CBL) in its 2017 Annual Report, real output in the agriculture, forestry and fishing subsector is estimated to have grown by 3.4 percent in 2017, albeit at a slower pace than the 7.2 percent recorded in 2016. Real output growth was attributed to a rebound in crop production in 2017, mainly due to better weather conditions relative to the two previous years when droughts caused by El Niño conditions dramatically cut crop production yields. Published in June 2018, the CBL Economic outlook (2018-2020) forecasts a decline of 1.3

percent in the sector during 2018, predominantly because of the poor crops performance. A host of factors, including late onset of rains, and dry spells coupled with extremely high temperatures and hailstorms, have affected crop development. Production is thus predicted to be lower than the previous year. Agriculture remains an important sector because it provides employment to some 40.1 percent of the population. The crops subsector is expected to recover mildly going forward, contributing to the sectoral growth forecast of 2.1 percent and 0.5 percent in 2019 and 2020, respectively. Crop projections

Furthermore, the spotlight is on increasing production of high value crops, livestock and cottage industry products through programmes that support improving the quality of wool and mohair, processing of food crops (food preservation) and livestock products, and those that encourage the commercialisation process. In addition to increasing farming incomes in the face of prevailing climatic condition, development of the value chain for high value products will be essential for sustaining commercialisation. This focuses on strengthening extension services for farmers at all levels as well as improving training modules and developing and promoting agricultural technologies. The Climate-Smart Agriculture (CSA) Profile launched in Maseru in May 2018 aims to improve the integration of agricultural development and climate responsiveness in order to achieve food security and broader development goals. This will assist in minimising climate change impacts for agricultural development, and will advance CSA in the public agenda, raising awareness of the importance of investing in technologies and practices that simultaneously increase agricultural productivity, adaptation and mitigation. Livestock diseases and parasites, as well as crop

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pests such as army worm and diseases like fungi, have an adverse effect on agricultural production. Current control and prevention strategies include continuous surveillance for Foot and Mouth Disease (FMD) and awareness campaigns concerning possible pests and mechanisms for controlling them. These control measures will safeguard public health by tracking animal disease transmission to humans, and protecting consumers from food-related health issues. Priority actions: 2018/19–2020/21 Budget priorities in the 2018/19–2020/21 period highlight raising productivity by commercialisation, diversification and climate proofing agriculture. Key strategic actions in this regard comprise: • •

•

• •

Scaling up commercial fruit and vegetable production by 100 hectares per year

Promoting private investment in developing integrated value-chains of existing agricultural sub-industries such as: vegetables, fruits, potato, poultry, piggery, mushrooms, wool and mohair, among others

Facilitating the development of water harvesting, irrigation and climate smart (green houses and hydroponics) agricultural infrastructure Introducing and/or modernising short and long-term agricultural programmes offered by local training institutions

Strengthening research capacity in respect of high-value agricultural products through collaboration with regional and international research centres

Developing infrastructure for national quality assurance and quality control Facilitating the development of agricultural marketing intelligence and infrastructure

The World Food Programme’s strategic plan World Food Programme (WFP) Lesotho has prepared a Transitional Interim Country Strategic Plan (T-ICSP) covering the period January 2018 to June 2019 in alignment with the upcoming National Strategic Development Plan II (NSDPII) and the Lesotho UN Development Assistance Framework (UNDAF), which will be effective as of 2019.

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WFP Lesotho’s vision follows two complementary directions: continuing longer-term efforts to improve resilience in the most disaster-prone districts; and furthering capacity strengthening and transition to national ownership processes in the areas of social protection, food security analysis, education and nutrition. This T-ICSP supports the Government in achieving the following strategic outcomes: households in chronically food insecure areas are able to meet their basic food and nutritional requirements throughout the year; school children in food insecure areas have access to nutritious food throughout the year; and targeted populations in prioritised districts have improved nutritional status in line with national targets by 2023.

Development Assistance Plan (LUNDAP), priorities are to: •

•

• • • •

Smallholder Agricultural Development Programme

•

The Smallholder Agricultural Development Programme (SADP) aims to support smallholder farmers in exploiting opportunities and increasing productivity, as well as diversifying into marketoriented agriculture. The programme’s initial focus was on four selected districts with high agricultural potential: Botha-Bothe, Leribe, Berea and Mafeteng. Beneficiaries have been provided with grants and technical assistance to boost their productivity and market access, with projects in irrigated vegetable production, wool and mohair, dairy, piggery and poultry hatcheries, among others. The bulk of funding has come from the World Bank and IFAD, with the Lesotho Government responsible for the balance.

•

In September 2017, the World Bank approved an additional US $10 million in financing from the International Development Association (IDA). These funds are supporting smallholders in the initial four districts as well as those in Mohale’s Hoek and Quthing. Grants are awarded to farmers to test and demonstrate new business initiatives and technological innovations, especially those that focus on climate-smart agriculture. Farmer groups as well as government agencies are also assisted in improving food quality and safety standards. UN Development Assistance Plan for Lesotho Under the ongoing Lesotho United Nations

Accelerate the implementation of the climate change, natural resources management, food security and livelihoods projects Develop more project proposals around climate change, natural resources management and protection of biodiversity Mainstream climate change into Lesotho’s NSDPII Initiate the establishment of an integrated agriculture information system

Facilitate private sector involvement in the provision of services

Develop national capacity for animal disease surveillance Facilitate the development of an investment plan for the Zero Hunger strategy Facilitate public expenditure review for the agricultural sector

Rangeland management The management of Lesotho’s rangelands is imperative for supporting livestock development and the production of red meat, hides, wool and mohair. When well-managed, the rangelands also help protect wetlands and recharge water sources. Further, rangelands are vital to the livestock and deciduous fruit value chains. Government has instructed the ministries of Forestry and Land Reclamation, Agriculture and Food Security, Trade and Industry, Small Business Development, Cooperatives and Marketing and Water to work together with private investors to rehabilitate rangelands and wetlands with the objective of stimulating investments in the abovementioned value chains. This should lead to further investments in commercial red meat production, hides and related products, wool and mohair and related products, chicken broiler and egg production, and fruit tree production. The successful rehabilitation of rangelands together with enhanced grazing methods will not only improve grazing resources but will also help restore water recharge rates across the country. In addition, the Ministry of Forestry and Land Reclamation is implementing a programme to remove shrubs from rangelands, and Government

intends setting up a Hub to help reverse desertification and intrusion of shrub species on rangelands. Irrigation and expansion of orchards is likely to benefit immensely from the successful rehabilitation of foothill and mountain rangelands. The rehabilitation of rangelands and widespread introduction of management grazing should stimulate the livestock and deciduous fruit value chains, both of which are priority sectors for Lesotho.

LIVESTOCK FARMING The livestock subsector comprises primarily cattle, sheep, goats, pigs and poultry, and makes up around 62 percent of agricultural GDP. Cattle are raised mainly for subsistence, draught power, milk, fuel (dung) and meat, while pigs are reared solely for food. Sheep are kept for meat production and also provide wool and skins, with goats a source of meat as well as mohair and hides. Livestock farming – in particular wool and mohair – has been singled out as one of the country’s most important value chains. The emphasis is on initiatives to build poultry and piggery abattoirs, upgrade the national abattoir to meet international standards, and construct 50 feedlots throughout the country (five per district). Government also supports developments in the wool and mohair industry and the associated value chain. M277.8 million was set aside in the 2018/19 budget to pursue these investments in livestock. A further M100 million was proposed for the Ministry of Development Planning to support feasibility studies and designs. Cattle and pigs The latest statistics indicate that the country has 540 133 head of cattle and around 63 415 pigs. Lesotho is self-sufficient in beef production, with output of some 13 500 metric tonnes per year, making it the largest source of animal protein in the country. This is followed by the production of pork at 3 698 tonnes. While around four-fifths of meat sold at butcheries is supplied through informal slaughter, according to legislation, informally slaughtered meat is only for home or subsistence consumption. Apart from a few

inadequate hatchery machines limiting growth as most local poultry farmers have to import fertilised eggs and chicks from South Africa, which adds to the cost of the end product.

isolated instances, neither export nor import of beef takes place. Chinese company Ketchin has proposed a substantial investment with the goal of producing livestock for export to China and Europe. This will include construction of a large slaughterhouse and feedlots around the country. Investment discussions were expected to be concluded in 2018. When completed, the scale of this operation will not only place Lesotho on the international beef market but also foster the development of an industry in hides and stimulate production of other goods in the beef value chain. The pig production sector is still in its infancy. It is dominated by large-scale farmers (41 percent), while small and medium-scale farmers account for 35 percent and 24 percent respectively. Almost all of the pork supplied to retail and wholesale outlets in Lesotho comes from South Africa through formal marketing channels. There is currently limited capacity in the production value chain and no accredited slaughtering facilities. This situation looks set to change, with the Lesotho National Development Corporation (LNDC) having sealed a M250 million deal with South African company Number Two Piggeries in August 2018. The project is expected to contribute to the development of production and supply chains and create over 1 000 jobs in the agricultural sector. Wool and mohair Wool and mohair are major income earners for Lesotho, with the industry utilising a combined total of some 4 million sheep and goats. Although wool and mohair are also used by local producers of tapestries and knitwear, traditionally a large proportion of the produce has been sent to South Africa for processing and packaging before being sold in international markets such as Asia and Europe. The industry has been growing steadily, and is now worth around M300 million annually. The main pasturelands are located in the foothills and mountains of the Lesotho highlands, which provide favourable ecological conditions for extensive small stock production. The indigenous Merino sheep is hardy and well adapted to the

Phula Poultry Products, one of the first National University of Lesotho (NUL) companies to be developed under the university’s innovation hub, aims to cover the entire value chain, from production of fertilised eggs and one day old chicks to selling full grown chickens. The venture has already seen the development of an artificial egg incubator with a hatching rate of over 80 percent compared with conventional egg incubators which have a hatching rate of between 50 and 60 percent. Phula released its first 1 000 chickens in June 2018, and aimed to be producing 4 000 a month by December 2018. There are also plans to open an abattoir for local commercial outlets. The goal is to raise output to 40 000 chickens per month over the next three to four years.

Angora goats © LNDC environment, as are Angora goats. Wool and mohair are produced in the Quthing, Qacha’s Nek, Mokhotlong and Thaba-Tseka districts. According to the recently gazetted Agricultural Marketing (Wool and Mohair Licensing) Regulations of 2018, trade in wool and mohair now requires a licence from the Ministry of Small Business, Cooperatives and Marketing. Licenses will be issued in six business categories: shearing sheds; brokers; wool and mohair testing; trading and auctioning; processing; and export. Furthermore, the holder of an export licence is not permitted to export wool and mohair unless it is prepared, brokered, traded and auctioned in Lesotho. This move is intended to end the monopoly that has existed in the sector and resulted in Lesotho’s failure to derive maximum benefits from its high-quality produce. For the past 44 years, farmers have auctioned their wool and mohair through brokers from the South African Wool and Mohair Buyers’ Association at the Port Elizabeth Wool Exchange. The localisation of the wool and mohair marketing directly from Lesotho to international markets will improve

Dairy the business environment, increase local beneficiation, enhance monitoring and evaluation of transactions, and concentrate banking transactions in Lesotho. Poultry The Basotho Poultry Farmers’ Association (BAPOFA) acts as the legal regulatory body for the poultry sector, which comprises both commercial activities and village industries. The association attempts to encourage a supportive business environment through advocacy, training and provision of technical assistance in the development and implementation of enabling policies and laws. The poultry value chain comprises three principal marketing channels: formal live bird markets (higher-income consumers); informal city markets (lower-income consumers); informal rural markets (rural consumers). Only some 20 percent of chicken is marketed through the formal sector. The main challenge is the high cost of inputs, many of which need to be sourced from outside the country. The lack of domestic hatchery services has been a concern for some time, with

Government is working to stimulate the development of the dairy industry, which has been declared a priority sector as regards food security. Dairy farming is a viable business proposition for both rural and peri-urban areas of Lesotho. The Lesotho National Dairy Board (LNDB) is a state-owned enterprise which is charged with serving and protecting the interests of local dairy farmers. At present, the vast majority of locally consumed dairy products are imported from South Africa. Lesotho spent M210 million on 18.9 million litres of milk and other dairy products in 2017/18, with local farmers producing just 1.3 million litres. In an effort to become self-sustaining in terms of milk production, the Lesotho Dairy Plant in Maseru has been refurbished with Government funding of M18 million. This will enable all processing and packaging of milk to be done in the country, thus avoiding the lengthy process of exporting milk to South Africa for processing. In addition, the training of dairy farmers in advanced animal care to increase output has been undertaken in Leribe, Botha-Bothe and Berea districts.

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There is a need to diversify dairy production in Lesotho to include products like cheese and yoghurt, particularly in view of their longer shelf-life.

Fish farming at Katse Dam © LHWC

The pilot study showed that a large portion of Lesotho was suitable for successful deciduous fruit production: from Botha-Bothe, cutting across the western lowlands and running all the way to the southern foothills near Mphaki. The research also explored the potential for Lesotho to engage in the commercial growing of horticultural produce which could be harvested substantially earlier than the corresponding produce in South Africa, allowing for market infiltration two to three weeks before her neighbour.

NUL has developed a yoghurt factory on its Roma campus under the name of Sebabatso Yoghurt, producing mixed berry, strawberry and fruit cocktail flavours. Following a successful incubation period the yogurt has become a favourite local brand, encouraging Sebabatso to increase its product line to include fresh and sour milk. A M5.5 million commercial dairy facility funded by Letšeng Diamonds and consisting of a milking parlour, milk processing room and offices, was handed over to the Liphamola Dairy Farmers Association (LDFA) in February 2018. The dairy farm, which is based in Mokhotlong, now produces approximately 160 to 200 litres per day of pasteurised and packaged fresh milk for the local community and mines, with plans to later expand into other districts. Fisheries Aquaculture plays an important role in the development of the fisheries industry, where potential has increased thanks to the dam reservoirs built as part of the ongoing Lesotho Highlands Water Project. Lesotho has two distinct fish farming zones; namely: • •

The Lowlands, where temperatures are relatively high. The Highlands, characterised by cold climatic conditions, which are suitable for the production of high-quality trout requiring clean, cold, well-oxygenated and fast-moving water at high altitude.

Commercial floating cage aquaculture for large rainbow trout (Oncorhynchus Mykiss), marketed as salmon trout, is undertaken at Katse Dam, a site known for its deep, pristine waters which create a highly favourable environment for growing premium trout. Steps have been taken to involve the surrounding communities so that they also benefit from aquaculture through jobs, training and skills development. Lesotho’s trout has become a favourite both locally and overseas (the Japanese market

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locations, based on factors such as altitude, soils and access to water. Maps were drawn up to indicate areas where, for instance, the climate was favourable but additional infrastructure was required.

The project has subsequently been scaledup to several farms over an area of 35 hectares and has achieved Global GAP (Good Agricultural Practices) certification as well as attracting interest from commercial investors and international distributors. The commercial production of apples, plums, peaches and apricots has been established for the local and South African markets. in particular), and it is expected that more than 3 000 tonnes per annum will be sold internationally in 2018. There are good prospects for expansion and additional enterprises of this nature in the Metolong Dam.

crop production. Annual precipitation is highly variable, both temporally and spatially, ranging from 500 millimetre per year to 1 200 millimetres per year, most of which is received during the summer months between October and March.

One Thousand & One Voices®, a US private capital fund, has invested in the SanLei trout production and processing facility located on the shores of the Katse Dam. SanLei produces sushi quality trout, primarily for consumption in Japan and South Africa, and is the largest facility of its kind in Africa.

The main crops are maize, sorghum and wheat, which occupy, respectively, about 60 percent, 20 percent and 10 percent of agricultural land. Beans and peas are also grown. Summer season crops are those planted between 1 August and 31 January, and cover maize, sorghum, wheat, beans and peas, with wheat mostly grown in the mountain areas. Winter season crops are planted between 1 February and 31 July, and comprise both wheat and peas.

According to the LNDC, there are also opportunities for the farming of tilapia fish. Other potential investment areas comprise processing and packaging operations, including filleting, trimming and smoking; the extraction of Omega oils; facilities for genetic material production (ova/ eggs and fingerlings); and fish food production.

ARABLE FARMING Just over 10 percent of Lesotho’s total land area is estimated to be arable, and only a small percentage of this is presently used for irrigated

Horticulture The World Bank’s Second Private Sector Competitiveness and Economic Diversification Project (PSCEDP II) for Lesotho has spurred growth in the horticulture sector, particularly the deciduous fruit market. Three pilot projects were implemented on farms in Thuathe, Qoqolosing and Mahobong between 2007 and 2013 to evaluate the feasibility of growing fruit and identify promising varieties and afro-climate

In 2018/19, Government committed to supporting the expansion of orchards and the development of a deciduous fruit industry as part of the strategy to create additional jobs. The ministries of Forestry and Land Reclamation, Trade and Industry, Small Business and Cooperatives, Agriculture and Food Security are working with banks, insurance companies, buyers and investors in this regard. Their efforts build on the successful operation of the Likhothola Orchard in Mahobong, Leribe. Furthermore, Government has been working to entice Dutoit Agri (Pty) Ltd and other large fruit growers to invest in Lesotho’s fruit industry. There is also a drive to produce high value cash produce such as herbs, spices and aromatic plants for export to the United States under AGOA, and Europe under Everything but Arms. Government, through the ministries of Forestry and Land Reclamation, Trade and Industry, Small Business and Cooperatives, and Agriculture and Food Security, is working with farmers and contract farming investors during the 2018/19 fiscal year to explore the feasibility of this idea. Consideration is also being given to scaling up honey production and commercialising organic peaches and dried fruit.

Road infrastructure dominates Lesotho’s transport networks, making up more than 70 percent of domestic transport needs. Other modes include air and limited rail services, as well as ferry boats at river crossings, animal transport and pedestrian travel, especially in the sparsely populated highland areas. Lesotho’s rugged topography has made the development of roads and other infrastructure a challenge. While this has had significant implications for transport modes and accessibility, the creation of an integrated transport system remains central to Government’s infrastructure development programmes. Cargo and passenger transport services are mainly provided by private sector operators in the freight, taxi and bus industries. Government is responsible for the Lesotho Freight and Bus Services Corporation, which manages a far smaller percentage of public road passenger transport services, mainly in areas and on routes where volumes are low and the private sector cannot operate a profitable service. There are 39 inland river crossings served by 44 ferryboats owned and operated by the Ministry of Public Works and Transport. Private operators, working longer hours, complement these services. Lesotho is connected to South Africa’s welldeveloped regional road network via a total of 11 border posts; those at Ficksburg and Maseru staying open 24 hours a day (see ‘Useful Information’ for additional border post hours). Maseru is only 450 kilometres from the economic hub of Johannesburg and 575 kilometres from the port of Durban on the east coast. The latter is the destination of the vast majority of Lesotho’s manufactured goods, which are transported here by road or rail before being shipped overseas. Air transport services operate from Moshoeshoe I International Airport near Maseru to OR Tambo International in Johannesburg, South Africa, from where there are a wide variety of regional and international connections. There are also several rural airstrips which are used by light aircraft.

TRANSPORT FRAMEWORK The Ministry of Public Works and Transport (MoPWT) is responsible for infrastructure

Transport

Infrastructure

Lesotho’s transport infrastructure plays an important role in connecting rural and urban areas, centres of production with markets, and facilitating cross-border trade. provision and maintenance as well as for creating an enabling environment for the private sector to develop efficient, cost-effective and safe transport services. This involves setting standards and guidelines to ensure operational efficiency in transport systems and infrastructure, and meeting Lesotho’s obligations regarding regional and international transport conventions. One of the Ministry’s vital priority areas is the restructuring and reform of the various transport subsectors to meet demand and improve service delivery. For example, it is problematic that the Department of Civil Aviation (DCA) is both a regulator and service provider, as this causes some issues to be overlooked, especially with regard to airport operations that are not in line with regulations. Other bodies needing urgent attention include the Department of Transport and Traffic and that of Road Safety, with the latter requiring a clear mandate to direct its activities. Transport Infrastructure and Connectivity Project The chief objectives of the World Bank’s US $18 million Lesotho Transport Infrastructure and Connectivity Project (TICP) are to improve access to services for rural communities, strengthen the country’s road safety management capacity and provide an immediate and effective response to eligible emergencies. This is to be realised by: improving road access through the application of output and performance based contracts (OPRC) and construction of footbridges; improving road safety management capacity and mitigating road safety risks; and building capacity and strengthening institutions in the transport sector. Approved in 2017, the project runs till 2023.

Anticipated outcomes of the Lesotho Transport Infrastructure and Connectivity Project (TICP) include reduced travelling times and transport costs, a greater share of the population with access to a paved/allseason roads or footbridges, a reduced number of road traffic fatalities, and the creation of construction-related jobs. There are four components to the TICP, the first being ‘Improving Infrastructure Access’, which aims to improve the access of rural populations to agricultural and job markets and social services in targeted isolated areas of Lesotho. This entails the construction of approximately 35 footbridges (US $4.2 million, including contingencies) in communities located in areas that are cut off from road access, especially during the rainy season when river water levels rise. The locations of 19 footbridges have been identified through a prioritisation exercise carried out by Government. The remaining 16 footbridge sites will be selected during implementation in accordance with the criteria set forth in the Project Operational Manual. The second component, ‘Improving Road Safety’, addresses road safety in a more integrated manner in order to achieve Government’s objective of meeting the global decade of road safety aim of halving road deaths between 2010 and 2020. To do so, this component will finance two subcomponents: ‘Strengthening Road Safety Management Capacity’, and ‘Establishing the Lesotho Integrated Transport Information System’. ‘Institutional Strengthening Support to the

Transport Sector’, which is the third component, includes the necessary project implementation support, such as citizen engagement mechanisms, HIV/AIDS and gender-targeted activities, capacity building support to the Roads Directorate and MoPWT, preparation of the National Transport Master Plan, and technical assistance in designing and piloting communitybased maintenance schemes. The fourth component, ‘Contingency Emergency Response’, allows for the possibility of accessing resources in the event of an eligible crisis or emergency to provide an immediate and effective response to said crisis or emergency. Regional transit routes As a landlocked country, Lesotho faces specific transport challenges which are addressed on a regional level in the Almaty Declaration on Landlocked Countries. The development of transit corridors in the Southern African Development Community (SADC) is essential for increasing industrialisation, regional integration and development, connecting areas of production (mines, agriculture and industry) with domestic, regional and global markets. However, infrastructural bottlenecks along these corridors, such as poorly maintained railway lines, roads and bridges, sub-optimal border logistics and complex customs procedures, often result in high transport costs and long transportation times. SADC’s Protocol on Transport, Communications and Meteorology ensures the cooperation of member states in facilitating the free movement of people and goods through the region, particularly from landlocked countries to seaports, and calls for the creation of Corridor Planning Committees to focus on specific strategies for development along the region’s principal routes. The Common Market for Eastern and Southern Africa (COMESA) and East African Community (EAC) are also working toward the development of transit corridors, with the emphasis on reducing transportation costs and enhancing regional competitiveness. The Transport Sector Plan (TSP) of the SADC Regional Infrastructure Development Master Plan (RIDMP) presents an analysis of transport infrastructure, including current and future infrastructure requirements up to 2027. It is

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focused on providing transport infrastructure services, policy and legislation, an enabling environment, and supportive institutions with the necessary human resources and capacity to transform the sector. The key objective is to identify hubs and gateways for rehabilitation and development in order to ensure that the passenger and goods markets are adequately catered for. The TSP also addresses the need to develop appropriate, integrated, safe, secure and efficient infrastructure capacity along strategic transport and development corridors with regard to road and rail networks. Lesotho and South Africa have formed a Joint Bilateral Commission on Cooperation to oversee the development of cross-border transport within the parameters of the SADC Protocol on Transport as well as the Southern African Customs Union (SACU) Memorandum of Understanding. Transport-related agreements between the two countries include the Search and Rescue Agreement and the Bilateral Air Services Agreement.

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We hire out cars to individuals and companies in the following categories: • Economy (e.g Polo, Corolla, etc.) • SUV’s (e.g IX35, Rav4, etc.) • 4X4’s (e.g Fotuner, Jeep, etc.) • Luxury cars (e.g Mercedes Benz, Audi, etc.) • 8 Seater Bus (e.g H1) Contact us for further enquiries at our AIRPORT office: Operating hours: Mon-Fri: 07h00 – 17h00 Sat-Sun: 10h00 – 17h00 Email: avis.maseru@avisbudget.co.za Tel: +266 2235 0328 24 hour lines: +266 5870 0088 +266 6270 0088

ROAD TRANSPORT Lesotho has an unevenly distributed road network due to its mountainous topography which poses a particular challenge to the expansion and maintenance of road infrastructure. Although the lowlands and foothills are relatively well served, they constitute just a quarter of the country’s total area. Arterial roads connect all districts in Lesotho to 11 border crossing points with South Africa, but relatively fewer rural roads connect villages and towns in the highland districts of Thaba-Tseka, Mokhotlong, Qacha’s Nek and Quthing that constitute the remaining 75 percent of the country. Isolated rural populations still struggle to access basic services, agricultural markets and business opportunities due to limited road connections and bridge access across rivers. The construction of roads and bridges underpins the drive to improve service delivery and enhance economic growth in Lesotho.. Much has been achieved under the World Bank-

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funded Integrated Transport Project (ITP). Planning and implementation support, which was provided both at the central and local government level, saw the development of a blueprint for planning and change management, appointment of a road safety advisor, and development of the needed systems, plans, studies and technical manuals. Operating within the ambit of the MoPWT, the semi-autonomous Roads Directorate was established under the Roads Directorate Act, 2010. Furthermore, some 500 kilometres of local roads were transferred to the Ministry of Local Government in line with Lesotho’s decentralisation policy. At project closure, the Roads Directorate was fully operational and 87 percent of the periodic and routine maintenance requirements of the total national network were funded through road user charges (the Road Fund) against a target of 80 percent. The upgrading of the Lesotho Road Management System (LRMS) was completed to provide a mechanised road condition survey. Furthermore, 40 kilometres of non-rural roads has been rehabilitated as per the revised target

and as compared with the original target of 20 kilometres. Other noteworthy outcomes under the ITP included: •

•

38 percent of roads were reported by the LRMS to be in good condition and 50 percent in fair condition, as compared with the original target of 39 percent in good condition and 46 percent in fair condition Average travel costs in targeted project areas fell by 40 percent, exceeding the original target of 20 percent

42 percent of the rural population had access to an all-season road within the project area as per the revised target at project closure

The Roads Directorate aims to provide better service delivery and more effective and efficient management of the road network, and is responsible for construction, upgrading, rehabilitation and maintenance of primary, secondary, tertiary and other roads as well

as bridges. Additional functions include: implementation of government policy on roads-related issues; planning, design and implementation of roads programmes; preparation of strategic road network development plans; and promotion and support of the development of the road construction industry in Lesotho. The Councils and the Ministry of Local Government are entrusted with upgrading and bituminising urban roads and bus terminals, as well as constructing hard gravel roads that link communities within the districts. Government encourages private sector participation in terms of commercial contracting and service provision. Under the Lesotho Road Management System there is a rolling three-year priority investment programme for the core maintainable road network to eliminate the backlog of deferred periodic maintenance, avoid further deterioration of roads already in a poor condition, and preserve the existing road assets. However, the current capacity of contractors is not adequate to keep up with the maintenance schedule, resulting in a growing maintenance backlog and low absorption of financial resources allocated to maintenance. One of the aims of the World Bank’s new Transport Infrastructure and Connectivity Project (TICP) is to provide further institutional strengthening to the Roads Directorate. This will enable it to improve efficiency in provision and maintenance of road safety while enhancing access and refocusing the management of road infrastructure to accommodate the impacts of climate change. In addition, the functions of the Road Fund will be reviewed to update its responsibilities in line with the changing road network requirements. Network expansion and maintenance Substantial investments have been made in expanding the network of urban and rural roads, upgrading gravel roads to bitumen standard, building new bridges and repairing and rehabilitating existing roads. The maintenance of the road network, both routine and periodic, is financed from the Road Fund and the Government budget.

According to the latest LRMS Report, the network has grown to approximately 8 638 kilometres, including some 1 817 kilometres of paved roads, 4 358 kilometres of gravel roads and 2 463 kilometres of earth roads. The Roads Directorate also constructs and maintains footbridges to facilitate access by rural communities to basic services and markets as well as minimising the chance of drowning while crossing swollen rivers during the rainy season.

The tarred road from Alwyn’s Kop to Tele Border Post in Quthing is being upgraded. The project was launched in May 2018 and covers 9.5 kilometres of road at an estimated cost of M125 million. It forms part of a major infrastructure upgrading plan that will strengthen links between Lesotho and South Africa, thus improving tourism and trade, not to mention facilitating the movement of local communities and their day-today lives.

The recently completed Bethel Bridge is an impressive tarred bridge spanning 140 metres across the Senqu River in Mohale’s Hoek, and was built at a cost of approximately M137.3 million. Other completed projects include the tarring of the Oxbow to Mokhotlong and Mokhotlong to Sani Pass roads.

Transport and traffic

The Ha Leshoele–Mathokoane–Setene–Ha Bene road works in Leribe District by China GEO Engineering have been undertaken at a cost of M535 million. Covering 40 kilometres, the road forms a loop from the Main North 1 at Ha Leshoele junction near Hlotse, passes through Ha Mositi and Mathokoane villages, and ends at Ha Bene junction, joining the Main North 1 near the village of St Monica’s. The project entailed the construction of a nine-metre wide pavement with paved shoulders of one metre, construction of two big culverts and numerous small ones. It also included repair and protection of the bridge over the Hlotse River, installation of road signage, guard rails and foot paths on some sections of the road, and provision of road markings. The Likalaneng–Thaba-Tseka Road rehabilitation project began in November 2017, with the MoPWT setting aside some M76 million for the project. Plans by the Roads Directorate to construct another major road to link Thaba-Tseka and Mokhotlong District are at an advanced stage. Work on the Marakabei-Monontša and MpitiSehlabathebe roads began in the 2018/19 financial year. At the same time, the Ministry of Local Government and Chieftainship targeted 198.4 kilometres of urban roads and 1 102 kilometres of rural community roads, adding to the respective 281.7 kilometres and 37.9 kilometres achieved in 2017/18. Furthermore, bus terminals are being constructed in Leribe, Mafeteng and Semonkong.

The Department of Transport and Traffic is responsible for the efficient operation of road transport, ensuring the availability of public transport and monitoring the participation of the private sector. The Lesotho Road Fund operates on a fee-for-service basis to enable road users to contribute towards road maintenance and construction. The fund’s largest source of revenue has historically been the road maintenance levy, which is included in the price of fuel, followed by tollgate fees and licence fees on motor vehicles. The Lesotho Integrated Transport Information System (LITIS) is being established to provide an integrated record management system for revenue collection, driver licensing and vehicle inspection. To improve public sector efficiency and effectiveness, services at the department of Traffic and Transport are being computerised to enable them to be accessed online with the assistance of a national database. Private taxi and bus transport operators dominate the public transport subsector, and the parastatal Lesotho Freight and Bus Services Corporation is charged with operating on remote roads that are inadequately serviced and where commercial carriers do not exist. Sixteen-seat private minibus taxis provide most public transport in rural areas and cater for commuters in peri-urban areas. Some larger buses cover inter-urban routes and taxis work in and around towns. Operating outside the regulatory framework, 4x4 pickups provide essential public transport on difficult routes inaccessible to minibuses. Road safety programmes The Department of Road Safety and soon to be

KayHil Freight Express Road Transportation and Courier Services has proven to enhance the benefits to retailers, wholesalers, companies, governments, parastatals and individuals, through the ability of lower stock holdings, faster turnaround times, lower immediate capital outlay. Our business offers: • Overnight Service to and from Bloemfontein; Durban; Johannesburg and Maseru. • Full and effective Parcel Tracking. • Customer notification of Parcel Tracking from Collection Booking to Parcel Delivery. • Immediate costing of the service. • Risk transfer through insurance availability. • Security and Reliability. • Enhanced productivity for shipper and consignee. • Electronic waybill, customs documentation and invoice accessibility. • Express delivery to International destinations. • Air and Sea Freight to and from International destinations. • Full Customs clearance of consignments, both SACU and International. • Competitive pricing. Kayhil Freight, as an industry leader will provide you and your business, with a quality service.

14-16 Lioli Road, Industrial Area, Maseru 100, Lesotho Tel: +266 22 247 300 • Email: hilary@kayhil.co.ls • www.kayhil.co.ls 16 Combrink Road, Alrode, Alberton 1451, South Africa • www.kayhil.co.za Tel: +27 11 9089699 • Email: kevin@kayhil.co.za TRANSPORT | 45

operationalised National Road Safety Council (NRSC) oversee improvements in road transport safety as well as the security of people along road traffic corridors. Lesotho faces a number of challenges in road safety, with high fatality rates in densely populated districts and numerous road accidents in the mountain areas. According to the Department of Road Safety, about 300 people die each year in the country due to road accidents, and the annual cost of these accidents to Government is more than M250 million. Road safety problems are twofold. In the more densely populated lowlands districts of Maseru and Leribe, where approximately 50 percent of deaths occur, pedestrians are the main victims. In the highlands, where driving conditions on winding roads through mountainous terrain prove challenging, the incidence of vehicle accidents is high. Road Safety Programme activities developed under the now concluded ITP included the establishment of a driver training and examination system, a vehicle inspection system, a road accident database, and traffic surveillance equipment. The NRSC was approved by the Cabinet and a Road Safety Policy was drafted. Chaired by the Principal Secretary in the MoPWT, the NRSC is mandated to coordinate all organisations involved in road safety, in addition to monitoring and evaluating the effectiveness of road safety strategies, approving road safety budgets and formulating road safety policies, actions plans, education and related legislation. The NRSC is presently being operationalised, pending the necessary legal amendments, and an amended Road Traffic Bill has been submitted to the Parliamentary Council. National road safety campaigns are held every festive season from early December to early January. The 2011 to 2020 period was declared the ‘Decade of Action for Road Safety’ by the United Nations (UN) General Assembly. This is intended to stabilise and reduce road traffic deaths around the world through increased activities conducted at the national, regional and global levels. Further, under the UN’s 2030 Agenda for Sustainable Development, target 6 of Sustainable Development Goal 3 is ‘to reduce road traffic

46 | TRANSPORT

deaths and injuries by 50 percent by 2020’. The main objective is to provide access to safe, affordable, accessible and sustainable transport systems for all by 2030. Lesotho’s existing road network needs to be monitored and assessed to ensure that improvements are introduced through a structured programme, with collaboration between the Road Directorate, Department of Road Safety and the Department of Transport and Traffic. Road safety audits are critical in identifying potential safety problems with new and existing road projects and designs. Another road safety priority is to properly equip the department to remove snow on the roads during the harsh Lesotho winters.

AIR TRANSPORT Lesotho has one international airport and 24 airstrips, of which 16 are operational, providing secondary and in some cases primary access to a number of the country’s most isolated rural areas. The airstrips at Qacha’s Nek and Mokhotlong have tarred runways, while the others have gravel or grass airstrips that are utilised mainly by the Lesotho Flying Doctors Service. Lesotho’s Moshoeshoe I International Airport (MIA) is situated about 20 kilometres outside of Maseru in Mazenod. With a tarred runway measuring 3 200 metres in length, it is suitable for medium-range jet aircraft such as the Boeing 727. Facilities include two passenger terminals, one cargo terminal and four runways. The terminal building has amenities such as a bureau de change, bar and restaurant, left luggage facilities, gift shop and tourism information kiosk. There are also facilities for the disabled. The US $63.2 million expansion project at Moshoeshoe I International Airport which began in the 2017/18 fiscal year aims to meet existing and forecast demands for passenger and cargo facilities. Furthermore, its completion will allow Lesotho to comply with International Civil Aviation Organisation (ICAO) standards. Funding has come from several development partners, led by the Kuwait Fund in an amount of M350 million. The project includes the following components: •

Increasing the handling capacity of the airport by extension of the runway to accommodate larger aircraft

•

Construction of a new VIP terminal building

•

Renovation of the existing terminal building

•

Installation of navigation aids, such as improved airfield and apron lighting

•

General improvements to the quality of service at the airport

While Lesotho has no national airline, SA Airlink offers at least three flights per day between Moshoeshoe I International Airport and OR Tambo (ORT) International Airport in Johannesburg, flown in Embraer ERJ-135 planes. Flying time to Johannesburg is approximately 55 minutes. From ORT there are connecting flights to a range of international destinations. The Lesotho Defence Force (LDF) Airwing was initially established in 1978 to support the country’s land force. It operates fixed-wing aircraft as well as helicopters out of Mejametalana Airbase, situated north-east of Maseru at an elevation of 5 100 feet above sea level. The airbase has undergone a M70.894-million upgrading project in order to attract more fixedwing aircraft from neighbouring countries, with the rehabilitated main runway operationalised in October 2017. Recent acquisitions to the fleet include two H125 helicopters. In May 2018, Prime Minister Thabane officiated at the launch of the newly acquired LDF helicopter nicknamed ‘Thaba-Putsoa’ at a ceremony held at the Mejametalana Airbase. The Airwing occupies a strategic niche in Lesotho’s national security spectrum as well as providing an important service to Government, NGOs and the public in undertaking socioeconomic and developmental ventures, particularly in the remote mountain areas which are not easily reached by road. Missions include the distribution of books and stationery, transportation of medical staff, construction materials, equipment and supplies. Humanitarian missions such as food relief operations and emergency rescue services are also carried out. Regulation The regulation and promotion of civil aviation, development of infrastructure and licensing of

air transport operators is under the jurisdiction of the Department of Civil Aviation. It participates in the activities of a number of international civil aviation organisations and upholds international conventions on aviation, all with the objective of achieving safety, efficiency and regularity of service and creating an environment conducive to the development of regional and international trade and tourism. A bilateral air services agreement between Lesotho and South Africa that was signed in 1990 has been reviewed and renegotiated.

RAILWAYS & FREIGHT HUBS Rail transport infrastructure in Lesotho comprises 2.5 kilometres of narrow-gauge railway which runs through Maseru West industrial area between Maseru Station and the South Africa border at Maseru Bridge. This connects the capital city of Maseru via the border bridge on the Mohokare (Caledon) River to South Africa’s BloemfonteinBethlehem line. Two freight trains run every day, carrying mainly cement, maize, fuel and freight containers and making up about one third of Lesotho’s international trade in bulk goods. Although the railway is owned by the Lesotho Government, it is leased, operated and maintained by the South African railway company Transnet. While there has been backing from SADC for the development of a rail link that would run from Maseru to South Africa’s sea ports of Durban and Port Elizabeth, with the Lesotho Government seeking funds to conduct a feasibility study, support from Transnet has not been forthcoming. Maseru Container Terminal The Maseru Container Terminal (MASCON), that was operated by Transnet Freight Rail (TFR) until 2009 and then by South African company InfraDev up to May 2013, is presently managed by the MoPWT. Various studies, consultancies and designs have been undertaken which aim to develop MASCON into a dry port that will be operated by a semi-autonomous government agency. In the interim, the Government of Lesotho has made a number of improvements at MASCON, including the purchase of two reach stackers that are instrumental in the loading and off-loading of containers, the fencing of the perimeter area and the levelling of the platform for the safe storage of containers.

Activity in the construction sector has been subdued for the past two years as a result of the slowing development of public projects as well as the completion of major construction works associated with the Metolong Dam in the second half of 2016 and Liqhobong mine in 2017. Going forward, the Central Bank of Lesotho (CBL) has revised its projections upward for the sector, which is now expected to grow by 9.2 percent in 2018 and 2.1 percent in 2019. These new figures are based on the revised implementation schedule of major capital projects, particularly the construction of the Polihali dam and transfer tunnel which will be preceded by advance infrastructure works. Government has reiterated the need to align the construction and maintenance of infrastructure with the needs of investors, local industry and communities. As indicated in the 2018/19 National Budget Speech, Lesotho is currently faced with a maintenance backlog as regards infrastructure. This covers water pipelines, power lines and road networks. To address this issue, Government intends engaging the private sector through framework contracts for maintenance. According to the Budget Strategy Paper which covers the 2018/19 to 2020/21 period, one of Government’s strategic objectives is to develop supporting physical and institutional infrastructure for growth and employment. Key strategic actions in this regard include: •

Facilitating the provision of basic infrastructure to improve connectivity through roads and ICT, and to selected industrial sites and commercial agricultural areas as well as tourism sites

•

Protecting water sources and developing multipurpose dams to provide water for irrigation, clean electricity generation, potential export opportunities and sports

•

Developing innovative solutions to improve accessibility of ICT infrastructure for e-commerce, e-education, e-health and e-government, among others

Construction

Lesotho’s construction sector continues to play a central role in the economy through large-scale infrastructure developments such as the Lesotho Highlands Water Project. •

Strengthening institutional infrastructure and coordination for investment and trade promotion

THE LOCAL CONSTRUCTION INDUSTRY Lesotho’s National Construction Industry Development Policy is being developed by the Ministry of Public Works and Transport in order to establish an institutional and legal framework for growth in the sector. Despite its weak policy and legislative framework, the construction sector has demonstrated significant potential for world-class performance, considering the nature and scale of works it is able to undertake. Given the appropriate support, it should be able to build sufficient capacity not only to meet domestic demand, but also to compete for, and undertake, work outside Lesotho’s borders. In terms of the Southern African Development Community (SADC) Protocol on Trade in Services, construction services that can be exported include architecture, engineering, and building infrastructure, among others. The Local Construction Industry Development Study, which was part of Lesotho’s Integrated Transport Project (ITP), aimed to develop a supportive environment in terms of policy and strategy for the establishment of a sustainable local construction industry and body of built environment professionals. The study recommended the adoption of a National Construction Industry Development Policy, to be supported by a Construction Industry Development Act, Built Environment Professions Act, and regulations specific to the procurement of construction works for inclusion in the new Financial Regulations.

The establishment of two independent bodies would also help to develop the local industry. The mandate of the proposed Lesotho Construction Industry Council (LCIC) comprises setting up a reliable contractor registration system and monitoring the performance of contractors while promoting best practice and seeking international recognition and accreditation for local engineers, architects, technologists and technicians. The Council for Built Environment Professions (CBEP) would be responsible for the registration, training, accreditation and conduct of key built environment professionals, setting standards for best practice, promoting appropriate standards of education and training, accrediting that training, and helping to design suitable courses for Lesotho’s vocational and tertiary education system. With the support of the World Bank and the Private Sector Competitiveness and Economic Diversification Project, Government has improved the construction permit process by moving from manual to electronic and automated systems, reducing the time and cost of issuing such permits.

WATER & ENERGY PROJECTS Water supply, sanitation and energy infrastructure is prioritised with the goal of connecting more households to basic utilities as well as meeting the needs of industry. Like its predecessor, the second phase of the Lesotho Highlands Water Project will deliver many positive spin-offs over and above the dams and water transfer schemes themselves in the form of a hydropower plant,

power lines, roads, bridges, housing, clinics and telecommunications systems. Lesotho Highlands Water Project The Lesotho Highlands Water Project (LHWP) is a multi-phase, bi-national initiative established through a 1986 treaty between Lesotho and South Africa and implemented by the Lesotho Highlands Development Authority (LHDA) and the Trans-Caledon Tunnel Authority (TCTA). The Lesotho Highlands Water Commission has an oversight function, and represents and advises the two governments as well as monitoring the activities of the LHDA and the TCTA. In its entirety, the LHWP involves the construction of five large dams, implemented over four phases and ultimately transferring 70 cubic metres of water per second to South Africa. The water transfer aspect sees dams and tunnels being built in Lesotho to store, regulate, divert and transfer water from the Senqu (Orange) River and its tributaries to South Africa. This delivery system is utilised to generate hydroelectric power in Lesotho. The first phase of the LHWP was the biggest water transfer scheme that had ever been undertaken on the African continent. Completed in 1998, Phase IA encompassed construction of the 185-metre-high concrete double curvature Katse Dam (the highest in Africa) on the Malibamatso River and associated infrastructure and transfer tunnels from the Katse Reservoir to the ‘Muela Hydropower Station and on to the Ash River in South Africa. Phase IB, which was inaugurated in 2004, consisted of the 145-metrehigh concrete-faced rockfill Mohale Dam on the Senqunyane River, a tunnel to the Katse Reservoir, and a diversion weir on the Matsoku River. Launched during 2014 at Tlokoeng in Mokhotlong district where the Polihali Dam is to be built, Phase II of the LHWP (LHWP II) comprises water transfer, hydropower and social and environmental components. In addition, the phase includes advance infrastructure

CONSTRUCTION | 47

such as roads, bridges, housing, power and telecommunications networks that support project implementation and benefit Lesotho in the long term. In developing Phase II, approximately 5 000 hectares will be flooded by the dam and reservoir in the valleys and tributary catchments of the Senqu and Khubelu rivers. Water delivery capacity under LHWP II is set to rise from 780 million cubic metres per annum up to 1.27 billion cubic metres per annum. Water transfer and related infrastructure comprise the following components: •

•

Polihali Dam, a concrete-faced rock fill embankment dam 165 metres high, will be built downstream of the confluence of the Khubelu and Senqu rivers, and have a capacity of 2.322 billion cubic metres, a crest length of 915 metres, and a full supply level of 2 075 metres above sea level. The dam’s embankment will comprise over 12 million cubic metres of compacted rock, which will be quarried locally within the dam basin. Other associated infrastructure will include a 50-metre-high saddle dam, concrete sidechannel spillway, 70-metre-high Polihali Intake Tower, and a conveyance tunnel 38.2 kilometres long and 5 metres in diameter that will transfer water from the Polihali reservoir to the Katse reservoir.

•

A 60-kilometre west-east access road linking the A8 near Matsoku to the A1 near Tlokoeng.

•

High tension power and fibre optic telecommunications extensions along the abovementioned access road.

•

Ten new bridges, with three being higher than 100 metres and longer than 0.5 kilometres, linked to some 100 kilometres of rural feeder roads.

•

A permanent housing development, which will consist of project offices, and residential

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and community facilities, will be established near the Polihali Dam and transfer tunnel. Work associated with the water transfer tunnel includes the intake works and gate shaft at the Polihali reservoir, the transfer tunnel itself, ventilation and dewatering shafts, outlet works and a gate shaft at the existing Katse reservoir. The contractors will tunnel through basalt rock, meaning that excavation will most likely be done using both the drill-and-blast method and a tunnel-boring machine, and the tunnels will be fully concrete-lined. Hydraulic control will be effected by the valves in the intake structures. The Polihali intake gate shaft will be used only for maintenance and water quality control functions. In July 2017 the LHDA awarded the contract on the design and construction supervision of the Polihali Dam to Matla a Metsi Joint Venture, comprising South African companies GIBB (Pty) Ltd and Mott MacDonald Africa (Pty) Ltd, French company Tractebel Engineering SA/Coyne et Bllier, and Basotho-owned LYMA Consulting Engineers. This is the largest award on Phase II consultancy and amounts to a sum of M445 million. The majority of the advance infrastructure components need to be completed before the construction of the main Phase II works (the Polihali dam and transfer tunnel) can begin. By late November 2018, a total of 27 contracts had been awarded, three of which were construction contracts and the rest for consultancy services. Roads, bridges, high tension power lines and telecommunications systems, accommodation and construction facilities form the advance infrastructure of the water component of the LHWP II. Construction work on Phase II was set to start in November 2018 following the awarding of a M235 million contract for the Polihali north-east access road to a joint venture between South African-

registered Sinohydro SA and Lesotho-registered Nthane Brothers in October 2018. Construction is expected to take 20 months (ending in June 2020), and entails the upgrading of the existing 16-kilometre gravel road to a Class A surfaced road. Running from the town of Mapholaneng in north-eastern Lesotho to the Polihali dam site, the road will provide access for construction vehicles and improve ease of movement for communities in the surrounding areas. This marks the beginning of Phase II’s seven-year construction timeline. Construction works for advance infrastructure, including access roads, is restricted to contractors registered in Lesotho or South Africa, in line with the tendering strategy to achieve the policy objectives of the Phase II Agreement. To foster capacity building and economic growth, the two governments have also made provisions in the policy for sharing of the value of all infrastructure works on an equal monetary basis between consultants and contractors registered in Lesotho and in South Africa. The challenge will be to transfer skills and leverage income for sustainable employment once major civil works are completed. The current construction timeframe for the LHWP II sees the roll-out of livelihood restoration demonstration projects, commencement of advance infrastructure construction, and prequalification for dam and tunnel construction taking place in 2018. This is to be followed by the decision on the hydropower option, continued resettlement programmes, and procurement of contractors for Polihali dam, tunnel and major bridges in 2019. It is expected that construction of the dam and tunnel will start in 2020, followed by the procurement of the hydropower contractor in 2021 and the start of construction on hydropower works in 2022. The water transfer system is slated for commissioning in 2026, along with the hydropower component. Water and sanitation Lesotho’s Water and Sewerage Company

(WASCO), overseen by the Lesotho Electricity and Water Authority (LEWA), is in charge of construction projects related to domestic and commercial water supply and sewerage systems in urban centres. The Metolong Dam is 83 metres high with a crest width of 270 metres and a reservoir of 63.7 million cubic metres. The water treatment works have a capacity of 75 000 cubic metres per day on average (peaking at 93 400 cubic metres). It was built at a cost of US $100 million. The downstream conveyance system comprises transmission pipelines, storage reservoirs and associated pumping stations. Pipelines include a 34.3-kilometre line to Maseru; 33.0-kilometre line to Roma and Mazenod; 30.5-kilometre line to Morija; and a 25.0-kilometre line to Teyateyaneng. While Metolong has been yielding water for some time, it only reached full capacity in the latter part of 2018. When the dam began to spill it was an important milestone as it marked the first time it had been subjected to the full range of stresses for which it was designed. Building on the Metolong Dam Water Supply Programme (MDWSP), the second component of the World Bank’s Water Sector Improvement Project Phase II involves, among other aspects, the construction of a transmission line to Teyateyaneng to increase the supply of safe, bulk water. This involves building an estimated 28 kilometres of transmission mains to supply the town with water from the Metolong reservoir. As at November 2018, 24.47 kilometres had been laid and was operational. The Metolong Dam reached its full capacity – an impressive 63 million cubic metres of water – in August 2018. The feasibility study for the Greater Maseru Water Supply Project has been completed and is presently awaiting financing for detailed design and construction supervision. The project covers the water distribution network and associated

infrastructure in the villages of Mazenod, Ha Luka, Ha ‘Masana, Ha Tsiame, Ha Makhoathi, Ha Lenono, Ha Bosofo, Ha ‘Nelese, Ha Foso, Marabeng, Berea and Maqhaka. The Lowlands Rural Water Supply and Sanitation Project, which has been implemented as part of the Metolong Dam initiative, provides basic rural water and sanitation infrastructure as well as environmental health support to the districts of Berea and Maseru. Benefitting some 65 000 inhabitants with access to safe and reliable water, and 7 800 households with access to improved sanitation facilities, the focus is on communities located in the vicinity of the project’s primary and secondary water supply pipelines. Drawing on EU funding, the Maseru Waste Water Project has helped to improve the treatment and disposal of wastewater for around 100 000 residents in the urban and peri-urban areas of Maseru through connections to sewer networks as well as building low-cost on-site sanitation services. It involves transporting reticulated sewage from villages such as Masowe I, II and IV, Thetsane, Khubetsoana, Mabote, Naleli, Makoanyane, NHTC and the filter clinics of Mabote Qoaling and Likotsi. Major components included development of the sewerage pipelines, pump stations, two sewerage treatment plants and rehabilitation of the Ratjomose sewerage treatment plant. While the main part of the project was inaugurated in 2017, a further phase has seen the construction of sewer mains and a pumping station in Khubetsoana (Lot 1) and construction of sewer networks in Thetsane East and Masowe IV (Lot 2). These were due for completion by the end of 2018. Furthermore, baseline assessment and construction is underway to provide onsite sanitation facilities in urban Maseru with the building of Amalooloo toilets for vulnerable groups. The Five Towns Water Supply Project encompasses provision of water in the five districts of Botha-Bothe, Hlotse, Mafeteng, Mohale’s Hoek and Qacha’s Nek. It involves the construction of river intake works, water treatment

works, pumping stations, transmission mains, distribution mains, and reservoirs in all the five towns. The High North/Sehlabeng/Foso Water Project entails construction works for the transfer of potable water from the High North Reservoir at Sehlabeng to the villages of Ha Foso and Marabeng in Berea. The Tsikoane Water Supply and Sanitation Project was nearing completion in 2018. The major components of the project include a reinforced concrete bulk reservoir; 60m3 reinforced concrete collection tank; six pressed steel tanks with capacities ranging from 100m3 to 400m3; over 100km of pipe work in the collector pipes, pumping main, gravity mains and reticulation system; installation of submersible pumps and associated control devices in six boreholes; construction of six borehole chambers; construction of a pump house and operation buildings; installation of three surface pumps; installation of an aeration and chlorination system; installation of a telemetry system for automated operation of pumps; construction of about 5km of access road to the boreholes, collection tank and bulk reservoir; and construction of 2 500 Ventilated Improved Pit (VIP) latrines. Other projects due for completion in 2018 include the rehabilitation of Sekantsing pipeline in Quthing. Being undertaken by WASCO, it involves the replacement of uPVC pipes with galvanised iron pipes in order to eliminate bursting due to high pressures as a result of water hammer. LHWP II hydropower options The ‘Muela hydropower plant which was built during the first phase of the Lesotho Highlands Water Project (LHWP) is set to be supplemented by the construction of further hydropower infrastructure as part of the second phase of the LHWP. The exact form of Phase II hydropower is yet to be decided, and rests on the outcome of further feasibility studies. However, in view of the current economic climate, it is likely to be conventional hydropower and not the pumped

storage system that was initially the preferred option. Two sites on the Senqu River and one on the Malibamatšo River at Oxbow are currently under consideration, and studies in respect of these had been substantially completed by the end of 2018. According to the LHWP II timeline, the completion of the hydropower feasibility study and agreement on the Phase II hydropower option is expected in 2019. This will be followed by the procurement of the hydropower contractor in 2021 and the start of construction on hydropower works in 2022. Other power generation projects A M151.76 million loan from the African Development Bank (AfDB) is helping to fund the Urban Distribution Rehabilitation and Transmission Expansion Project, which aims to rehabilitate and refurbish electricity power distribution networks across the country. The project encompasses the rehabilitation of 188 kilometres of distribution lines and switching stations, expansion of the transmission network through the upgrading of a substation, and construction of 8 kilometres of transmission lines, and is expected to create 140 jobs during construction. The Rural Electrification Project kicked-off in October 2017 for the three villages of Ha Sofonea, Ha Majara and Ha Tonki in Maseru’s Thaba-Bosiu constituency. The project will cost in excess of M6 million and benefit 545 households in these villages. This is the initial phase of a project which will be rolled out to rural villages across the country.

TRANSPORT INFRASTRUCTURE A department under the Ministry of Public Works and Transport, Lesotho’s Roads Directorate was formed by the amalgamation and restructuring of the former Roads Branch and Department of Rural Roads, and established under the Roads Directorate Act of 2010. It is responsible for planning, designing and implementing the construction, upgrading, rehabilitation and

maintenance of primary, secondary, tertiary and other roads and bridges throughout Lesotho, as well as supporting the development of the road construction industry. The role of transport infrastructure in improving a country’s competitiveness cannot be overemphasised. In recent years, Lesotho’s central and local governments have made considerable investments in improving the quality of roads to bitumen or hard gravel standards and expanding the network of urban and rural roads. The introduction of the Lesotho Road Management System (LRMS), which enables the collection and systematic monitoring of data on national roads, will facilitate timely maintenance interventions before roads start to deteriorate. Projects either recently completed or presently coming to an end include: •

The 140-metre tarred Bethel Bridge across the Senqu River in Mohale’s Hoek costing some M137.3 million

•

The Ha Leshoele–Mathokoane–Setene–Ha Bene road works covering 40 kilometres in Leribe District by China GEO Engineering at a cost of M535 million.

•

The tarring of the Oxbow–Mokhotlong and Mokhotlong–Sani Pass roads

•

Reconstruction of 70 kilometres of the Oxbow–Mapholaneng road

•

Rehabilitation of the Likalaneng–ThabaTseka Road at a cost of around M76 million

Approximately 9.5 kilometres of the tarred road from Alwyn’s Kop to Tele Border Post in Quthing is being upgraded from gravel to bitumen by Matekane Construction at a cost of M125 million. The project was launched in May 2018 and forms part of a major infrastructure upgrading plan that will strengthen links between Lesotho and South Africa. Work on the Marakabei–Monontša and Mpiti– Sehlabathebe roads began in the 2018/19 financial year. Government is also looking

CONSTRUCTION | 49

to upgrade the Monontša border post and road passage within the ambit of the Joint Bilateral Cooperation with South Africa. Also in 2018/19, the Ministry of Local Government and Chieftainship has targeted 198.4 kilometres of urban roads and 1 102 kilometres of rural community roads, adding to the respective 281.7 kilometres and 37.9 kilometres achieved in 2017/18. The rehabilitation of Moshoeshoe I International Airport includes extending the existing runway, building a new VIP terminal building and renovating the existing terminal buildings, as well as installing navigation aids and apron lighting. The objective is to increase the handling capacity of the airport to meet existing and forecast demands for passenger and cargo facilities. Government has received funding totalling US $63.2 million from several development partners, led by the Kuwait Fund. The rehabilitated main runway at Mejametalana Airbase was commissioned in 2017. The runway, which measures 1 300 metres long and 30 metres wide, was built by EXR Construction (Pty) Ltd.

HOUSING & PROPERTY According to the 2018 Housing Finance Yearbook, 70 percent of the total urban housing stock in Lesotho is provided through informal channels. Basotho still rely on social networks and inheritance to own property, with just 23 percent living in houses they have financed through bank loans. Some build their homes themselves while others live in homes that they have inherited. Data from the 2016 census reveals that just under 79 percent of households own their dwelling, while free government housing comprises 0.5 percent of households, free private housing 1.25 percent, subsidised government housing 0.4 percent, subsidised private housing 0.25 percent, housing rented by government 0.4 percent, and housing rented privately 18.45 percent. There is currently a huge demand for housing, with the Lesotho Housing Profile estimating that a

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total of 99 000 dwellings (or 170 000 rooms) will have to be constructed by 2025 to meet demand. An estimated 5 200 dwellings, or 9 000 rooms per year, are needed to meet the annual urban housing demand. Residential property development The Lesotho Housing and Land Development Corporation (LHLDC) is a government parastatal mandated to assist in meeting the shelter needs of all Basotho by providing a variety of housing sites as well as home ownership and rental accommodation options to cater for a wide spectrum of income levels in the most cost effective manner available. The corporation finances and engages construction companies to build and maintain the housing stock as well as having in-house capacity for construction. In addition to its other duties, the Ministry of Local Government and Chieftainship is tasked with facilitating the delivery of affordable quality houses to Basotho within properly planned settlements. The Ministry has helped to develop the Lesotho Housing Profile (LHP), supported by the United Nations Development Programme and UN-Habitat in Lesotho. The aim of the LHP is to develop a holistic interpretation of the factors influencing housing provision in the country, including areas such as housing finance, land and construction, and institutional, regulatory and cultural issues. The LHP has also been instrumental in the creation of the National Housing Policy. The LHLDC has taken a phased approach to housing delivery. The 2018 Housing Finance Yearbook reports that Maseru South West (Masowe) Project Phase I and II was implemented between 2000 and 2010, followed by Masowe Phase III between 2010 and 2016. Just 34 houses were built and sold between 2010 and 2016. In Masowe IV, LHLDC had 448 residential plots with 189 earmarked for low income housing and an additional 227 for middle to high income housing, with plot sizes of 450m2 for the former and 700 m2 to 800 m2 for the latter. The LHDC also faces the challenge of inadequate housing finance to be

able to execute its housing mandate effectively and satisfactorily. An additional housing project in Linakotseng comprising 17 two-bedroom units was initiated by the Ministry of Local Government and Chieftainship as a low income housing project. It was transferred to LHLDC in 2015, and all 17 houses were sold between 2017 and 2018. In the 2018/19 fiscal year the Ministry of Local Government and Chieftainship is building low-income housing comprising 60 units in Linakotseng, Maseru and Qacha’s Nek. The Maseru Municipal Council (MMC) is responsible for planning and allocating land within the designated city boundaries and for housing development through public-private partnerships (PPPs). There is a booming market for private housing developers to undertake satellite town housing developments in partnership with the MMC. This includes a pipeline housing project currently under negotiation known as ‘MORERO City Development’, which has the objective of providing a mixed-use development to the southwest of Maseru, 5 kilometres from the city centre. The project will require 400 hectares of land for residential housing, office space and education facilities, and will include a retail complex, hotel and sport facilities. The development timeline is a period of four years. Other private housing developers in Lesotho include Matekane Group of Companies (MGC) Properties, Creative Properties, Green City Construction and Property Developers. Their developments include the likes of Bridge Estate Rental, Masowe 3 Rental, Thetsane West Rental, New Office Park Masowe, New Development 1 Phuthiatsana River Type A & B, and Caledon River Estate New Residential Development. MGC Properties has built 20 three-bedroom luxury houses at Mpilo Estate. Sigma Construction and Property Development has developed low,

middle, and high income residential houses (both detached and multi-family) in Mabote, Khubetsoana, Masowe II and III. Their housing stock caters for middle to high income buyers as well as low income renters. Industrial and commercial property The Lesotho National Development Corporation (LNDC) provides services (roads, water and electricity) at selected industrial estates as an incentive to investors. Historically it has also built factory shells, but this function is being phased out and Government is presently encouraging private property investors to become involved in the provision of factory shells. Development in the past few years has concentrated on the 80-hectare Tikoe Industrial Estate. Phase II of Tikoe Industrial Infrastructure was completed in 2016/17, with 27 hectares of land being transformed into a fully-serviced estate with roads, water, electricity and 11 factory shells with sizes ranging from 2 000 to 4 000 square metres. The project was financed by Government and its development partners, the Arab Bank for Economic Development in Africa (BADEA) and the OPEC Fund for International Development (OFID), in an amount of US $28.4 million. A sum of M50.0 million was allocated in the 2017/18 budget for Tikoe Industrial Infrastructure Phase III. Government is also augmenting its investment at Tikoe, with Formosa Textiles building its own factory shell. The current focus is a three-year, M800-million project to develop industrial infrastructure at the Ha Belo Industrial Hub in Botha-Bothe District, where a contractor has been selected. A sum of M100 million is planned to fund 14 factory shells out of a total of 52 shells and advance infrastructure. Government intends that the remaining 38 factory shells should be developed by the private sector, and prospective property investors are expected to work with the LNDC in this regard.

WATER

for Sustainable Rural Water Supply in the Lowlands’, which focuses on the rural areas of Maseru and Berea. The funding, which was mobilised under the Least Developed Countries Fund (LDCF) of the GEF, is expected to address constraints related to increasing populations in the peri-urban areas; economic growth and higher demand; geographical isolation; lack of public utilities and regulation; high cost of water provision; and the water stress caused by increasing climate change and variability. The project concept was approved in 2017 and it is presently awaiting implementation approval.

Lesotho has abundant water resources as its highlands are one of the region’s principal water catchment areas and the source of three major river systems – the Senqu, Mohokare (Caledon) and Makhaleng. These assets, when combined with the country’s high altitude and geographic proximity to major demand centres in southern Africa, have proven to be a valuable natural resource that is both renewable and sustainable. Rainfall together with winter snowfalls provides an estimated 5.5 billion cubic metres of water annually and renewable groundwater resources of some 340 million cubic metres per year. The landmark Lesotho Highlands Water Project (LHWP) enables the transfer of water from the highlands of Lesotho to the economic powerhouse of the African continent in Gauteng, South Africa, while also contributing to the development of hydropower resources. Royalties earned from the export of water have become the largest single source of non-tax revenue in the country, and the launch of the LHWP Phase II has reinforced the crucial role of this lucrative commodity in Lesotho’s economy. While Lesotho’s water resources exceed national requirements, limited access to these assets has been an obstacle to growth and development as well as Government’s efforts to stem waterborne diseases. This is especially pertinent for the capital city of Maseru and its surrounding areas, which are the site of the majority of textiles and light manufacturing firms. Lesotho has made substantial progress over the years in improving water supply and sanitation facilities. According to the 2016 Population and Housing Census, more than 88 percent of all households have access to an improved source of drinking water – 97 percent in urban areas and 80.2 percent in rural areas. Regarding sanitation, while 56.4 percent of households use an improved sanitation facility, 19.6 percent of households still have no formal sanitation facilities. Integrated catchment (wetland) management is prioritised to ensure sustainability of water

Katse Dame Aerial © LHWC

Water & Energy

Lesotho has made significant progress in enhancing access to water and sanitation, and both the water and electricity sectors are expected to benefit from the second phase of the Lesotho Highlands Water Project which kicked off in 2018. resources and reduction of soil erosion, and an Integrated Catchment Management Plan is being prepared. The Ministry of Water has also been reviewing the Water and Sanitation Policy of 2007 and Water Act of 2008. Improving the country’s national water resources infrastructure and increasing water security in an environment that is climate-insecure, is central to boosting Government’s efforts to promote longterm sustainable macroeconomic development, including food security and job creation. The 2016 World Bank report ‘Lesotho Water Security and Climate Change Assessment’ evaluates the vulnerabilities, challenges and opportunities in the country’s water management system. Simulations show that continued development of

existing water infrastructure is critical to improving the reliability and resilience of the domestic and industrial sectors. Exploring interconnections between water resources developed through the LHWP and linking these to address domestic and industrial demands in the lowlands could help improve the resilience of the existing system. Furthermore, the implementation of additional phases of the LHWP will increase transfer capacity as well as acting as a major job creator in the construction sector. The Global Environment Facility (GEF) has approved a grant of US $4.4 million to complement US $17.25 million in co-financing from the African Development Bank (AfDB) to fund the programme ‘Climate Change Adaptation

During 2018/19, Government is developing feasibility studies for the Hlotse and Makhaleng Dams which are intended to supply Maputsoe, Hlotse, some parts of Botha-Bothe, Mafeteng, Mohale’s Hoek and the Republic of Botswana. New dams are expected to generate additional revenue for Lesotho, and feasibility studies are presently being undertaken. Water management The management of Lesotho’s water systems falls under the Ministry of Water, which was created in 2015. The Department of Water Affairs (DWA) keeps and provides records, information, results of monitoring activities research and analyses to the offices of the Commissioner of Water (CoW), who acts as the custodian of raw water resources. The Department of Rural Water Supply (DRWS) provides small settlements with water, while the operation and maintenance of these schemes is the responsibility of local authorities and committees. Provision of potable bulk water supply to urban areas is undertaken by the Water and Sewerage Company (WASCO) under the licence issued by the Lesotho Electricity and Water Authority (LEWA). The regulator oversees services provided by WASCO, which operates several river intake works, water treatment and wastewater treatment plants, and their associated bulk water transfer systems into bulk water storage tanks. WASCO has engaged the services of Lesira Teq in order to start the process of converting

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The Lesotho Highlands Water Project

OVERVIEW The Lesotho Highlands Water Project (LHWP) is one of the world’s most successful regional trans-boundary water resources management systems, a partnership between the governments of Lesotho and South Africa initiated in the 1980s for the mutual benefit of the two countries. Gauteng, South Africa, receives much needed water and Lesotho generates hydropower and receives royalties from the water transfer. Skills transfer and capacity building to enable Lesotho to manage and maintain the infrastructure within the country and the development of future LHWP phases was also a consideration. The aim of the envisaged multi-phased Lesotho Highlands Water Project is ultimately to transfer 70 cubic metres of water per second to South Africa, and in the process, to secure a sustainable, independent energy supply for Lesotho that will meet the country’s electricity requirements, and earn the mountain kingdom revenue in the form of royalties on the water transferred to South Africa. Currently, the LHWP transfers 780 million cubic metres of water per year to South Africa. Phase II will increase the volume incrementally to 1 270 million cubic metres per year. The ‘Muela hydropower plant currently produces 72 MW of power and Phase II will increase the amount of electricity generated (actual increase will be confirmed following the completion of further feasibility studies on hydropower). The average royalty earnings on the transfer of water for the last two years was M870 million, approximately 2.6% of Lesotho’s GDP. The 1986 Treaty commits the two Governments to the implementation of Phase I and subjects other phases to negotiations hence the 2011 Phase II Agreement on the second phase that is currently being implemented. PHASE II COMPONENTS

View of the Senqu River where the Polihali dam wall will be erected

The Phase II plaque at Tlokoeng features a picturesque replica of the proposed Polihali dam wall.

Phase II comprises water transfer, hydropower and social and environmental components. In addition, the phase includes advance infrastructure such as roads, bridges, housing, power and telecommunications networks that support project implementation and benefit Lesotho in the long term. WATER TRANSFER COMPONENT

to defer the pump storage option (due to prevailing economic conditions) and advance the conventional options. This entails two sites on the Senqu River and one on the Malibamatšo River at Oxbow. These studies are expected to be substantially completed by the end of 2018. SOCIAL AND ENVIRONMENTAL COMPONENT

UPDATE ON PROCUREMENT OF CONTRACTS •

In summary, as at end November 2018, a total of 27 contracts had been awarded, three (3) of which are construction contracts while the rest are consultancy services contracts.

•

Construction of the advance infrastructure components started with the award of the construction of the Polihali North Eastern Access Road (PNEAR) in October 2018. The road project entails the upgrading of the existing approximately 16km-long gravel road to a Class A surfaced road. The contractor had access to site by the beginning of November 2018, marking the start of Phase II’s seven-year construction period.

INDICATIVE PHASE II TIMELINE An artist’s impression of the Polihali Dam wall. •

The Polihali dam to be built downstream of the confluence of the Khubelu and Senqu rivers in the Mokhotlong district in the eastern highlands of Lesotho.

• The Polihali dam wall will be a rock fill embankment towering 165m high. • A 38 km long water transfer tunnel which will link the Polihali reservoir to the Katse reservoir. •

Roads, bridges, high tension power lines and telecommunications systems, accommodation and construction facilities which form the advance infrastructure.

HYDROPOWER COMPONENT The exact form of the Phase II hydropower component is still to be confirmed following the completion of further feasibility studies, which commenced in the latter part of 2016 and which are currently at an advanced stage. The studies have looked at pumped storage and conventional hydropower options. The decision was taken

Environmental management in the Polihali catchment will be key in the success of the project. An environmental and social management programme is being implemented to address potential environmental and social impacts associated with Phase II activities. The programme includes environmental and social impact assessments and the development and implementation of environmental and social management plans; resettlement assessments, the development and implementation of resettlement actions plans including livelihood restoration programmes and compensation; the development and implementation of public health action plans. The design of these programmes is being informed by the outcome of the baseline studies and extensive engagement with local communities and other interested parties. The resultant sustainable development programmes to be designed and implemented will be agreed on with the affected communities.

2018 • Roll out of livelihood restoration demonstration projects • Advance infrastructure construction commences • Call for Expression of Interest (Prequalification for) dam and tunnel construction. 2019 • Completion of hydropower feasibility study • Procurement of contractors for Polihali dam, tunnel and major bridges • Agreement on Phase II hydropower option • Resettlement programmes continue 2020 • Construction of dam and tunnel commences 2021 • Procurement of hydropower contractor commences 2022 • Construction of hydropower works commences 2026 • Water transfer commissioned • Hydropower generation commissioned

LESOTHO HIGHLANDS DEVELOPMENT AUTHORITY (LHDA) For more Information: LHDA Public Relations Office 3rd Floor, LHDA Tower Building, Kingsway, Maseru 100, Lesotho Tel: +266 22246000 Fax: +266 22310665 E-mail: lhwp@lhda.org.ls. Website: www.lhda.org.ls

from post-paid to pre-paid meters. Lesira Teq is supplying and installing smart meters in selected areas for a pilot period of six months. Non-domestic customers such as industries, businesses and government entities have been targeted, with WASCO expecting the initiative to improve revenue collection as well as data capture with their automatic data collection and remote shut down units. New features include a customer interface unit which enables wireless transfer of credit and consumption information to users, which assists in better management of water use and purchase through mobile devices.

related instruments in the water sector. The project has a slated completion date of December 2018, and as of November 2018 completed aspects included the successful implementation of the Environmental Management Plan; preparation of the State of Water Resources Report; 24.47 kilometres of pipeline from the Metolong reservoir to Teyateyaneng laid and operational; successful supply of potable water through the pipeline; the required cultural heritage sites identified and recorded; and regulatory instruments governing the urban water sector updated. Furthermore, the target of 30 000 direct beneficiaries had been reached.

GDP growth in the next few years is largely premised on enhanced construction activities under Phase II of the LHWP. The Lesotho Highlands Development Authority (LHDA) is the implementing authority of the Lesotho Highlands Water Project (LHWP). As such, it is responsible for the implementation, operation and maintenance of all components of the project in Lesotho, including the LHWP dams (Katse and Mohale), the raw water transfer system to South Africa, and electricity generation via the ‘Muela hydropower scheme. The LHDA is answerable to a Board of Directors, which is responsible for the performance and affairs of the LHDA. As stipulated in Protocol VI, the LHDA Board reports to the Lesotho Highlands Water Commission (LHWC). To mitigate any potential adverse impacts as well as maximise the development spinoffs of the project, the LHDA is also charged with managing social, environmental and economic developments, such as resettlement, compensation, the supply of water to resettled villages, irrigation, fish hatcheries and tourism. The Authority is responsible for implementing Phase II of the project, as well as raising funding for the new hydropower component. The LHDA’s counterpart, the Trans-Caledon Tunnel Authority (TCTA), is responsible for the South African side of the transfer scheme. The LHWC provides a joint oversight of the implementation of the LHWP on behalf of the two

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Katse Dam overspilling © LHWC governments. It has monitoring, advisory and approval powers in respect of the activities of the LHDA relating to the LHWP in Lesotho and activities of the TCTA relating to the operations and maintenance of the project in South Africa. Lowlands water and sanitation schemes Comprising the first phase of the Lesotho Lowlands Water Supply Scheme, the Metolong Dam and Water Supply Programme (MDWSP), has made an average of 75 000 cubic metres of treated water per day available to the centres of Mazenod, Roma, Morija, Teyateyaneng and Maseru, where it will meet domestic and industrial requirements for approximately 40 years. It was given priority within the overall scheme as it serves the greatest number of end users, and the communities and industries that it supplies had the most urgent need of upgraded water supply systems. The MDWSP includes water treatment works and a downstream conveyance system, with a water reticulation component that is operated by WASCO and a wastewater project that deals with liquid waste from industry. Apart from guaranteeing a reliable water supply to thousands

of people in the Metolong catchment area, the programme will leave long-lasting benefits for the communities along the pipeline route who have been directly affected by the construction, with a total of 40 villages in the catchment area being supplied with water and sanitation services. Tertiary pipelines constructed as part of the MDWSP include branches and take-offs at specific points along the pipeline routes to facilitate future distribution of potable water to the surrounding communities. This infrastructure is being linked to components of the Rural Water Supply and Sanitation Project in the districts of Berea and Maseru, benefitting some 65 000 inhabitants of the area. Detailed designs of the remaining modules of the project are being undertaken to ensure that water is supplied to additional locations. The objective of the World Bank’s Water Sector Improvement Project Phase II is to: support the Kingdom of Lesotho in developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP; increase the quantity of safe, bulk water supplied to Teyateyaneng; and strengthen institutions and

Ongoing components comprise the implementation of the Comprehensive Resettlement and Compensation Action Plan, the feasibility study for the hydropower component of LHWP Phase II and updating of the Lowlands Water Programme studies (both at 60 percent), with 400 of the targeted 473 improved community water points constructed or rehabilitated. According to the World Bank, the Metolong Dam supplies water to two-thirds of Lesotho’s population of over two million. The main objective of the Tsikoane Water Supply and Sanitation Scheme is to improve the health and living conditions of communities in the Tsikoane area through the development of sustainable water supply and sanitation services. Being implemented by WASCO with a price tag of M8 million, the water supply system is designed to serve a projected population of over 18 000 up to 2035. Funded by the Government of Lesotho, BADEA, OFID and the Saudi Fund, the Five Towns Water Supply Project involves water supply improvement in the five towns of Botha-Bothe, Hlotse, Mafeteng, Mohale’s Hoek and Qacha’s Nek. The improvement entails construction of river intake works, water treatment works, pumping stations, transmission mains, distribution mains and reservoirs.

The Lesotho Highlands Water Project (LHWP) was established by the Treaty between the Governments of the Kingdom of Lesotho and the Republic of South Africa on the 24th October, 1986. The Treaty specifies the purpose of the LHWP as to “enhance the use of the water of the Senqu/Orange River by storing, regulating, diverting and controlling the flow and its affluents in order to effect the delivery of specified quantities of water to the Republic of South Africa and by utilizing such delivery system to generate hydro-electric power in the Kingdom of Lesotho”. The LHWP was designed to be implemented in four phases and on completion, transfer 70 cubic meters of water per second to South Africa.

The LHWC was established to provide a joint oversight of the implementation of the LHWC on behalf of the two Governments. The LHWC is responsible and accountable to the two governments for the overall implementation of the LHWP and is the only channel of the Governments’ inputs into the LHWP. The LHWC has monitoring, advisory and approval powers in respect of the activities of the LHDA relating to the LHWP in Lesotho and activities of the TCTA relating to the operations and maintenance of features of the LHWP in South Africa. The two Governments are equally represented in the LHWC. Each Government appoints three delegates and three alternate delegates as its representatives. Each Delegation is led by a Chief Delegate and advises their respective Governments on matters pertaining to the planning, implementation and operations of the LHWP. The LHWC is serviced by a Secretariat.

The LHWP has been quoted as an African success story. It ranks among the most successful cross-border water collaboration schemes between two sovereign states. It contributes significantly to the promotion of sustainable economic growth, reduction of poverty and improvement in the livelihoods of the people of the two countries. The institutional arrangements for the implementation of the LHWP were established by the Treaty and subsequently domesticated by national legislation in the two countries. The Government of Lesotho established the Lesotho Highlands Development Authority (LHDA), an organization responsible for the implementation of the LHWP in the territory of Lesotho. The Government of South Africa established the Trans-Caledon Tunnel Authority (TCTA), an organisation responsible for the implementation of the LHWP in the territory of South Africa. The Joint Permanent Technical Commission, which was later re-named the Lesotho Highlands Water Commission (LHWC) was established and gazetted in both countries as a bi-national body.

Katse Reservoir © LHWC Significant achievements have been recorded during the past thirty-two years of implementation of Phase I of the Project. These include the construction of the 185m high Katse Dam, the 145m high Mohale Dam with their interconnecting tunnels for the transfer of water to South Africa, and the 72MW ‘Muela Hydropower Station which generates hydropower electricity for the supply to meet Lesotho’s needs. Apart from the engineering component, several infrastructural developments and ongoing social and environmental programmes ensue from the LHWP. Mitigation measures have been established to protect the environment and

contain the adverse impacts on the communities affected by the construction of the project. Livelihood enhancement programmes have been established to assist the affected communities in achieving sustainable livelihoods. Throughout the years, the LHWP has won several prestigious awards from leading associations in the areas of project management, engineering, hydropower generation and management, construction, as well as environmental planning and management. Currently the LHWP is embarking on the implementation of Phase II which was inaugurated on the 24th March 2014 by the King of Lesotho, His Majesty King Letsie III, and the President of South Africa, His Excellency President Jacob Zuma. This phase entails the construction of a 163.5m high Concrete Faced Rockfill Dam in the Mokhotlong District. Other associated infrastructure will include a 49.5m high saddle embankment dam, a 70m high Polihali Intake Tower and a 38km long conveyance tunnel connecting Polihali Reservoir with the Katse Reservoir. The dam will increase the total amount of water transferred to South Africa from 780 million cubic metres to 1,270 million cubic metres per annum. Furthermore, Phase II will simultaneously increase the amount of electricity generated for Lesotho. The exact form of the hydropower component is still to be agreed by the governments of South Africa and Lesotho. The decision will be informed by on-going further feasibility studies. The consultant undertaking these studies will submit a report which will recommend the bankable hydropower options for Phase II that can be implemented immediately on completion of these further studies. The main expected benefit of Phase II is that South Africa will be assured of a reliable and cost effective water supply that will meet the demands of the Gauteng region well into the future, while Lesotho will benefit from an increased capacity to generate electricity to meet Lesotho’s requirements and also increased royalty revenue.

5th Floor, Standard Lesotho Bank Tower Kingsway, Private Bag A 156, Maseru 100, Lesotho Tel: +266-52214000, Fax: +266-223240211 e-mail: sec@lhwc.org.ls, website: www.lhwp.org.ls

Urban and peri-urban water supply Rapid urbanisation in the capital has seen city boundaries shift substantially, putting pressure on WASCO to extend the supply services to areas not previously within its territory. Following the commissioning of the MDWSP, WASCO is now able to produce adequate water to meet the increasing water demand, provided distribution network challenges in these areas are addressed. WASCO’s Metolong operations have undergone intensive assessment by the World Bank Technical Support for Utilities Operations (TSfUO) initiative team, with the findings presented in February 2018. Issues highlighted relate to areas such as capacity building and the up-skilling of employees, which are necessary to ensure that the water utility improves operational efficiency. Gaps identified include the lack of a proper asset management system and the need to put in place zero tolerance strategies in respect of NonRevenue Water (NRW). Intended to supply those parts of Maseru which currently do not have access to clean water, the Greater Maseru Water Supply Programme covers feasibility and preliminary design of water distribution networks and all associated infrastructure in three areas of Maseru. These comprise: South (Masana, Mazenod, Ha Luka, Bosofo, Lenono and Makhoathi); South-West (Tsiame, Ha Tikoe, Ratjomose/Lesia, Tsautse and Qoaling); and North-East (Maqalika, Mabote, Tsenola, Foso, Marabeng and Berea). The initial study, which was undertaken with a grant from BADEA, examined the technical, financial and economic feasibility of providing water to these areas as well as developing preliminary water supply designs for a planning horizon of 2040. The findings of the study revealed that embarking on water supply projects in the selected areas would be economically viable, as clean water will not only improve the health status and productivity of the residents, but also their livelihoods. The project is currently awaiting financing for the detailed design and construction supervision. The residents of Ha-Foso and Marabeng in Berea

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have been given access to clean water, thanks to the Drought Relief Water Supply Project, a joint effort between the Ministry of Water, WASCO and the Disaster Management Authority (DMA). The project was introduced by Government in response to the 2015/16 El Niño-related drought that affected the greater part of southern Africa. Potable water is being transferred from the High North Reservoir at Sehlabeng. It also allows for residents located along public standpipe lines to be provided with individual house connections. This M12 million project complements efforts to provide water to urban dwellers through the Greater Maseru Water Supply Programme. As of 2018, additional water supply pipeline extension works were ongoing at Ha Foso and Marabeng. This project will enable more households to access water supply services following construction of the main water line in 2016/17. The works involve excavation, pipe laying, compacting and pipe testing. Inaugurated in July 2017, the Maseru Waste Water Project was funded by the Government of Lesotho (€8 million), European Investment Bank (EIB) (€14.3 million) and the EU (€10 million), and implemented by WASCO. The aim was to provide a modern, environmentally friendly system of wastewater collection and treatment within the urban and peri-urban areas of Maseru, particularly within the Maqalika catchment, thereby protecting the reservoir from pollution. As uptake of connections has been low, WASCO is concentrating on issues such as community information, financial incentives and subsidies. A further phase of the project which focuses on building Amalooloo toilets for vulnerable groups in Maseru has begun, with construction in Mabote and Khubetsoana. Rural water supply and sanitation The Rural Water Supply and Sanitation Project implemented by the Department of Rural Water Supply has the objective of improving the health and livelihoods of Basotho living in rural areas through increased and sustained access to improved domestic water supply and sustained access to improved latrines, as well as cultivating better hygiene practices among beneficiary

communities. In total, the scheme comprises 79 water supply systems and 11 140 VIP latrines in villages across Lesotho at a cost of M75.819 million. The Village Water Supply Project, which is also implemented by the Department of Rural Water Supply, has a budget of M30 million. The main activities include maintenance of existing rural water systems and their rehabilitation, as well as construction of new water supply systems and VIP latrines. The Katse-Lejone-Matsoku Water Supply, Sanitation and Refuse Disposal Programme was implemented in 2017/18 by the LHDA with a budget of M15 million. Its aim is to protect the water quality of the Katse reservoir and to improve livelihoods by providing the communities upstream of the reservoir with potable water through the construction of gravity-fed water supply systems, sanitation facilities and refuse disposal facilities. Lesotho Highlands Water Project One of the world’s most successful regional transboundary water resources management systems, the Lesotho Highlands Water Project (LHWP) is a multiphase initiative established by a 1986 treaty between Lesotho and South Africa. It is also one of the most ambitious engineering projects ever undertaken on the continent, and has contributed significantly to the promotion of sustainable economic growth, reduction of poverty and improvement in the livelihoods of Basotho and South Africans. This mutually beneficial water transfer scheme provides water for South Africa’s domestic and industrial use, with Lesotho reaping the rewards of associated infrastructure (roads and hydroelectricity) and royalties. It has involved the construction of dams and tunnels in the two neighbouring countries, as well as the generation of hydropower. In its totality, the LHWP will consist of five large dams implemented in four phases and eventually transferring 70 cubic metres of water per second to South Africa. Phase I of the LHWP included the construction of Katse and Mohale dams, ‘Muela hydropower-

station, and associated tunnels and reservoirs, and was inaugurated in 2004. The transfer scheme sees water travelling from a network of reservoirs at Mohale, Katse and ‘Muela through the trans-Caledon tunnel and then into the Vaal Dam in Gauteng – South Africa’s industrial heartland. Average royalty earnings on the transfer of water from Lesotho to South Africa between 2016 and 2018 amounted to M870 million – approximately 2.6 percent of Lesotho’s GDP. Phase II of the LHWP entails the construction of the Polihali Dam at Tlokoeng in Mokhotlong below the confluence of the Khubelu and Senqu rivers, as well as additional transfer tunnels feeding water to the Katse Dam. Once completed, this will enable water delivery capacity to rise from 780 million cubic metres per annum to some 1 270 million cubic metres per annum, dependent on the operating rules and water demand. Pending the outcome of further feasibility studies, a hydropower component in the form of a pumped storage scheme may also be constructed. Not only will Phase II guarantee reliable and cost effective water supply for South African industry, it will also see Lesotho benefit from increased royalty revenues and electricity generation capacity. According to the Central Bank of Lesotho’s Economic Outlook for the 2018-2020 period, Lesotho’s capital account is projected to increase by about 70.0 percent to M1.9 billion in 2020 relative to M0.6 billion in 2017, mainly as a result of capital inflows associated with preparations for construction of Polihali Dam under LHWP Phase II. LHWP Phase II was launched in March 2014, and the focus has subsequently been on procuring consultants and contractors for its implementation. The main consultancy contract, which is for the design and construction supervision of the dam, was awarded in July 2017 to Matla a Metsi Joint Venture for M445 million. As at end November 2018, a total of 27 contracts had been awarded: three construction contracts and the balance for consultancy services.

Construction of the advance infrastructure components began with the awarding of the construction contract for the Polihali North Eastern Access Road in October 2018. The contractor was on site in November 2018, marking the start of Phase II’s seven-year construction timeline. Construction of the dam is scheduled to begin in the 2020/21 fiscal year (by which time most of the advance infrastructure will have been completed), and the first water delivery to South Africa should take place early in 2026. Environmental management in the Polihali catchment will also be vital to the success of the project. An environmental and social management programme is being implemented to address potential impacts associated with Phase II activities. Particular attention is being given to the relocation of the 2 500 people affected by the dam construction, with the LHDA developing compensation and resettlement programmes to ensure that those affected are fairly compensated and that physically displaced households are properly relocated and re-established. The Authority has engaged with local communities and other stakeholders in the development of the Compensation Policy to ensure community concerns are addressed and that such communities understand the compensation process. The Polihali north-east access road is one of the critical advance infrastructure components of the LHWP Phase II, the majority of which must be completed prior to the construction of the main works: the Polihali dam and transfer tunnel. Lesotho Electricity & Water Authority The Lesotho Electricity Authority Amendment Act of 2011 was passed in order to broaden the mandate and scope of the former Lesotho Electricity Authority (LEA). This saw the creation of the Lesotho Electricity and Water Authority (LEWA), which in 2013 assumed responsibility for regulation of the Water and Sewerage Company (WASCO) in addition to the Lesotho Electricity Company (LEC).

and governance for development cooperation, with €142 million having been set aside for the implementation of projects in these areas. Some €28 million is earmarked for energy production, electrification, conservation and efficiency, and €78 million for the expansion of water supply and sanitation infrastructure and rain water collection.

Snow at Mohale Dam © LHDA

ENERGY The Department of Energy (DoE), which operates under the Ministry of Energy and Meteorology, is tasked with managing and administering the energy sector in Lesotho as well as developing policies and strategies to ensure the security of such supplies and services. The Rural Electrification Unit (REU) is mandated to develop, operate and maintain transmission and distribution networks as well as rural electrification.

Activities regulated by LEWA thus encompass the generation, transmission and distribution of electricity, and the supply as well as import and export of electricity, not to mention the regulation of the following urban water and sewerage services: water treatment, production, transmission, distribution and supply, storage of water for treatment, distribution or onward supply, the delivery of water to trunk or main pipelines, and the treatment and disposal of wastewater by the sewerage system. LEWA’s prime responsibility is to ensure that water and electricity are provided to industry and business, as well as domestic, public and government consumers, private education and health institutions, in a manner that is affordable, reliable and cost effective. This entails putting mechanisms and policies in place that encourage, promote, monitor and evaluate local private sector participation in the efficient financing and timely construction of water and electricity programmes, as well as the collection of data on water and electricity schemes in all constituencies. LEWA also protects the interests of all consumers of electricity, water and

sewerage services in relation to access, quality and price of service, and makes appropriate recommendations to Government. Important developments under LEWA include its administration of the Universal Access Fund, preparation of legal and regulatory frameworks for both electricity and urban water and sewerage services, and sound financial management strategies. Furthermore, the Authority has developed and implemented mechanisms to expedite the resolution of customer complaints. LEWA’s 2014-2019 Strategic Plan takes into account its broadened scope of services. A set of incremental activities and projects form part of its planned strategic initiatives, with the focus on harmonising roll-out of strategies. As the roles and responsibilities of the various key players in the energy sector are not clearly defined, a bridging programme by the EU under the National Indicative Programme (NIP) of the 11th European Development Fund (EDF) has been proposed to assist in addressing this issue. The EDF, which runs from 2015 until 2020, identifies the focal areas of water, energy

Lesotho is well placed to expand its production of indigenous renewable energies, and has substantial hydropower, wind and solar resources. However, the energy sector is currently characterised by a reliance on biomass (wood and dung) and imported coal and petroleum. Electricity makes up only 4 percent of Lesotho’s energy balance, and as of 2016 there was a household connection rate of 38 percent. Access to electricity is predominantly enjoyed in urban areas, where about 60 percent of households are connected to the network. The country’s mountainous landscape and remoteness of rural settlements results in high grid extension costs, and access to electricity in these areas is just over 14 percent. The 2016 Population and Housing Census shows that household penetration of electricity in Lesotho is 59.7 percent in urban areas, 52.3 percent in the peri-urban areas and 14.2 percent in the rural areas. The rest of the population relies on multiple fuel sources to meet their energy needs. Paraffin is the most used type of lighting fuel

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(48.0 percent), and is also commonly used for heating households (38.8 percent). Gas is popularly used for cooking in the urban areas (49.2 percent), while in the rural areas wood is used (65.1 percent). Government has set targets to expand the electrification rate to 50 percent of the population by 2020, along with ensuring security of supply using locally available renewable energy resources (a targeted 200 megawatts) and constructing strategic fuel reserves and regional depots to assist other sectors of the economy. Electricity demand (a significant proportion of which comes from manufacturing and the garment industry) currently outstrips supply, and Lesotho imports about 44 percent of its annual electricity needs. The ‘Muela hydropower plant has a capacity of 72 megawatts, with peak demand expected to grow to 304 megawatts by 2020 and 432 megawatts by 2030. Developed by the DoE, Lesotho’s Energy Policy (2015-2025) aims to make energy universally accessible and affordable in a sustainable manner, with minimal negative impacts on the environment. The policy provides for the participation of public agencies, nongovernmental organisations (NGOs), research and training institutions, private organisations and development partners, among others. Local private partners are invited to become involved in energy initiatives, with the new policy stipulating 50 percent domestic participation. This includes the distribution and transportation of petroleum. The Strategic Plan for the Ministry of Energy and Meteorology (2015/16-2020/21) focuses on climate change mitigation and adaptation strategies which include national sustainable energy initiatives. The Sustainable Energy Strategy and Action Plan (2018-2022) has been developed to assist in the implementation of the Energy Policy. Electricity supply industry The electricity supply industry in Lesotho is dominated by two state-owned entities. The Lesotho Electricity Company (LEC) is the monopoly transmitter, distributor and supplier

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of electricity, while the Lesotho Highlands Development Authority (LHDA) is the main generator of electricity through its 72-megawatt ‘Muela Hydropower Plant, which is part of the Lesotho Highlands Water Project. There are also some small hydro projects providing generation capacity totalling around 4 megawatts. Lesotho’s electricity production capability currently meets 56 percent of energy requirements, with the balance supplemented with imports from South Africa (Eskom) and Mozambique (EDM).

market in October 2016 through acquisition of Exel Petroleum Lesotho. In addition to owning and operating a fuel terminal of 1 200 cubic metres in Maseru, the company has a footprint of 22 retail sites, situated predominantly in the lowlands of the country. Furthermore, Puma Energy LS supplies various customers outside of its retail chain, in sectors such as mining, construction (buildings and roads), transport and independent business.

Changes took place in the electricity industry in the post-2000 period when, as part of its programme to restructure state-owned assets, the Government decided that LEC would be privatised while ‘Muela would be ring-fenced within the LHDA to ensure that its costs were known. The LEC is responsible for electrification within its service territory, with rural electrification efforts currently managed by the Rural Electrification Unit of the Department of Energy. A Universal Access Fund disburses monies in order to subsidise the capital costs of electrification in the country, with the goal of facilitating the development and expansion of electricity service infrastructure.

Accelerating the electrification programme is a key policy tenet of Lesotho’s Government. In addition to its focus on renewable and sustainable energy sources which have limited negative impact on the environment, the Ministry of Energy and Meteorology is committed to fast-tracking electrification projects and electricity connections.

Expanding electrification

The LEC’s budget covers the connection of more than 15 000 new customers to the electricity grid annually.

Puma Energy is a midstream and downstream petroleum company which operates across five continents in 47 countries, including Lesotho. One of the largest independent storage and downstream companies in Sub-Saharan Africa, it operates from more than 662 retail sites and 29 airports in the region, and provides deliveries to industrial and commercial customers in some of the most remote areas.

A M151.76 million loan agreement from the African Development Bank (AfDB) in 2017 is financing the Urban Distribution Rehabilitation and Transmission Expansion Project, which aims to rehabilitate 188 kilometres of distribution lines and switching stations and expand the transmission network through upgrading a substation and building 8 kilometres of transmission lines. The networks include Quthing to Mohale’s Hoek, Roma to Thaba-Tseka, Maseru, Teyateyaneng, Botha-Bothe and Letšeng Diamond Mine in Mokhotlong. Completion of the project is scheduled for December 2019.

Puma Energy is a well-resourced and wellmanaged business, with global know-how of the fuel industry and an understanding of the challenge of delivering sustainable growth in both emerging and mature markets. Its key success factors include: wise and decisive investments; operating in strategic locations; operating efficiently; employing talent; and being responsive and flexible.

Transmission and distribution initiatives in 2018/19 focus on planned system improvement and network upgrading projects that address the aged and overloaded network that is responsible for frequent power outages and hence affects the stability of power supply to existing customers. The upgraded network will accommodate load growth and have the capacity to connect new customers.

Puma Energy LS (Pty) Ltd entered the Lesotho

The focus of Lesotho’s energy sector is presently

Puma Energy

directed towards increasing energy access in remote areas by developing off-grid energy and energy trading centres led by the private sector. Improving access to electricity for rural communities continues to be a major challenge. Even though Lesotho is a relatively small country, around two-thirds of its land area comprises mountainous terrain which is sparsely inhabited. The majority of rural villages lack electricity and the probability of connecting them to grid electricity in the foreseeable future is very low, given the commercial nature of grid electricity and the generally low income levels among the population. The Rural Electrification Programme was launched in October 2017 in the three villages of Ha Sofonea, Ha Majara and Ha Tonki in ThabaBosiu. Being undertaken at a cost of M6 million, this represents the first phase of the project and will benefit 545 households. The initiative will be extended to other rural villages across Lesotho in due course, with the aim of electrifying 7 000 rural households per year. To enable a community to be electrified, there has to be a village or community electricity scheme, spearheaded by a committee, with each family paying a minimum deposit of M500.00 to be connected. The balance of the cost (M1 500.00) is paid either on a monthly basis for a period of seven years, or by a pre-determined surcharge each time that electricity is purchased. Renewable energy The Ministry of Energy and Meteorology has stated that present trends in energy demand coupled with over-reliance on imported fossil fuels by the majority of Basotho are unsustainable on many fronts – environmentally, socially and economically. Without decisive action, energyrelated emissions of carbon dioxide (CO2) will continue to rise. It is therefore imperative for Lesotho to change its current path. Such a change entails an energy revolution with lowcarbon energy technologies playing a crucial role together with widespread deployment of various types of renewable energy, carbon capture and storage, and new transport technologies.

VISION To be a caring and profitable electricity provider, aspiring to be the best in class.

MISSION Despite the weather, maintance continues as scheduled.

To provide affordable, reliable, safe and environmentally friendly electricity for sustainable economic growth and improved quality of life for the people of Lesotho, in line with good governance, through a motivated workforce.

VALUES Excellence in customer care, safety and quality consciousness, corporate governance, regulatory compliance, zero tolerance to corruption, responsiveness to employee needs, team work approach, adaptive to change.

Security of Supply

Some of Qacha’s Nek’s Herdboys attending an Anti-Vandalism campaign

The electricity production capability of the country currently covers 56% of energy requirement while 44% percent is imported from Eskom, in the Republic of South Africa, and from EDM in Mozambique. Over the years, power generation shortage has pushed electricity prices over the roof in the Southern African region. The situation is envisaged to remain the same until such time that the region has invested enough in the generation of power. This unfavourable state of affairs compels authorities to embark on local power generation to protect Lesotho from high imported energy costs. Current and Future Plans of System Improvement and Refurbishment In September 2018, LEC completed the refurbishment and upgrade of network manager at its control

Installation of a new transformer at Kolonyama.

centres that included hardware and software for the SCADA system for improved remote operation of LEC substations. The plan is to install power-line carriers between Mazenod and Mohale and also to install Fox, which is a multi-plexor that combines signals between Mabote, Maseru Central and Border substations. The intention is to expand and improve remote monitoring of LEC network and response time during restoration of power.

Transmission and Distribution Projects With the current budget allocated, more than 15,000 new connections will be made. There are planned system improvement and network upgrading projects addressing the aged and over loaded network that causes frequent power outages and hence affecting stability of power supply to existing electricity users. The upgraded network will accommodate load growths and have a capacity to connect new customers.

connection, wiring testing, wiring-retesting, survey, re-survey, licensing for wiring, meter testing and house extension remain unchanged for the financial year 2018/19. The new tariff was effected on the 01 August 2018.

Social Responsibility and Company Image Corporate Social Responsibility is one of the company’s activities it exercises to build reputable image as well as to make positive impact towards the community it serves. LEC has found it prudent to consider social responsibility a priority and has therefore committed to allocate annual budget towards the activity. During the reporting period, 2017/2018 LEC donated a total of M492, 440.00 to different recipients for their diverse needs. These, included Corporate and or Institutional events, awards for academic excellence at Tertiary Institutions and less privileged and vulnerable groups.

Safety and Risk Management Effective risk management starts with a commitment to health and safety rules for both employees and customers. Consequently LEC convened a series of workshops that took place in three regions of the country. The purpose of the workshops was to create awareness and enhance knowledge on Safety, Occupational Health, Environment and Quality (SHEQ), attitudes and practices in the workplace.

Tariff Determination During the year under review, LEC submitted an application for tariff adjustment of the proposed detailed revenue requirement and the LEWA Board approved increment of Energy and Maximum Demand charges by 4% for all customer categories. Charges for

The Area Manager for Quthing Mr. Setlalemarena Moshoeshoe, handing over a cheque to the best student in Electrical Installation .

More so, every sector of the economy must be actively involved if the country is to achieve its greenhouse gas (GHG) emission reduction targets. Lesotho is fortunate to have an abundance of solar, wind, and hydropower resource potential that well surpasses its relatively modest energy needs. Realising the potential of these resources is a focus of the Government’s Vision 2020 strategy, and investment in renewable energy is viewed as a means for addressing many of the energy sector challenges faced by the country. Increased generation capacity from utility-scale solar photovoltaic (PV), wind and hydropower could reduce Lesotho’s dependence on imports from South Africa, while decentralised technologies powered by solar, wind or biomass could bring access to modern energy services to the Basotho who currently rely on biomass and kerosene to meet their energy needs. Approved for implementation in 2016, ‘Development of Cornerstone Public Policies and Institutional Capacities to Accelerate Sustainable Energy for All’ is a Global Environment Facility (GEF) project. Its aim is to develop financial regulatory systems to catalyse investments in renewable energy-based mini-grids and energy centres. Government is also developing the Low Emission Investment Plan to facilitate the deployment of renewable energy technologies.

Solar power projects There are plans to construct a 40-megawatt solar power plant at Ha Ramarothole in Mafeteng district. Work on this project was expected to commence during 2018 as soon as an environmental impact assessment (EIA) had been completed. An amount of M60 million is earmarked for the project, and its cost per Kwh should be no more than 6 US cents.

Installation of a new transformer at Kolonyama © LEC investments in three on-grid technologies (solar, wind and small hydro) and three off-grid technologies (micro-grids, solar home systems and improved cook-stoves). The programme consists of two core investment-focused components and a third technical assistance component.

Lesotho is eligible for funding under the World Bank’s Scaling Up Renewable Energy Programme in Low Income Countries (SREP), which provides financing for renewable energy technologies, including solar, geothermal, wind, small hydropower (below 10-megawatts per site) and bioenergy. The SREP Sub-Committee allocated Lesotho an envelope of US $30 million in this regard, and an investment plan has been prepared with input from the World Bank, International Finance Corporation (IFC) and AfDB.

For the first component, SREP resources are being used to finance the development of a 20-megawatt solar PV plant – the first commercial utility-scale plant in Lesotho. This has been chosen as utility-scale solar is competitive with imported energy and is economically and financially viable. By contrast, wind is economically viable, but only financially viable with subsidies. The economic viability of small hydropower plants is site-specific, and they require subsidies to be financially viable.

The plan includes an assessment of various renewable energy technologies suitable for Lesotho, with Government favouring technologies that result in job creation, improve energy security, and promote increased private sector investment. SREP funds will be used to support

According to the Central Bank of Lesotho, the completion of green energy projects has the potential to boost growth in the electricity subsector in the medium term.

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As regards the second component, SREP resources would be used to finance the development of 9-megawatts of solar PV-battery hybrid micro-grids through an off-grid concession scheme. The SREP would also finance the development of 0.77-megawatts of solar home systems (SHS), other solar technologies, and improved cook-stoves (ICS). Micro-grids are competitive with diesel generators, but the cost might still be too high for rural customers. On the other hand, ICS pay for themselves within a few months because of offset fuel costs, and they are economically and financially viable if investment is financed. SHS needs subsidies to be affordable, and although solar pumps are competitive with diesel pumps, it is unclear if other solar technologies are also competitive. Relating to the third component, US $3.6 million in SREP grants would be used for: an AfDB-managed renewable energy integration study (US $0.6 million); World Bank managed site specific prefeasibility studies; and project preparation (US $1.5 million).

Furthermore, a 20-megawatt Solar PV Project (discussed under the SREP investment plan) is to become the first such utility-scale solar project in Lesotho, with the power generated to feed into the national grid in Mafeteng. This follows the approval of a US $695 500 grant to NEO I SPV, a subsidiary of IPP OnePower Lesotho. The grant comes from the AfDB-managed Sustainable Energy Fund for Africa (Sefa) to support the structuring of the project and lead it to bankability. This is intended to be a reference solar PV project for the SADC region. These projects will contribute to a strategic phase-out of costly power imports, thereby decreasing retail electricity prices in Lesotho. They will also decrease GHG emissions by reducing imports of thermal-generated power from South Africa, and support rural development by stabilising the grid in Mafeteng province. Hydropower initiatives The outcome of the initial Lesotho Highlands Water Project (LHWP) Phase II feasibility study was not conclusive in respect of the hydropower component, which is still to be confirmed following the completion of further feasibility studies which are at an advanced stage. Studies have looked at both pumped storage and conventional hydropower options. The decision has been taken to defer the pump storage option due to prevailing economic conditions and advance the conventional options. This focuses on two sites on the Senqu River and one on the Malibamatšo River at Oxbow. Studies in respect of these locations are expected to be substantially completed by the end of 2018.

The ICT industry has been one of Lesotho’s best-performing sectors for many years, with technological advancements and new products, particularly in the mobile phone industry, having driven growth. This has seen coverage increase for Internet services and as well as the rapid expansion of mobile money services by mobile operators. Current initiatives emphasise the importance of improving the operating environment and backbone infrastructure, as well as achieving the goal of universal access to ICT services for all Lesotho’s citizens. As stated, mobile telephony has been at the forefront of growth in Lesotho’s ICT sector, and there has been sustained and ongoing investment in the country’s communications infrastructure, wireless and fibre networks, data centres and switches. These developments are complemented by service centres and hotspots at schools and community centres, where Internet and broadband facilities are being made available even in the most remote areas of the country. However, Lesotho’s topography, together with low population densities in the mountain regions, continues to challenge the goal of making universal access a reality and preparing Basotho to participate fully in the digital future. According to the 2018 African Economic Outlook’s profile on Lesotho, while ICT has played a role in supporting growth, the country continues to suffer from many infrastructure gaps relative to its Southern African Customs Union (SACU) comparators. These relate to the quantity and quality of ICT skills, the level of training, and the education and skills of tomorrow’s workforce. Below-par Internet speeds and the high cost of infrastructure continues to constrain access and growth. The Central Bank of Lesotho (CBL) 2017 Annual report indicates that the positive performance of Lesotho’s services sector during 2017 was supported by output growth in the ICT sector. However, the CBL’s Macroeconomic Outlook for June 2018 suggests that growth has subsequently contracted, and output is expected to main static in the 2018-2020 period. The declining trend in services is spurred by

(its parent body) and 1 percent of the annual Net Operating Income (NOI) of each of the main network operators. Its name has been changed to the Universal Service Fund (USF) to reflect the emphasis on service over access.

Hloahloeng Universal Service Fund Site © LCA

Government policy is presently directed towards enhancing broadband access. As mobile broadband and mobile voice are implemented using the same basic infrastructure, extending mobile broadband infrastructure to unserved areas will equally meet the need for access to voice services across the country. In addition to mobile network expansion, which includes mobile broadband, the Fund is committed to the development of broadband in the education sector, where both access and usage are targeted.

Information &

Communications Technology Information and Communications Technology (ICT) is a key enabler of socioeconomic development, and given the benefits associated with the use of modern technology, access to and adoption of ICTs continues to expand rapidly. low consumer demand coupled with high levels of indebtedness, with spill-over effects from the South African economy continuing to adversely affect demand. The 2018/19 Budget Strategy Paper, covering the period up to 2020/21, underlines the strategic importance of supporting physical and institutional infrastructure development for growth and employment. Key strategic actions include facilitating the provision of basic infrastructure to improve connectivity through ICT, and developing innovative solutions to improve accessibility of

ICT infrastructure for e-commerce, e-education, e-health and e-government, among others. Universal service and access Lesotho’s Universal Access Strategy was developed in 2001, and its present mandate is to ensure that all citizens have access to communications services; namely: telephony, broadband, broadcasting and basic postal services. The Universal Access Fund (UAF) was established in 2009 with seed capital of M10 million, and receives 25 percent of the revenue raised by the Lesotho Communications Authority

The USF’s Strategic Business Plan (SBP) for the three-year period covering 2017/18 to 2019/20, which is also informed by Lesotho’s commitments to the Southern African Development Community (SADC) and the United Nations, aims to meet the following targets for broadband: •

80 percent of the population of each SADC Member State to be covered by broadband services by 2020

•

Broadband connections and usage to all primary and tertiary schools to allow e-learning by 2020

•

Broadband connections and usage to 70 percent of health facilities to allow e-health by 2020

•

Broadband connections and usage to all public sector agencies to allow for e-governance by 2020

•

Broadband connections to 50 percent of the SADC Member State households by 2020

•

Broadband services should not cost more than 5 percent of national average disposable monthly income by 2020

E-government initiative A fast, safe and reliable platform for all government telecommunications and Internet services will allow ministries, private businesses

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and individual citizens to develop a meaningful and significant web presence. E-government services, where Basotho can access educational materials, health and consultative services, and apply for enrolment in schools and tertiary institutions, are fast becoming a reality. The Ministry of Communications, Science and Technology announced in the 2018/19 budget that it was beginning the process of integrating all government systems presently running on separate platforms. This includes systems for civil registry, human resources, payroll, pension system, visa, residency permits and working permits. It is also assisting the Ministry of Labour and Employment to implement the automated processing of work permits to improve efficiency and eliminate fraud under the current manual system. The E-Government Infrastructure Project is co-funded by the Lesotho Government and the African Development Bank (AfDB) in an amount of over M12 million. It has four main components; namely: strengthening of core government network infrastructure; strengthening of data centres; improvement of the government e-portal; and skills development. Implementation of Lesotho’s E-Government Infrastructure Project kicked off in October 2016 and it is expected to be completed by August 2019.

The Communications Policy of 2008 established the framework for regulating the telecommunications, broadcasting and postal sectors, in line with the Southern African Development Community (SADC) Protocol on Transport, Communications and Meteorology. Its primary aims are to: ·

Strengthen the regulatory capacity of the LCA

Reflect and promote the convergence of services and networks based on the Internet

Foster universal access to a diverse range of high-quality communications services at affordable prices, including advanced networks, in order to enable Lesotho to participate in the global information society

Promote a competitive communications market, which entails facilitating the cooperative deployment and sharing of infrastructure while promoting service-based competition

LESOTHO COMMUNICATIONS AUTHORITY

The LCA’s main objective is to facilitate new entries into the communications market and the provision of new services, including converged communications services, while promoting Lesotho’s participation in the global information society. Its mandate covers issuing licences to operators, promoting fair competition, approving tariffs, managing the radio frequency spectrum, empowering and protecting consumers, and type-approving terminal equipment. The authority also cooperates with the Independent Communications Authority of South Africa (ICASA) in regulating telecommunications and broadcasting, particularly with regard to controlling signal spill-over between the two countries.

The communications sector, which now encompasses telecommunications, broadcasting, radio frequency and postal services, is regulated by the Lesotho Communications Authority

One of the authority’s prime tasks is to promote a competitive telecommunications market through appropriate regulatory interventions, while creating opportunities for all Basotho to benefit

Components completed so far include the construction of five Internet towers at Senqunyane in Mokhotlong, Likhoele in Mafeteng, Ha Ts’ilo in Maseru, Malimong in Berea and Thamathu in Qacha’s Nek, among others. During 2018, preparations were underway to construct a tworoomed power house for the tier III data centre which has been built in Mohale’s Hoek.

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(LCA). This follows amendments to the Lesotho Telecommunications Authority Act of 2000 to include electronic media, which saw the promulgation of the Lesotho Communications Authority (amendment) Act of 2008.

LESOTHO COMMUNICATIONS AUTHORITY CORPORATE MANDATE: VISION:

Broadcasting facilities

Access to affordable and reliable communication services throughout Lesotho by 2020.

(f) To facilitate infrastructure sharing by operators to foster universal access;

MISSION:

(g) To efficiently manage universal access to communication services to ensure that communications services are available to Basotho in underserved and unserved areas; and

To facilitate provision and accessibility of quality communications services.

VALUE STATEMENT: The Authority shall maintain integrity, professionalism and transparency in regulatory and corporate affairs.

MOTTO: Fairness to all and allegiance to none. Lesotho post office in Maseru

Lesotho Communications Authority (LCA) is a statutory body, established in June 2000, with broad mandate of licensing operators, facilitating the development of and regulating the communications sector in Lesotho. This mandate entails: granting licences to operators, promoting fair competition, approving tariffs, promoting sector development, managing the radio frequency spectrum and numbering resources, empowering and protecting consumers, type-approving terminal equipment and performing other related responsibilities. The general objectives of the Authority are outlined in the Communications Act of 2012, and are as follows:

(h) To introduce an element of self-regulation in the broadcasting services. The Communications Act 2012 has also created a statutory entity, the Universal Service Fund whose functions are to extend access to basic communication services to unserved and underserved areas that network operators consider not commercially viable. Since its inception, the Fund has provided voice services through 54 GSM network infrastructure projects. This infrastructure has benefited at least 130,000 people in about 900 villages. All districts of the country have benefitted from the Fund. Apart from mobile network expansion, which includes mobile broadband, the Fund is also committed to the development of broadband ecosystem and digital literacy in the education sector. The strategy is to promote broadband use in the education sector whereby the programme addresses both access and usage..

Lesotho has experienced a decade of high growth in the communications sector, driven by mobile phone technology. The national goal is to build on this success and continue to improve the operating environment and backbone infrastructure (NDSP 2014). The objective of the Authority is to facilitate new entry into the Lesotho communications market, the provision of new communications services, including converged communications services and promote Lesotho’s participation in the global information society. The Authority also handles issues of domain registration and more details are available on: www.nic.ls

(d) To introduce competition regulation safeguards on dominant licensee(s);

Talk to us about the opportunities available in the ICT, broadcasting and postal sectors in Lesotho.

(a)

To integrate the regulation of telecommunications, broadcasting and postal services to introduce efficient methods and practices which would meet international standards;

(b) To facilitate the introduction of a converged regulatory regime for the provision of communication service parameters;

USF site in rural areas

(e) To enhance tariff regulation on operators classified as dominant licensees;

Lesotho Communications Authority: 30 Princess Margaret Road, Old Europa P.O. Box 15896, Maseru 100, Lesotho. Tel: +266 2222 4300 / +266 5222 1300 / Customer Care: +266 2232 6784 Fax: +266 2231 0984 / +266 2232 6081 Email: info@lca.org.ls or licensing@lca.org.ls Website: www.lca.org.ls

“FAIRNESS TO ALL AND ALLEGIANCE TO NONE” INFORMATION & COMMUNICATIONS TECHNOLOGY | 63

from the ICT revolution. This is being undertaken with the overall strategic objective of ensuring the delivery of a universal, affordable and high-quality service which includes rural areas and lowincome subscribers. LCA National Household Survey In its endeavour to provide reliable, comprehensive and comparable ICT statistics, in 2017 the Lesotho Communications Authority (LCA) conducted a national household survey to assess the state of ICT in the country, in partnership with Research ICT Africa (RIA), the International Telecommunication Union (ITU) and International Development Research Centre (IDRC). The main objective of the survey was to measure access to and use of ICTs at household and individual levels in Lesotho. Across Lesotho, 52.8 percent of households have a radio, while 29.5 percent have television, 16.6 percent a mobile phone, 6.3 percent a laptop, 3 percent a desktop, 1.7 percent a tablet/iPad and 1.9 percent a fixed telephone line. Nationally, household Internet connectivity stands at 3.6 percent. There is a substantial disparity between rural settlements (1 percent) and urban (6.7 percent). The highest connectivity is seen in Maseru district, and the lowest in Thaba-Tseka. In connecting to the Internet, the majority of households use a mobile phone (83.7 percent), followed by a USB modem/card at 13.9 percent and fibre/ADSL at 2.5 percent. Around 11.8 percent of individuals owned a desktop computer as of 2017, against the 25.2 percent who owned laptops, and 7.8 percent who were tablet or iPad users. Mobile phone owners made up 21.3 percent of the population, with 44.5 percent of mobile phones being smart phones. The LCA found that 67.5 percent of the population had never used the Internet. Of the individuals who used Internet, most had first used a mobile phone to access the Internet (85.8 percent), while others had first used a desktop or laptop (13.2 percent) or a tablet or iPad (1.0 percent). The main reasons for Internet usage were cited as: social networking (46.7 percent); educational purposes (23.9 percent); instant messaging

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(14.7 percent); entertainment (8.2 percent); work related (4.9 percent); and free data/ connectivity (1.6 percent). The predominant activities performed on the Internet by individuals were: social networking (86.3 percent); instant messaging (74.8 percent); downloading music/ videos (54.0 percent); fact checking/definitions (53.1 percent); Internet telephony (49.2 percent); posting and reading information (45.4 percent); downloading software/apps (42.2 percent); information about health (39.3 percent); and playing/downloading videos/computer games (32.3 percent). It was found that 43.2 percent of individuals used mobile money services, 2 percent use mobile banking and 4.1 percent use both mobile money and banking. However, more than half of the population (50.7 percent) do not use any mobile money services, and just 9.8 percent of Basotho use Internet banking. ICT and education The ‘School Connect’ project is part of a joint effort between CAMARA Lesotho, LCA, Econet Telecom Lesotho (ETL) and Vodacom Lesotho. The aim is to enable junior and senior secondary schools and TVET institutions to access ICT through: •

An Internet access subsidy provided by either ETL or Vodacom Lesotho

•

A website and email for the school

•

Training for teachers and school management in effective use of ICT for teaching and for introducing ICT to learners

There are also plans to provide institutions of higher learning with ICT network equipment, as the LCA has established that the majority of such institutions are not able to provide Internet access for learning and research. In some of the institutions, the service is available but it is too overloaded to be of use. The main challenges cited by the institutions are the prohibitive cost of bandwidth and/or required infrastructure. Against this backdrop, the Authority has decided to pilot a free WiFi access programme for institutions of higher learning over a threeyear period. The programme is intended to

supplement rather than replace Internet services that the institutions have contracted or plan to contract in the future. The programme will be continuously evaluated for effectiveness, and the need for refinement or continuation after the initial period. Institutions targeted include the National University of Lesotho (NUL), Limkokwing University of Creative Technology (LUCT), Lerotholi Polytechnic (LP) and the Lesotho College of Education (LCE), among others. A request for proposals was sent out in 2018.

revolutionise the global communications industry. One of the world’s first commercial 5G networks is being piloted in Maseru at the Central Bank of Lesotho as well as the head office of Letšeng Diamond Mining Company, and there are plans to extend the scheme. Set up by Vodacom on the 3.5 GHz spectrum, the network is able to deliver speeds of up to 700 megabits per second. The high speeds offered by 5G technology mean it has the potential to do away with the need for expensive fibre cabling.

TELECOMMUNICATIONS The past decade has witnessed robust growth in the telecommunications sector, much of which has taken place on the African continent, and has been focused on mobile and wireless technology. The Communications Sector Liberalisation Framework states that there will be no quotas set for the number of participants in any service. All existing network operators as well as specified classes of Internet Service Providers (ISPs) are allowed to operate international gateways, and voice and data services are fully liberalised. Telecommunications services in Lesotho are managed by the privatised national operator, Econet Telecom Lesotho (ETL), with mobile telephony provided by ETL and South Africabased Vodacom. Vodacom Lesotho (VCL) was launched in 1996, followed by Econet Ezi-Cel (EEC) in 2002, with the latter a subsidiary of the national fixed-line operator. In 2008, with the controlling interest in both EEC and Telecom Lesotho passing to the Econet Group, the two were merged to form the current Econet Telecom Lesotho (ETL). Both operators have launched 4G LTE services, which address the relative scarcity of fixed line connections in the country through the provision of high-speed mobile Internet. Furthermore, they also offer mobile money services, which have not only provided instant, convenient and cost-effective remittance corridors, but also put financial services within reach of the unbanked and under-banked sectors of the population. Lesotho is currently in the news as a test venue for high-speed 5G mobile technology that is set to

In 2018, Lesotho became the first country in Africa to pilot revolutionary 5G mobile technology. According to the ITU’s 2018 profile on telecommunications in Lesotho, the country has: •

0.5 fixed-line telephone subscriptions per 100 inhabitants

•

106.6 mobile cellular subscriptions per 100 inhabitants

•

0.1 fixed (wired) broadband subscriptions per 100 inhabitants

•

49 mobile broadband subscriptions per 100 inhabitants

•

8.9 percent of households with a computer

•

30.4 percent of households with Internet access at home

•

29.8 percent of individuals using the Internet

Broadband is an area that requires particular focus because of the potential it has to contribute to socioeconomic development and job creation. However, while 90 percent of the country has mobile broadband coverage, the 2016 Population and Housing Census found that 67.5 percent of citizens had never used the Internet, 57.1 percent did not know what the Internet was, and 49.3 percent did not own a device for accessing the Internet. Furthermore, 40 percent of those who did use the Internet indicated that their usage was limited by the fact that it is too expensive, and 20.7 percent were limited by the slow speed of their Internet connection.

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A minimum of 3G coverage is stipulated for new mobile network expansion projects, and priority areas will be upgraded to 3G or 4G under the Universal Service Fund. In order to achieve true broadband, some areas also require improvements in the backhaul, including migrating from microwave to optical fibre. The Fund will further make provision for incentivising the roll-out of fixed backbone infrastructure where there is a sound business case for such. Investment opportunities The Lesotho National Development Corporation (LNDC) is currently seeking an infrastructure investor for the Lesotho National Broadband Network (NBN) Initiative, to partner with the LNDC (as anchor investors) and telecommunications service providers. The intention is to develop a shared telecommunications infrastructure company in which both parastatal and private sector players could collaborate on telecommunications infrastructure spending to achieve better results. This will make the most of capital investment by avoiding duplication of infrastructure and maximising coverage, thereby encouraging service providers to compete – based on service offerings and not infrastructure ownership – to drive economic development and job creation. The scope of the NBN encompasses the consolidation of available telecommunications infrastructure and expanding the base to make it available on an Open Access, non-discriminatory and uniform pricing basis to a large number of service providers. To ensure international communications price efficiency, it is proposed to consolidate multiple international capacity links into the NBN. An integral part to the NBN business plan includes the deployment of additional ICT infrastructure in the form of an ICT City, inclusive of data centre and call centre infrastructure, to stimulate bandwidth demand. It is envisaged that the project cost will be some US $150 million. Econet Telecom Lesotho Econet Telecom Lesotho (ETL) is at the core of Lesotho’s economy. Econet has the longest

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fibre optic network in the Mountain Kingdom and is the supplier of choice for most business customers. ETL’s position as the partner of choice is affirmed by its ability to respond to every call for broadband services from government and business regardless of their geographical location. According to Lebohang Ramaisa, General Manager Enterprise Business, communication services have become pivotal tools for business operations and the lifeblood of their growth. As such, Econet is committed to investing in infrastructure that contributes positively to building sustainable enterprises and improving government services as well as the lives of ordinary Basotho, regardless of where they reside. This strategy is apparent in the way Econet enables most of Lesotho’s large enterprises, such as mining companies, to access modern, high-speed broadband services, even in the Kingdom’s remote valleys and mountain regions. These companies enjoy high-speed connectivity with their head offices as well as other partners across the globe at all times. Most mines, despite being located deep in the mountains of Lesotho, have heightened demand for both speed and availability of broadband services. In addition, Ramaisa explains that over and above ETL’s fibre network, it is the diverse range of business solutions it offers that has positioned it as the partner of choice to businesses and government. ETL have started working with enterprises to improve the efficiency of their existing investment in broadband services by deploying advanced VoIP and Telephone Management Systems that take advantage of the benefits brought by cloud-based technology. These solutions enable businesses to modernise their communications services experience as well as their budgeting and reporting. For Small and Medium Enterprises, ETL is putting together affordable bundles which will enable them to make calls throughout the month, receive Internet for their business and add security to their office network and building with mid-size firewall devices and surveillance cameras.

As data is now part of people’s lives, ETL has been striving to provide Econet fibre broadband services to residential areas, with many such areas in Maseru already enjoying Econet fibre. With this service, Basotho are able to enjoy highspeed Internet and WiFi at home, at a price which is better than any other broadband service in the country. In recognition of the fact that data is no longer a luxury but a necessity, and that in the next few years companies as well as individuals will rely even more heavily on data, ETL is building its infrastructure to play a crucial role in this new era. The vision is to connect every home. ETL is fully committed to assisting Basotho, both businesses and individuals, to reach their full potential despite challenges that the terrain and Lesotho’s extreme weather may pose. ETL invites all enterprises and businesses to contact them to discuss communication challenges, as the provider is confident that they have the right solutions to assist any enterprise. Other voice and data providers Vodacom Lesotho (VCL) is owned by the Vodacom Group (80 percent) and local SekhaMetsi Consortium (20 percent). VCL has been operating in Lesotho since 1996, and has over the past 22 years created a solid distribution network that has made it Lesotho’s leading operator. At the end of the 2017/18 financial year, VCL had 1 366 000 mobile customers, 673 000 data customers, 388 000 30-day active mobile money (M-Pesa) customers, and minutes of use (MoU) per month had risen to 86 from 82 in the previous year. VCL enjoys superior nationwide coverage. There are 3G sites throughout Lesotho and additional 4G sites have been rolled out to cover all districts. Further, according to the Vodacom Group’s interim report of November 2018, in September 2018 VCL became the first company to commercially launch 5G on the African continent. A quarter of Vodacom Lesotho’s cell phone network is powered by ‘green’ base stations which use energy saving technologies such as wind and solar power to help reduce carbon emissions.

BROADCASTING & MASS MEDIA The broadcasting industry is dominated by private and commercial broadcasting, with both electronic and print media represented in the form of private radio and television stations and independent newspapers. The difference between broadcasting and telecommunications is accounted for in the Communications Act of 2012, which replaced the Lesotho Telecommunications Act of 1979 and the Post Office Act of 1979 and introduced reforms to the broadcasting industry as well as providing for the independence of the Lesotho National Broadcasting Services (LNBS) and the postal services. The Act also established four categories of broadcasters: public service, community, private and commercial. One of the principal functions of the Communications Act is to regulate the granting of licenses by ensuring that qualifying operators give the public access to a ‘diverse range of broadcasting services’. This covers a wide spectrum of broadcasters, who are in turn expected to offer a varied range of broadcast content, including news, sports, entertainment, religious, educational and cultural programming. The Radio Frequency Spectrum Management Policy of 2014, which replaced the Radio Frequency Spectrum Policy of 2008, cleared the way for the application and deployment of innovative technological developments, especially those that enable and extend broadband uptake in Lesotho. In this respect, the LCA Board extended the use of Industrial, Scientific and Medical (ISM) frequencies beyond wireless Local Area Networks (LANs) and hotspots to incorporate wireless mesh networks. Most of Lesotho’s radio and television services are concentrated in the urban areas or lowlands, while the remoter rural areas have either one or two broadcast services or no coverage at all of terrestrial television or radio. Constraints to accessing television broadcasting include the cost of equipment and satellite television subscriptions, not to mention a lack of electricity. There is a pressing need to develop an enabling policy as well as institutional and regulatory frameworks to facilitate broader coverage of

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both television and radio. At present there is a lot of infrastructure duplication, resulting in limited national coverage. A more economical approach is one that makes use of a distributor that serves the whole country, and issues licences with universality obligations for signal coverage. Content and language diversity is another issue which needs to be addressed.

of Internet-based ‘new media’ services. While the Lesotho Communications Policy of 2008 already makes allowance for these remedies, primary and secondary legislation is required to implement them. The LNBS is required to grant all licensed broadcasters access to its transmission infrastructure under reasonable and nondiscriminatory terms, and is licensing new market participants to increase competition in the sector.

Government is presently supporting efforts to evolve Radio Lesotho and Lesotho Television from state broadcasters into national broadcasters, with the emphasis on equitable, fair and unbiased broadcasting.

The Media Institute of Southern Africa (MISA) Lesotho is a non-governmental, non-profit making, member-driven organisation that seeks to promote freedom of expression, media freedom, media diversity, independence and pluralism in Lesotho. MISA endeavours to uplift the standards of journalism in Lesotho and facilitate the economic self-sufficiency of the country’s independent media services.

Reform within Lesotho’s broadcasting sector is seeing state broadcasting being transformed into public service broadcasting. This change in operating culture will coincide with an investment in new equipment and broadcasting technologies. A programme of investment covering the 20172020 period intends to foster the emergence of local production houses that can harness the country’s home-grown talent, supported by local content licensing. The Lesotho News Agency (LENA) was established in 1985 as a national news agency responsible for the distribution of local, regional, and international news services to local and international media organisations, institutions and individuals. Today it provides its services by utilising Information Technology as an effective method of distributing both news and pictures from within the country and around the world. Services include news, sports events, business and economic news and feature articles by reporters across the country. Daily news feeds are available to LENA subscribers online, and are updated regularly throughout the day. Ongoing initiatives to foster the development of the sector include the corporatisation of the Lesotho National Broadcasting Service (LNBS), deployment of transmission infrastructure throughout the country, adoption of a transparent and non-discriminatory regime for the regulation of content, and promotion

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Radio and television services Radio Lesotho, which was established in 1964, produces, among others, talk shows on current affairs as well as educational programmes, and currently has the widest geographic reach across the country. There was only one national radio station in Lesotho until 1999, when Government issued licenses for other privately-owned radio stations. State-owned youth radio station Ultimate FM was launched in 2006 and has grown substantially in reach, listenership and infrastructure over the years. Targeting listeners between the ages of 16 and 45, it broadcasts interactive, youth-oriented programmes as well as news flashes in English. One of its primary aims has been to promote local talent through airplay as well as the Ultimate Music Awards. The station is presently expanding its coverage to enable the entire country to listen via the 99.8 frequency, in addition to introducing online streaming to further broaden its coverage. Lesotho has three television stations. Lesotho Television (LTV) was established in 1988 with funding from M-Net, the owners of MultiChoice, and handed over to government in 2002. The station covers the whole country with satellite transmission and about 60 percent through terrestrial transmission. Programming covers

newscasts in Sesotho and English, sports, current events, music, cultural and children’s shows, including several locally produced programmes. Content is 80 percent Sesotho and 20 percent English, and the development of local broadcasting content is encouraged. Satellite connectivity exists for Radio Lesotho, Ultimate FM and LTV following an agreement entered into with MultiChoice which allows these broadcasters to be accessed countrywide as well as outside Lesotho’s borders on DStv. In addition, South African television networks are available in Lesotho, as are satellite links to other broadcasters. Multi-platform broadcasting television network Kwesé TV network was launched in 2017. Lesotho joined 12 other African countries where Kwesé has been launched, comprising Botswana, Ethiopia, Ghana, Kenya, Malawi, Namibia, Nigeria, Rwanda, Swaziland, Tanzania, Uganda and Zambia. The Kwesé bouquet comes standard with over 60 channels, including six free-to-air channels that include news, sports, religious channels, and the Kwesé informative channel. Print media Lesotho’s print media has a long history, with publications like the fortnightly ‘Leselinyana La Lesotho’ (Little Light of Lesotho), which is published by the Lesotho Evangelical Church, and the weekly ‘Moeletsi oa Basotho’, produced by the Roman Catholic Church, both established back in the late 1800s. Today there is a variety of independent newspapers, such as the Lesotho Times, as well as small publications, periodicals and newsletters, in addition to the state-owned newspapers falling under the Lesotho News Agency (LENA). Weekly papers include Lentsoe la Basotho (Voice of Basotho), Sunday Express, Public Eye, Mopheme (The Survivor), Mosotho and Maseru Metro. A number of newspapers may also be found online, including the national news agency, LENA, which appears on the Lesotho government website, and independent news sources such as the Lesotho Times, Public Eye and Informative.

Some international publishers, such as Macmillan and Pearson, are represented in Lesotho. Educational materials for local school curricula are also published under Longman and Heinemann, imprints of Pearson. Business Advertising and Marketing Media are one of Lesotho’s main publishing companies, established in 2009. The company produces a variety of products including newspapers, magazines, books and newsletters. Local publishers include Mazenod Printing Works; Morija Sesuto Book Depot; St Michael’s Mission and the Government Printer. Low levels of investment in this sector have negatively affected the growth of the printing and publishing industry, and the majority of printing jobs are undertaken outside Lesotho.

POSTAL SERVICES The Lesotho Communications Authority has been developing a regulatory framework for the postal sector with the aim of designating the universal postal service operator and defining basic services subject to universality. Following the promulgation of the Lesotho Communications Authority (Administrative) (Amendment) Rules, 2018, the LCA began the process of licensing postal operators. In July 2018, LCA granted operating licences to two postal and courier services operators. Two licences were granted to the Lesotho Postal Services for public postal services and commercial Express Mail Services (EMS), while the other licence was granted to DHL Lesotho for postal commercial services. The license period for the public postal operator is unlimited, while that of the commercial postal operator is five years. Lesotho Postal Services is authorised to provide universal postal services throughout the country, postal financial services, domestic parcel services up to a weight of 20 kilograms, as well as provide EMS and other licensed services. DHL Lesotho is authorised to provide Courier, Express and Parcel (CEP) services in Lesotho generated by individual customers, small and medium enterprises and any other customers, including multinational companies and government institutions.

The Ministry of Finance is the financial sector policymaker. Lesotho’s regulatory system hinges on the Central Bank of Lesotho (CBL), which is responsible for regulating banks and non-banking financial institutions (NBFIs), including creditonly and deposit-taking microfinance institutions (MFIs), financial leasing institutions, insurers, money lenders, money transfer operators, the credit bureau and others. NBFIs are supervised and regulated within the Non-Banks Supervision Division (NBSD), which is also charged with implementing projects aimed at building financial infrastructure, fostering financial inclusion and improving access to finance. The primary instrument of regulatory legislation is the Financial Institutions Act (FIA) of 2012, which establishes the CBL as the regulator of banks and a wide range of NBFIs. The Payments Systems Act (2014) enables the CBL to exercise oversight of the payment systems and provide modernised methods of payment, covering interbank payment systems, clearing houses and securities settlement systems, as well as collateral and netting arrangements. Three of Lesotho’s commercial banks – Standard Lesotho Bank, Nedbank and First National Bank – are foreign-owned, being subsidiaries of South African banks and serving the formal sector, mainly medium and large corporate enterprises and salaried employees in urban and peri-urban areas. Most bank credit to households takes the form of personal loans related to salaries, but mortgage finance is also growing. The local, state-owned Lesotho PostBank is more development-focused and its activities take place predominantly in the rural areas. Commercial banks are concentrated in the capital city of Maseru, and while the distribution of automated teller machines (ATMs) is improving, they are mainly found in urban centres and the Lesotho lowlands. In terms of national outreach, the industry had a total of 49 branches across the country, 203 ATMs and 1 524 point of sale (PoS) terminals by the end of 2017 (CBL Annual Report, 2017). Economic and financial cooperation in the region is critical, and Lesotho is actively involved in various regional and international organisations. These include, among others, the Common Monetary Area (CMA), along with

Financial Services

Insurance & Investment While Lesotho has a relatively limited formal financial sector, comprised mainly of banks and insurance companies, it is complemented by a wide range of informal financial institutions.

Namibia, Swaziland and South Africa, and also the Southern African Customs Union (SACU), Southern African Development Community (SADC), International Monetary Fund (IMF) and World Bank. Bilateral and multilateral monetary agreements exist between Lesotho and South Africa. Lesotho’s national currency, the Loti, is fixed at par with the South African Rand, which is also legal tender in Lesotho. Benefits arising from the CMA arrangement include macroeconomic stability and the elimination of exchange rate risk between Lesotho and South Africa. However, it also poses some challenges for Lesotho, particularly with regard to synchronising fiscal and monetary policies. The Maseru Securities Market also has the potential to be a powerful vehicle for raising capital while diluting Government’s holding of shares in privatised companies. In the 1990s with the privatisation of government businesses, government retained partial shareholding in trust for Basotho. At that time, and with the absence of a securities market, equity holding became the only avenue for retaining Basotho shareholding. During 2018 a plan was being finalised to recapitalise the Lesotho PostBank directly through the Maseru Securities Market by allowing Basotho to buy shares that were initially held by Government. A broad assessment of an equity dilution strategy is being undertaken with a view to opening up direct shareholding to Basotho.

FINANCIAL LEGISLATION & INITIATIVES The Central Bank of Lesotho (CBL) continues to strengthen the legal and regulatory framework. The Payment Systems Act of 2014 has been operationalised by the gazetting and

promulgation of the Payment Systems (Issuers of Electronic Payment Instruments) Regulations (2017). The Regulations are meant to strengthen mobile money regulation, promote market confidence, protect investors and manage risks associated with issuance of electronic payment instruments, including mobile money. Furthermore, the Regulations aim to provide guidance for the licensing and oversight of issuers of electronic payment instruments as well as to provide general provisions applicable to all e-money issuers in the country. Migration to Basel 2.5 During 2017, preparations for migration to Basel 2.5 continued, with the CBL undertaking a self -assessment process to ensure compliance with the Basel Core Principles. These mainly focused on the laws, supervisory systems and practices, and risk management systems that banks have to employ in order to identify, measure and monitor the risks they face. Following the assessment, a number of regulatory instruments were developed, including Corporate Governance, Stress Testing, Internal Capital Adequacy Assessment Process (ICAAP) and Basic Disclosure Requirements Guidelines. These documents were duly validated by the market participants for pilot implementation in 2018. Access to credit According to the 2016 World Bank Enterprise Survey, access to credit is one of the main constraints to private sector expansion in Lesotho. As such, it is vital that credit constraints are reduced, implementation of Lesotho’s 2014 Financial Sector Development Strategy accelerated, and the authorities’ capacity to supervise banks and coordinate cross border

supervision enhanced. Furthermore, legislation is being prepared on a Secured Transaction Regime that would permit movable property to serve as collateral. Measures to improve the regulation of the financial sector while broadening access to credit are complementing efforts to enhance inclusiveness as well as accelerate growth in the private sector. One of the most pressing challenges is the financing of start-ups, which is nearly nonexistent, with working capital or bridging finance extremely hard to come by. This underlines the necessity for Government to step in and hedge a portion of the lending risk financial institutions are unprepared to take on. The Partial Credit Guarantee Fund run by the Ministry of Small Business Development, Cooperatives and Marketing has reported rapid lending, with 61 new guarantees amounting to M11.9 million being issued in a space of only five months. Credit Reference Bureau The CBL’s credit bureau project resulted in the promulgation of the Data Protection Act (2011) and the Credit Reporting Act (2012), with the Credit Reporting Regulations of 2014 laying the foundation for the establishment of the credit bureau. The SADC Credit Information Sharing (CIS) project, initiated and supported by FinMark Trust, also began in 2014. This saw a partnership between the Ministry of Finance as the policy maker and project custodian on the ground, the CBL, the credit bureau and the credit providers themselves, who have been working together to improve the credit information sharing environment in the country. Since the launch of the Credit Information Bureau in 2016 the Central Bank has been able to analyse information on trends in the credit market in Lesotho, levels of consumer indebtedness and the usage of the credit information system by lenders. Also, efforts have been scaled-up to sensitise consumers about the credit bureau, and a communications company has been outsourced to undertake public campaigns across several media platforms targeting consumers and lenders.

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C E N T R A L

PHYSICAL ADDRESS: Corner Airport and Moshoeshoe Roads, Maseru Central POSTAL ADDRESS: P.O. Box 1184, MASERU, 100, Kingdom of Lesotho Telephones: (+266) 22 31 4281/22 23 2000 Telefaxes: (+266) 22310051/22310679 E-MAIL: cbl@centralbank.org.ls WEBSITE: www.centralbank.org.ls

1. INTRODUCTION In 2018, the Central Bank of Lesotho (CBL) pursued its statutory functions of monetary policy implementation, supervision of banks, insurance companies and other financial institutions; as well as development of capital market and oversight of the national payment system. In addition, the Bank continued with the implementation of financial sector reforms in line with the Financial Sector Development Strategy (FSDS). The strategy focuses on improving access to finance and financial inclusion in Lesotho. To date, significant progress has been achieved in areas of legal reforms, improvement of supervisory frameworks, capital markets, and establishment of institutions that support access to credit. 2. MONETARY POLICY IMPLEMENTATION The CBL continued with the implementation of monetary policy in the Kingdom of Lesotho, which involves maintaining the peg between the Loti and the Rand. In 2018, the Bank rate was increased from 6.50 per cent to 6.75 per cent in November, 2018. During the year, six meetings of the Monetary Policy Committee (MPC) were convened to consider global and domestic economic conditions, global financial markets conditions that have an underlying influence on the net international reserves (NIR) developments and outlook, and to make the determination on the NIR target floor and the CBL Rate. The Bank also monitored domestic developments and undertook relevant research. In this regard, the Bank has, among others, published Monthly Economic Reports and Quarterly Economic Reviews. 3. CAPITAL MARKET DEVELOPMENT 3.1. Maseru Securities Market Following the launch of Maseru Securities Market (MSM) in January 2016, the Bank continued to pursue strategies aimed at operationalizing the facility. The MSM is regulated by the Bank as the registrar and the regulator of capital markets. MSM provides an opportunity for companies to raise capital domestically while also creating an investment opportunity for Basotho. During the year, effort was exerted towards improving public awareness about the existence of the facility such that people can take advantage of the investment opportunities. This was done through the implementation of public education campaigns in the form of roadshows; as well as the use of radio, television and print media to mention a few. The potential corporates and public entities were also consulted and encouraged to participate in the platform. 3.2. The Government Securities Market In Lesotho 3.2.1. Government Of Lesotho Treasury Bonds The Central Bank of Lesotho continues to implement the Government of Lesotho Treasury Bonds Program. Treasury bond issuances are an important marker for maturity of domestic capital markets. To date, there are 7 year and 10 year maturity bonds. The auctions are currently conducted four times a year and the number will increase as the market deepens. In an effort to bolster the bonds market while addressing the infrastructure deficit in the country, the Honourable Minister of Finance has announced that for the

B A N K

O F

fiscal year 2017/18, the Government will require M450 million through Government bonds. The Central Bank of Lesotho as a fiscal agent for the Government of Lesotho issues Treasury Bonds. These are debt securities denominated in local currency with maturity longer than one year. The objective of issuing bonds is twofold; to provide alternative source of funding for Government of Lesotho, and to foster the development of domestic bond market. Issuances are open to individuals and corporate bodies if they hold bank accounts with local commercial banks. They are done through an auction system which is automated at the Central Bank and are conducted quarterly. Currently, the 7 and 10 years’ maturities are available on sale and longer term bonds will be issued in the future to facilitate the construction of a benchmark yield curve at the long end. For fiscal year 2018/19, part of the fiscal deficit is to be financed through domestic borrowing of M1.2 billion. This financing strategy involves issuance of Treasury Bonds in tranches. Efforts are being made to facilitate secondary market trading of these securities. As such, the trading platform at the MSM has been adapted to accommodate secondary market bond trading. 4. BANKING SECTOR A major reform ongoing in the Banking sector is the migration project from Basel I to Basel II.5. The migration will ensure that the domestic banking sector is supervised on better supervisory framework. In pursuing this objective, sets of guidelines on Pillars II and III of the accord, namely; Internal Capital Adequacy Assessment Process (ICAAP), Stress Testing, Basic Disclosure Requirements and Corporate Governance guidelines were completed and shared with the sector for adoption. The Banking Sector had prepared reports on Pillar II and Pillar III. On Pillar I, two sets of guidelines namely: Credit and Operational risk capital requirements Guidelines have been drafted. The guidelines were issued to the market for comments and suggestions. The Bank remains committed towards promoting the integrity of the financial system. During the first quarter of 2017, the Central Bank of Lesotho embarked on a joint Anti-Money Laundering/Combating of Financing of Terrorism (AML/CFT) inspection with the South African Reserve Bank on one of the local banks in Lesotho. The purpose of the inspection was to assess the bank’s level of compliance with the global anti-money laundering and combating the financing of terrorism (AML/CFT) standards of the Financial Action Task Force’s (FATF) 40 recommendations, and the Basel Committee on Banking Supervision (BCBS) sound management of risks related to money laundering and financing of terrorism guidance. The inspection has enhanced banking supervision staff supervisory skills on AML/CFT issues. Furthermore, the Bank received technical assistance from the IMF in July 2018 to equip staff with skills to enable them to develop AML/CFT frameworks. To that effect, the Bank has developed a Risk-Based AML/CFT policy framework and manual, which will further enhance the Supervision process on AML/CFT by ensuring that a Risk-Based Supervision Approach is adopted.

L E S O T H O The Bank continues to monitor financial system stability in Lesotho and reports the findings through the quarterly Financial Stability Watch. This report analyses international and domestic developments and trends of the financial soundness indicators (FSIs) and distils implications for financial stability. In addition, in order to enhance its early warning system, the Bank semi-annually conducts Stress Testing on the banking sector to assess the resilience of the sector to both external and internal shocks. The Bank also publishes a Financial Stability Report (FSR) on an annual basis. The FSR is meant to promote awareness about the health and soundness of Lesotho’s financial system. 5. INSURANCE AND PENSION SECTORS With the assistance of the regional regulatory bodies, the Bank has implemented the risk based supervision framework, which is aimed at deploying the supervisory resources efficiently for the optimal regulation of the insurance sector. The Bank shall continue to implement relevant frameworks and instruments to implement best international principles, particular the Insurance Core Principles (ICPs) to which the Bank subscribes as far as insurance supervision is concerned. One of the major achievements registered in this area was the presentation of the Pensions Fund Bill to Parliament in 2018. The objective of the Bill is to provide for the registration, regulation, supervision and dissolution of pension funds in Lesotho. The need for this regulation is driven by two main reasons namely; to protect the interests of people who make contributions with the aim of building a fund from which they will draw when they reach their retirement age, and for the purpose of developing the domestic capital market by requiring that a portion of the pensions fund contributions be invested in Lesotho, as there is currently no legislative requirement that pension moneys be invested in Lesotho to avoid repatriation of funds into the economies of other countries. The enactment of the Pension Bill is expected to represent a major milestone in the financial sector as pensions can play critical role in fostering economic growth. Furthermore, the 2018 Collective Investment Schemes Regulations were enacted with the purpose of improving on the Central Bank of Lesotho (Collective Investment Schemes) Regulations of 2001. The new regulations attempt to accommodate new innovations in financial sector products with the view to promote economic growth. This is driven by three primary objectives, namely: (a) The introduction of a regulatory tool for collective investment schemes (CIS’s); (b) The promoting of growth of CIS’s as capital market vehicles; and (c) Ensuring that the interests of investors are adequately protected against any possible risks. 6. NON-BANKS FINANCIAL INSTITUTIONS 6.1. Development of the Financial Leasing Market Development of the financial leasing market is identified by the FSDS as an integral reform in addressing financial inclusion and access to finance in Lesotho. Thus far, the Financial Leasing Regulations were enacted into Law

in 2013. However, only two commercial banks have been given clearance to proceed with leasing and have not yet started with leasing operations. There has been little interest in Leasing both as a product and as a business space by financial institutions, other credit providers and prospective asset finance companies. As a result of this slow uptake, the Bank, with the support of the Private Sector Competitiveness and Economic Diversification Project (PSCEDP), is in the process of developing financial leasing in Lesotho. The first step was to undertake a market research which was completed in September 2016. The study involved a thorough diagnosis or review of the state of the credit market, particularly, the asset finance industry in Lesotho. It also quantifies and identifies market segments with high potential for leasing. Economic sectors that could highly benefit from leasing are identified as follows: Agriculture; Mining; Manufacturing; Construction; Transportation; Tourism; and other service sectors. Another step under this project will be the completion of the review of the legal framework and undertaking the environmental scan. This review reveals the barriers that could be hindering growth of the leasing industry and recommends incentive packages that could unlock the barriers to entry in the leasing space by prospective players. These include the tax and accounting incentives, fiscal, investment guarantees and other incentive packages. Another area of concern highlighted in the study relates to lack of training and capacity building based on thorough assessment of requisite skills and systems required in order to run a viable leasing operation. A training and capacity building plan that was drawn in 2016 has been partly implemented in 2017. Another critical step will be promotion campaigns in view of selling the finance leasing space through investment forums to prospective market players in Lesotho and from abroad. These awareness and outreach campaigns will be undertaken in order to make sure that the other stakeholders and the general public appreciate financial leasing. In order to make sure that these recommendations are implemented, a few task teams that are made up of stakeholders from the financial sector, government ministries and parastatals, private sector and other stakeholders have been constituted. 6.2. Credit Information Bureau Following the formal launch of the Lesotho Credit Information Sharing initiative in early 2016, significant strides continued to be made in uploading more data into the system and in increasing coverage of credit providers to report to the bureau. Throughout the year 2017, Consumer Credit information has been shared and used by the following credit providers: banks; microfinance institutions; retailers; savings and credit cooperatives; telecommunication and utility companies in Lesotho. Specifically, four banks, five retailers, two savings and credit cooperatives, nine microfinance institutions, six retailers and two insurance companies had their data live and accessible at the credit bureau. Small money lenders had not yet met connection requirements to upload data into credit bureau systems though. Consumer credit records in the credit bureau continued to increase and up to 143,000 consumers were captured by end of 2017. This accounted for up to 232,825 credit records. As far as usage of data in the bureau is concerned, credit checks continued to increase and there were over 21,800 data inquiries made as at the end of the year.

Usage was predominantly by the commercial banks with 13,000 hits followed by MFIs with over 5,000 during this period. Other credit providers like retailers, savings and credit cooperatives and money lenders had not made any borrower inquiries even though they already share information with credit bureau. As a result of this reform, Lesotho improved its ranking under the Doing Business Indicator by climbing 12 places. Out of 189 countries in the world, Lesotho is now ranked 100 from position 112 in the previous year and number 8 out of 48 countries in Sub-Saharan Africa (SSA). The main factor behind this jump is the improvement in the “getting credit” indicator. Under this indicator Lesotho has climbed 70 positions in the world and is now ranked 82 and 12 in the World and in SSA respectively. In order to ensure that the momentum is not lost, the Bank seeks to facilitate the reporting of business data and development of other value added service like credit scoring. The Bank also endeavors to make credit reports easily accessible through SMS and other digital platforms. On supervision and regulatory side, the Bank continued to strengthen supervisory frameworks and tools through offsite surveillance and the first onsite inspection which was undertaken in November 2017. Awareness and outreach campaigns on this reform is critical, as a result, the Bank and its partners under this reform launched a yearlong awareness and outreach campaign in 2018. 6.3. Establishment of Secured Transactions Regime on Movables and the Collateral Registry The establishment of the Secured Transactions Regime on Movables and the collateral registry is another critical reform proposed by the FSDS. This reform entails the development of modern secured transactions in movable property law and the establishment of a national public registry for security interests in movables. The main goals of this reform are to: increase access to credit for businesses and consumers by facilitating the use of movable assets as collateral for credit; reduce risks to lenders through increased certainty of repayment; increase the likelihood of loan approval; improve the loan duration and loan-to-value ratios; and reduce interest rates. So far, the Secured Transactions Regime Technical Working Group (STR-TWG) was constituted to spear head this reform. This working group is made up of all relevant stakeholders, including the financial sector, Government Ministries, private sector representatives and the legal practitioners. The working group contributed to the policy framework on the creation of secured transactions and collateral registry system which was cleared by Cabinet in 2016. Following the policy clearance, the Security in Movable Property Bill has been drafted. Focus was also put on the development of the electronic Collateral Registry which conforms to the provisions of the law. This system has been installed and is operating on a ready mode pending enactment of the Bill. In the process, training and capacity building on the system and the law was undertaken in 2017. Lastly outreach and awareness campaigns have been undertaken in order to make sure that this regime is fully appreciated by the general public and other strategic groupings in 2018. 7. NATIONAL PAYMENT SYSTEMS There is continuous effort to strengthen the legal and regulatory framework to achieve safety and efficiency of the National Payment Systems by

the Bank. In March 2017, the Payment Systems (Issuers of Electronic Payment Instruments) Regulations 2017 were gazetted and published to operationalize the Payment System Act 2014 and to strengthen the mobile money regulation in the country. Consequently, all new and existing issuers of electronic payment instruments are expected to abide by these regulations thus resulting in the promotion of market confidence, protection of investors and management of risks. 7.1. Mobile Money Mobile money (EcoCash and M-Pesa Systems) processed a total of 36.14 million transactions valued at M5.69 billion between January and September 2018. This compares to 28.89 million transactions valued at M4.19 billion processed in the same period in 2017; representing growth rates of 25 percent and 35.5 per cent, respectively, from the same period in 2017. In line with the growth in transaction volumes and values, the trust account balances also continued to grow from the corresponding period in 2017. The trust account had accumulated a total of M150.71 million as of September 2018 compared M131.62 million recorded as of September, 2017. Year-on-year, the trust account balance grew by approximately 15 percent between September, 2017 and 2018. 7.2. Cross border remittances As a consequence of the widespread labour migration of Basotho people to South Africa and other countries, remittances especially from South Africa make up the bulk of inward remittances to Lesotho. International remittances contribute significantly to economic growth and development in the country and now they surpass other international inflows like official development assistance (ODA), portfolio capital inflows and foreign direct investment. Therefore, as part of an effort to improve and formalise inbound remittances, Shoprite and Capitec Bank in South Africa (SA)1 with the assistance from the Bank and the South African Reserve Bank launched the Shoprite cross-border money transfer remittances facility in March 2015. Since its launch, this money transfer facility has experienced remarkable growth in terms of processed transaction volumes and values. Between January and September 2018, the Shoprite cross-border money transfer facility processed a total of 338,552 transactions valued at M357.88 million compared to 211,954 transactions valued at M206.62 million processed in the same period in 2017. These huge transactions volumes and values are testimony of the high take-up of service by large number of Basotho diaspora who work and reside in the republic of South Africa (RSA). This is due to the low charges, convenience, safety and reliability of the service. However, the service recently experienced challenges of long queues of people coming to collect money at Shoprite Stores in Lesotho. Apart from the launch of Shoprite cross border money transfer, the mobile money issuers (namely; Econet Telecom Lesotho and Vodacom Lesotho) in partnership with licensed international money transfer service providers also launched inbound cross-border remittance corridors. In particular, Econet Telecom Lesotho (ETL) partnered with WorldRemit in June 2015 to facilitate inbound international remittances from the United Kingdom (UK) and United States of America (USA). In addition, ETL also partnered with Flash South Africa for inbound cross-border remittances from South Africa to Lesotho. Likewise, Vodacom Lesotho (VCL) also partnered with Mukuru in 2014 to facilitate inbound remittances from South Africa. Between January and September 2018, ETL’s EcoCash and VCL’ M-Pesa wallets collectively

received a total of 68,928 international remittance transactions valued at M38.20 million from South Africa, United States and United Kingdom. This compares to 37,258 transactions valued at 37,258 transactions to the tune of M19.74 million received between January and September 2017; representing growth rates of 85 percent and 94 percent in terms of transaction volumes and values, respectively, from the same period in 2017. Despite the challenges faced by the cash recipients in Lesotho due to lack of funds, which results in long queues at Shoprite Stores, the uptake and adoption of the Shoprite cross border money transfer service currently remains higher than the mobile money enabled remittance corridor on account of the former’s cost-effectiveness especially for inward remittances from South Africa. 8. FINANCIAL CONSUMER PROTECTION The role of Financial Consumer Protection is enshrined in the Government of Lesotho’s National Strategic Development Plan and the FSDS of 2013. Consumer protection is critical for financial inclusion. The Bank has completed the financial consumer protection diagnostics study with the assistance of the World Bank. This milestone is expected to pave way for the development of a financial consumer protection policy framework and law in Lesotho. The financial consumer protection regime will help the Bank deal with issues in relation to undue collection methods by lenders, serial consumer complaints, abusive lending practices and high prices. It is against this background that CBL established the Financial Consumer Protection (FCP) Unit in 2018 with the fundamental aim to protect the consumers from unfair, deceptive or abusive practices and take action against Financial Services Providers (FSPs) or companies that break the law. The Unit serves as a vocal point for all financial consumer protection and market conduct issues, hence it regulates and supervises market conduct. In terms of the legal framework, the current existing financial sector laws contain gaps in the area of financial consumer protection and market conduct, hence a reason as to why the Draft of the FCP Policy has been developed and it is still to be approved by the Cabinet. Similarly, the FCP Bill has also been drafted. The procedures for Complaints Handling Guidelines against Regulated Entities under the ambit of the Financial Institutions Act (FIA) of 2012 have also been developed. It is in this regard that the FCP Unit is handling complaints from the public or financial customers on the quality of services being offered by the regulated entities, alleged mal-practice or violation of financial sector laws. The Unit is also looking at the area of banking fees and charges, and a lot of research has been undertaken in this regard. The Unit has also encouraged commercial banks to provide standardized basic bank account type (Low Income Savings Account) for individuals earning monthly gross income that is below M3,000. The Unit has also been participating in empowering the consumers via financial education and literacy campaigns such as Money Week/Month as a way to equip financial consumers with tools to manage their finances effectively. 1 Later, Capitec Bank was replaced by Standard Bank, which has footprint in other African countries, in order to expand the service to other African markets.

According to the CBL’s 2017 Annual Report, there are some 137 000 individuals and a total of 220 000 accounts in the custody of the credit bureau, with 24 active credit providers. At the end of September 2017, the number of credit information enquiries was recorded at 13 000. The bulk of inquiries came from banks. Financial leasing market The Financial Leasing Regulations were enacted into law in 2013, and during 2017 the CBL continued to explore measures aimed at developing the financial leasing market in Lesotho. Following market research on financial leasing in Lesotho, the Bank has engaged several stakeholders from institutions which were identified as relevant in implementing the proposed incentives and regulatory environment. These include commercial banks, the Lesotho Revenue Authority (LRA), the Lesotho National Development Corporation, Lesotho Tourism Development Corporation, Ministry of Small Business Enterprises and Cooperatives, Ministry of Trade and Industry and Ministry of Finance. On the legal side, the proposed amendments to the Financial Leasing Regulations were drafted and are awaiting enactment by Parliament. Going forward, the CBL aims to undertake investment forums in order to attract international leasing firms to deliver leasing finance products in Lesotho. The Bank is also looking forward to overseeing the training of microfinance institutions on the development of leasing products in the country.

MONETARY POLICY The CBL formulates and implements the country’s monetary policy which, under the CMA arrangement, involves maintaining the peg between the Loti and the Rand. The Monetary Policy Committee meets to consider global and domestic economic conditions, global financial market conditions, net international reserves (NIR) developments and outlook in order to determine the NIR target floor (the level of NIR below which the parity of the Loti and the Rand would be compromised) and the CBL Rate. The declining level of reserves put immense pressure on the NIR for the whole of 2017.

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In the monetary policy space, one of the key milestones has been the adoption of a new model to forecast liquidity conditions to better inform monetary policy operations. The new model had its debut in January 2017. Monetary and financial indicators Inflation has been on a downward trend, underpinned by declining food prices against the backdrop of a bumper harvest in South Africa. The inflation rate was 5.2 percent in 2017 and has dropped further during 2018, reaching 3.8 percent in April 2018, mainly driven by low food prices and the marginal increase in services prices. The pass through effect of the VAT increase onto domestic prices has been muted so far. Given weak consumer demand, the price increases due to the VAT increase are likely to be absorbed by the retailers and manufacturers. With the downward surprise in SA food prices, it is expected that Lesotho’s food prices will remain stable in 2018, keeping inflation at around 5.0 percent. At the meeting of the Central Bank’s Monetary Policy Committee on 27 November 2018 it was decided to keep the NIR target floor unchanged at US $690 million while increasing the CBL rate from 6.50 percent to 6.75 percent per annum. Interest rates in Lesotho follow the same trend as those in South Africa. The CBL policy rate remained constant at 6.50 percent between June and July 2018, rising to 6.75 percent in November 2018. On the other hand, the commercial banks’ prime lending rate declined to 11.19 percent in July, from 11.31 percent observed in June 2018. Similarly, the one-year deposit rate fell to 4.19 percent in July 2018 from 4.30 percent recorded in the previous month. Over the same period, the 91-day T-bill rate declined by 29 basis points to 6.59 percent. The Loti strengthened against major trading currencies in July 2018. This movement occurred ahead of the release of the CPI series, which increased slightly and caused the South African Reserve Bank to hold the repo rate constant. In

addition, the Rand/Loti strengthened further after South Africa secured positive deals at the BRICS summit. The external sector position deteriorated slightly in the third quarter of 2018, with the surplus on the overall balance of payments declining to 5.7 percent of GDP from 7.0 percent of GDP in the second quarter. However, gross international reserves were registered at 4.3 months’ of import cover in the quarter ending in September, compared with 4.2 months in June 2018, on account of a decline in imports. The broad measure of money supply (M2) increased by 6.9 percent during the third quarter of 2018, against a decline of 2.4 percent in the previous quarter. The increase in money supply was driven by growth in both domestic claims and net foreign assets of the banking system. Private sector credit maintained a strong upward trend, underpinned by robust growth in credit to business enterprises, which grew by 5.3 percent following growth of 5.9 percent in the quarter to June 2018. In contrast, credit extended to households slowed to 1.7 percent from 2.1 percent in the previous quarter.

BANKING SECTOR The Central Bank of Lesotho reports that the banking industry reflected good profits and a strong capital position during 2017. The sector comprised four licenced banks, with total assets amounting to M16.0 billion as at December 2017, dominated by loans and advance amounting to M5.8 billion. Balances from foreign banks and local banks amounted to M4.1 billion and M2.2 million, respectively. The three foreign banks dominated the market at 91.9 percent of the balance sheet. To a large extent, improved performance was observed in the credit portfolio, with overdrafts being the major driver for the first time in five years. Total liabilities amounted to M13.9 billion in December 2017, comprising deposits of M11.1 billion. Deposit liabilities were mostly dominated by businesses and Government, which were wholesale in nature at 74 percent of total deposits. The industry continued to be challenged by the

liquidity funding structure which is dominated by short-term wholesale deposits. Commercial banks Standard Lesotho Bank has consistently over the years remained the leading bank in Lesotho in terms of assets and market share, with a complement of more than 800 staff across its operations in 19 branches countrywide. The bank also operates 96 ATMs across the country. Standard Lesotho Bank is a subsidiary of Standard Bank Group with 20 percent local shareholding, which operates in 19 geographies in Africa and enjoys an enduring legacy of over 155 years of banking on the continent. As a point of differentiation, Standard Lesotho Bank subscribes to a customer value proposition that commits the bank to support entrepreneurship as a critical building block of the country’s economy. The bank identifies the challenges below as critical to the livelihoods of Basotho and the wider economy: •

Unemployment

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Lack of finance for small, medium and micro enterprises (SMMEs)

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Financial inclusion for the unbanked and under banked sectors of society

•

Capacity challenges that face the entrepreneurial sector in the country in general

In mitigating these challenges, the bank launched the Entrepreneurship Development Programme (EDP) in 2018. The EDP is a very comprehensive programme that has combined a number of initiatives in the area of sponsorships and products specifically tailored to meet the needs of Lesotho’s economy. Most of these issues have been articulated in the first National Strategic Development Plan (NSDP), and are being redefined in NSDP II under the theme ‘Pursuing job creation and restoring fiscal stability and sustainability’. They remain relevant now and in the foreseeable future as they form the bedrock of wider national initiatives towards improving Lesotho’s economy. Standard Lesotho Bank is indeed pushing the

boundaries to remain relevant for Basotho, and is making a conscious effort to become part of the solution to current challenges. EDP bears testament to the bank’s commitment to Basotho businesses and the growth of the country’s economy as a whole. EDP projects include: •

The Enterprise Hub – This facility provides entrepreneurs with free access to office space, Internet and market information. The Hub also has a skills development component, where the bank has engaged a local consultant to provide business management skills for SMMEs. In this project, deserving SMMEs go through a 12-month training programme to capacitate them to run viable and profitable businesses that can increase employment and contribute significantly to economic development.

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Local Supplier Development – The bank already has around 300 vendors on its database and a current local procurement spend of 55 percent. In keeping with Government’s aims, the bank would like to increase support to local suppliers to ensure that money circulates within the Basotho economy. To this end, Standard Lesotho Bank has embarked on a local suppliers development programme with the aim of contributing to the local economy by building a sustainable local supply base that will benefit itself as well as other corporates in the country. As part of this initiative, the bank has on-boarded six wholly-owned Basotho companies for a training programme in the categories of: Furniture manufacturers and shop fitters; IT equipment maintenance and supply; Textiles and traditional wear; Water processing and bottling; Promotional and corporate wear producers. Through this programme, selected companies are being helped to ascertain whether their products meet local and international standards and the needs of the market, as well as ensuring that they improve all aspects of their business in order for them to grow. Over and above these interventions, the bank has also

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entrepreneurial skills. The project is currently in Phase 2, and remains a top priority on the bank’s entrepreneurship development agenda.

Standard Lesotho Bank Head Office, Maseru © Standard Lesotho Bank The bank’s attempt to lend a hand to street vendors in the informal sector has seen it provide umbrellas to vendors, thereby enabling them to do business in an improved environment. Standard Lesotho Bank has also sponsored the building of 15 street vendor kiosks in Botha-Bothe to commemorate the King’s 52nd Birthday. The bank encourages street vendors to join the move towards financial inclusion by opening accounts which have been tailored to suit their needs with minimal fees. These include the Molleloa Account, Nala Account, Farmers’ Account and the Society Scheme Account. This gesture is a clear indication that the bank is resolute in its intention not to leave anyone behind.

embarked on providing market access and linking businesses to international markets in order to promote trade in, for and across Africa, with a special focus on trade between the continent and China. •

Lioness of Africa – Launched in 2018, Lioness of Africa targets young women in business and seeks to empower them to run and grow their businesses. In particular, it links young women entrepreneurs with seasoned and experienced business women in Lesotho and 19 other African countries where the Standard Bank Group is represented.

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The Entrepreneurship Network (TEN) and Street Vendors – In the last two years Standard Lesotho Bank has begun a partnership with TEN through the entrepreneurship expo that is growing phenomenally year on year. The bank intends to improve on this relationship by taking part in the dinners which they host every month. These engagements are highly enlightening, empowering and inspirational to entrepreneurs, and therefore worthy of the bank’s support.

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Bacha Entrepreneurship Project – For the past three years, the bank has partnered with BEDCO and the LRA in the Bacha Entrepreneurship Project (BEP). Phase 1 of the project has injected over M1.5 million in start-up capital. To date, a total of 23 youths have been employed in different businesses. The project also boasts a total of 75 youths who have been trained and capacitated with

These are the five aspects of the Entrepreneurship Development Programme that speak to how Standard Lesotho Bank intends to support Basotho entrepreneurs with the ultimate goal of laying the groundwork for entrepreneurship to thrive in Lesotho while also addressing the need for SMMEs to be financially included in the mainstream economy. The bank also supports a number of initiatives that speak to wool and mohair growers. This subsector is another fundamental driver of economic growth, producing about 3 500 tons of raw wool annually for export. The bank’s commitment is to touch the lives of many people, believing that the growth of any economy rests on the growth of the SMME sector. Commercial banks strengthened their liquidity position during 2017, with the ratio of liquid assets to short-term liabilities increasing from 52.4 percent in December 2016 to 53.7 percent. Nedbank Lesotho offers a full spectrum of personal, SME, business and corporate banking services, ranging from transactional and current accounts, private banking, savings and investments, short-term and long term finance and lending, trade finance and forex services to offshore investments and digital and self-services banking channels. The bank has ten branches located in the country, which can be found in Maseru, Mafeteng, Mohale’s Hoek, Maputsoe, Hlotse, Botha-Bothe, Berea and Roma. Nedbank Lesotho is a subsidiary of the Nedbank Group, one of Africa’s largest banks. Nedbank Lesotho has a rich 20-year history in Lesotho, and has been a pioneer in the market with some key ‘firsts’: •

First and only bank to offer Sunday opening times through the Pioneer Mall branch

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First bank to launch Internet Banking and a banking App in Lesotho

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First and only bank to offer a managed local credit card

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First bank to launch the first low-cost EMV and PCI-certified fully mobile point-of-sale (POS) solution designed for business – the Nedbank PocketPOS™

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Financed the first mall in Lesotho, namely the Pioneer Mall, as part of pioneering retail property developments

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Brand name sponsor of the only local golf tournament, the annual Nedbank Mohokare Golf Classic

The bank’s specialised expertise in business and property finance allows it to be a partner to business and corporate clients and offer specialised financial advice, which results in business growth and success. For corporates, the bank also offers unique solutions in trade finance, money market, foreign exchange trade and sales, and funding. For servicing of SMEs, Nedbank holds the pioneering position of being the first bank to create a full SME unit, which operates from Maseru branches and the Northern and Southern regions to meet the unique needs of local enterprises. In its bid to continue to bring better value banking, Nedbank Lesotho has significantly expanded its offerings and simplified banking for its clients, with innovations that also bring more convenient digital and self-service banking channels, including the Nedbank App, its network of ATMs, POS services, and enhancing the strategically located branches and unique Sunday banking services at Pioneer Mall for more convenient around-the-clock banking. Nedbank has expanded its product and services portfolio for the local market, and offers improved value propositions to existing and prospective clients. This has facilitated simplified and transparent pricing by implementing real-time billing on transactions, thereby helping to improve clients’ banking and financial management; bundled products and value adds for entry level, middle income, working professionals and private

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Her Majesty Queen Masenate Bereng Seeiso handing over the trophy to Mr. Motlatsi Ramafole, the 2018 Nedbank Mohokare Golf Classic Overall Winner © Nedbank Lesotho

and commenced operations by offering mainly savings products. In 2010, it diversified into lending; in 2012 electronic transacting services were introduced, and by 2014 it had started to be profitable. To date, the PostBank has rolled out 14 branches and 10 ATMs, and utilised both book-based and card modes for transacting. Since beginning operations, LPB has attracted a substantial diverse client base, and has segmented products to meet those distinct portfolios. Other services include mobile topup and local and regional money transfers, to mention but a few. In 2017, LPB took a giant leap in fulfilling its mission to provide modern banking services to its customers at affordable rates by upgrading its core banking system. The upgrade commenced in September 2016 and was launched in May 2017. The upgraded system will enable the bank to offer improved and new products, SMS notifications and security features to give the customer peace of mind and more.

banking clients; as well as the new mobile banking and smart App that allows purchases such as airtime and electricity. Electronic banking allows registered clients to make payments, get electronic account statements (e-statements) and make LRA tax payments with convenience and security anywhere at any time. This electronic banking enhancement has been further expanded to corporate and business clients to enable efficient day-to-day business management. Nedbank remains as the only bank that offers a local credit card for individuals, businesses and corporate clients. Nedbank Lesotho’s philosophy is to be a ‘green and caring’ bank, using its financial expertise to do good for staff, clients, shareholders, regulators, and for the local communities in which it operates. The various contributions to this aspiration include: •

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A phantom share scheme (Seshoai) for Nedbank Lesotho staff to create a constructive workplace and empower staff members to become and deliver their best. Key corporate social investment (CSI) initiatives and sponsorships, comprising:

Hlokomela Banana ‘Care for Girls’ Project; the Royal Education Development Fund; Queens’ National Trust Fund; the annual Menkhoaneng Moshoeshoe Walk; the annual Nedbank Mohokare Golf Classic; the Nedbank XS Series Mountain Biking Championships; partnership support to the Red Cross and Rotary International in Lesotho, and initiatives by other corporate partners. Nedbank has embedded efforts that go towards the development of education, sports, entrepreneurship, promotion and protection of heritage, and improved health delivery and social development projects for key local beneficiaries and identified target groups. The Lesotho PostBank (LPB) was incorporated in 2014, is 100 percent owned by the Lesotho Government and prides itself on being an indigenous bank managed wholly by Basotho. It was founded to provide banking services to under-banked and unbanked Basotho in both rural and urban areas, and remains committed to its mandate of answering the challenge of financial exclusion in the country. It is licensed by the Central Bank of Lesotho

Due to the upgraded system, the bank will introduce other banking platforms such as Europay MasterCard and Visa (EMV), Internet and Mobile Banking as well as Agency Banking. These platforms will enable LPB to provide its existing and potential customers with advanced and diverse banking capabilities.

FINANCIAL INCLUSION The Lesotho Government has identified lack of access to financial services as a major constraint to job creation and income generation, and has prioritised financial inclusion in the National Strategic Development Plan (NSDP) and the Financial Sector Development Strategy (FSDS). At present, access to formal and semi-formal financial services is limited, especially for lowincome and rural populations. The majority of Basotho are excluded from the formal credit system, while restricted accessibility and high pricing of banking products further limits uptake. Lesotho ranks the lowest amongst SACU member states in respect of access to banking services. According to the 2018 African Economic Outlook, only 20 percent of the rural population have access to a bank account compared with 36

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Chartered Accountants

percent of urban dwellers. Just 8 percent of the poorest 40 percent of the population have access to bank accounts, and only 24 percent of households live within 30 minutes of an ATM while 55 percent must travel for an hour to reach the nearest bank.

The UNDP conducted research into Lesotho’s mobile money sector in March 2016 as part of the Lesotho SIMM Project. Four key areas have been identified that prevent mobile money products from reaching scale and providing financial services to unserved and underserved Basotho:

Despite formal financial inclusion being very low, the FinMark Trust report ‘Making Access Possible’ reports that informal financial inclusion is considerably higher. Some 62.4 percent of the adult population use financial service providers such as non-bank credit institutions, registered money lenders, NGOs, Savings and Credit Cooperatives (SACCOs), Village Savings and Loan Associations, Rural Savings and Credit Groups, and unregistered money lenders (Machonisas). This scenario includes very high usage of insurance, primarily funeral insurance (formal as well as informal), which covers 62 percent of adults.

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Awareness of mobile money services is low, especially in rural areas, among adults and the elderly. The main causes include a lack of financial and technological literacy, as well as a lack of knowledge about the usefulness of mobile money services.

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A narrow product range, services that are not tailored to the needs of low-income customers, a lack of regulation, and a shortage of technological understanding make mobile money a relatively unattractive solution for many Basotho.

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Limited and unreliable services of mobile money agents, a lack of cash in/cash out merchant services, and float liquidity issues dissuade full adoption of mobile money services, particularly in rural areas.

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Despite the potential to dramatically reduce the costs of transferring money and making payments, mobile money services in Lesotho are relatively expensive. When compared with neighbouring countries like South Africa and Swaziland, costs per transaction can be more than five times as expensive.

Mobile money represents an important avenue to deliver financial services as the use of mobile phones is extensive and wide-spread in Lesotho, and mobile money offers an increasingly broad range of financial products that help customers overcome traditional distribution challenges related to the size of the financial sector footprint. Nonetheless, uptake of such services remains limited, and product innovations are required to provide services that meet the needs of the financially underserved. Lesotho SIMM Project

Accountants I Consultants I Trainers TEL: +266 2700 1023 Robert Likhang FCIS, ACMA, CGMA, CA(L) +266 5802 1023 EMAIL: business@rl.co.ls | www.rl.co.ls 78 | FINANCIAL SERVICES, INSURANCE & INVESTMENT

In line with Government priorities, the Ministry of Finance and United Nations Development Programme (UNDP) have developed the Lesotho Scaling Inclusion through Mobile Money (SIMM) Project, aimed at catalysing inclusive and propoor growth by scaling up formal and semi-formal financial services through mobile money. The mobile money sector can be used as a channel to offer innovative and low-cost credit, savings and insurance products. The Lesotho SIMM project promotes the use and adoption of technology, through mobile money, to develop solutions that enhance financial inclusion.

In partnership with FinMark Trust, UNDP hosted a Hackathon as part of the Lesotho SIMM Project. The three-day event was held at the Avani Maseru Hotel from 20-22 April 2018. Its aim was to promote product innovations for inclusive financial services within the mobile money sector, with a particular focus on poor and rural populations. The Hackathon provided a platform for young innovators to collaborate and explore their ideas, while interacting with experts in financial services, the private sector, business development and civil society. The primary objectives were to: create a platform for young innovators that enables the development of mobile money solutions aimed at advancing financial inclusion; build new and strengthen existing networks that facilitate the continued empowerment of Basotho in designing

scalable solutions to key ecosystem challenges; provide opportunities for young innovators to access additional skills development, mentoring, partnership and financial support; and mobilise the data community in Lesotho, promoting collaboration in using data and analytics to solve financial inclusion challenges.

Moores Rowland LOCAL ACCESS – GLOBAL SUPPORT

For the professional solutions to business financial sector requirement, including: Audit & Assurance Taxation Consulting Financial Advisory Services Liquidations Our international expertise and associate network coupled with local knowledge, connections and experience give us the cutting edge in ability and cost that equals unrivalled service delivery.

Moores Rowland Chartered Accountants (Lesotho) Praxity Global Alliance Affiliate CONTACT US: Tel: (+266) 22 313929 | Telefax: (+266) 22 310254 Sentinel Park, United Nations Road, Maseru | P O Box 1252, Maseru 100 e-mail: mrl@mooresrowland.co.ls 82 | FINANCIAL SERVICES, INSURANCE & INVESTMENT

Financial Access Points mapping project The Financial Access Points (FAP) mapping project in Lesotho was conducted between December 2017 and March 2018. During this period, the data collection service provider (BrandWorx) located 5 597 financial access points to form a baseline of spatially representable information. These FAPs included mobile money agents, commercial bank branches, ATMs, POS terminals, MFI branches, insurance providers, post offices and agencies, and moneylenders. Further analysis conducted by FinMark Trust revealed market gaps by overlaying the geospatial data on FAPs, with contextual data such as population density, small business density, mobile coverage data, amongst others. In addition, the analysis provided credible and internationally recognised metrics for measuring proximity to FAPs such as population density per financial access point, percentage of population within 5 kilometres of a financial access point, and other location intelligence metrics instrumental to financial inclusion monitoring and evaluation. The Lesotho FAP maps: •

Allow SIMM and other stakeholders to gain comprehensive location information on financial access points

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Allow financial service providers to adapt operational strategies to serve more remote locations

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Allow the exploration of the potential growth of the real economy via safe and convenient payment systems

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Provide opportunities for improved Know Your Customer (KYC) reporting processes

FIRST Initiative on Financial Inclusion The FIRST Initiative Project on Financial Inclusion

is the technical assistance programme funded by the World Bank and the FIRST Initiative with the objective of supporting the Lesotho Government and Central Bank in expanding financial inclusion in the country by strengthening and deepening the supply of financial services and establishing a consumer protection framework. The Programme focuses on five main components: •

Creating an appropriate legal, regulatory, and supervisory framework for microfinance institutions (MFIs) and financial cooperatives

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Strengthening legal, regulatory and supervisory capacity for cooperatives, and other non-bank financial institutions

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Creating a conducive environment for mobile money and agency banking

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Creating an adequate framework for financial consumer protection and improving financial capability/education

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Strengthening partial credit guarantee schemes

Consumer protection As access to financial services begins to expand, the development of consumer protection will be critical. The CBL has completed the financial consumer protection diagnostics study with the assistance of the World Bank, and is developing a consumer protection policy framework which will address undue collection methods by lenders, serial consumer complaints, abusive lending practices and high prices. Upon adoption of the policy by Government, the Financial Consumer Protection law will be drafted. Institutionally, the Central Bank has created a Financial Consumer Protection Unit with a team that is being trained on consumer protection.

THE INSURANCE INDUSTRY The insurance sector in Lesotho is small but growing rapidly. Its penetration is relatively high and substantially above the African average (excluding South Africa). This is mainly because of the popularity of funeral policies, with funeral insurance a major financial inclusion driver. Although the industry is expanding compared

with the rest of the economy, its regulatory framework and supervision are still weak and have some gaps. The insurance industry deals with both longterm and short-term insurance, and is the mostconsumed financial service in Lesotho for nearly all target groups, contributing significantly to financial inclusion. Around 62 percent of the adult population has some form of insurance. Usage is significantly higher in urban areas, where formal penetration is 48.1 percent as compared with 31.8 percent in rural areas. In turn, informal-only is much higher in the rural areas (30 percent) than for urban dwellers (11.4 percent). As at the third quarter of 2018, total life insurance assets in Lesotho were worth just over M5.9 billion, while assets of the general insurance business were slightly more than M430.5 million. The Insurance Act of 2014 provides for the consolidation, administration, supervision, regulation, protection and development of the insurance business in Lesotho. It was developed with the aim of meeting the demands of the economy for risk-management and stimulation of growth in the investment sector. It also tackled the development of the micro-insurance subsector to improve upon the previous Insurance Act (1976) which was marked by excessive rigidities. An applicable regulatory framework was drawn up to promote participation and new entrants, as well as facilitate supervision. One of the CBL’s areas of focus in recent years has been the reform of insurance sector regulations, and a review of the Insurance Act of 2014 is underway. A central feature of this review process is to strengthen the governance framework for insurance companies and help to accommodate risk-based supervision. Amendments will be made in the areas of: corporate governance; solvency; risk management; consumer protection; inclusion of annuities as a class of long-term insurance and micro-insurance; and the introduction of a crisis management regime.

In order to support the current regulatory regime, seven sets of Insurance Regulations were published in 2016. These include, among others, regulations on solvency and financial reporting good practice for insurers and intermediaries. During 2017, the CBL focused on the implementation of these regulations, such as the new licensing requirements, fit and proper requirements, as well as revised capital requirements for the insurance sector. Furthermore, with the assistance of regional regulatory bodies, the Central Bank implemented the risk based supervision framework aimed at deploying supervisory resources efficiently for the optimal regulation of the insurance sector. Alliance Insurance Company Limited was established in Maseru in 1993 when a group of mostly local Basotho businessmen, with the vision of creating a unique insurance financial solutions company, acquired the insurance license of one of only two short-term insurers in Lesotho at the time. This license enabled them to establish a truly Basotho insurance company, which is majority owned by local Basotho, who hold a controlling stake of over 80 percent of the company. The remaining 20 percent is owned by Alliance Employees Share Trust and non-resident shareholders. 2018 marked Alliance’s 25th anniversary, and the company is proud to be recognised as a leading pioneer of innovation and service excellence in the insurance and investments industry in Lesotho. Alliance is headquartered in Maseru, employs over 300 Basotho, and has operations in every district in Lesotho, with over 13 branches across the country. The company’s purpose is to improve the lives of its customers and their communities through providing effective wealth creation and protection tools that allow them to better plan and achieve their business and financial goals. Alliance’s products and services are designed to be accessible to every business and every Mosotho, with a range of investments and insurance protection solutions that are tailored to the needs of customers regardless of their size or income.

Our business is about creating value for our clients by guiding them towards quality and affordable insurance. While the company’s products focus is on the general insurance, our competitive edge is in service delivery to the network of independent brokers. Intermediaries are supported by a decentralized system with flat hierarchy, quick decisionmaking and underwriters with strong technical skills and business acumen. SIC does not operate any call centres – intermediary and policy holder relationships have a strong personal component with face-to-face contact.

WHAT WE OFFER • Our Corporate Property insurance offering caters for the specific cover requirements of clients with major assets values. • We cover large industrial and commercial risks, including parastatals, multi-national corporations and mining operations.

WE PROMISE TO: • Deliver personal service with a partnership approach • Quick time to market • Provide innovative products with a flexible approach to finding solutions • Provide deep expertise and relevant products that address specific clients’ needs at reasonable costs.

We provide flexible methods of payments, WE ACCEPT monthly premium payment.

Focused on unique expertise and technical excellence to make a difference! Tel: +266 223 20837/8 Email: bokangn@sic.co.ls Ground Floor, MGC Office Park, Maseru

Alliance’s vision is to be the most trusted financial

FINANCIAL SERVICES, INSURANCE & INVESTMENT | 83

services partner to Lesotho and Basotho, delivering superior value to clients through its products and service excellence, and ensuring its customers achieve their financial goals. Its strategy is to respond to the real financial needs of customers by developing and providing suitable, innovative and affordable insurance, risk, wealth creation and investment solutions. The company’s products and services include risk and wealth creation financial solutions to businesses (large and small), individuals, retirement funds, banks, corporates, stokvel schemes and public sectors in Lesotho. •

Alliance Short Term Insurance – Innovative and competitively priced insurance products to protect valued assets such as buildings, plant and machinery, contents, motor vehicles, construction work, etc, from accidents, natural disasters and other perils.

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Alliance Life Insurance – Market leading life insurance and savings products providing life, funeral, disability, critical illness, retrenchment, salary/income protection, investment savings, savings backed loans and loan protection cover to individuals, employee benefits schemes, banks and retirement funds.

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Investments – Customers have real power to grow their wealth through investing in any of Alliance’s expertly pre-selected top performing investment funds managed by asset management experts in Lesotho, South Africa and around the globe. Through Alliance, individuals, retirement funds and stokvel schemes now have access to savings products managed by Stanlib, Allan Gray, Coronation, Old Mutual Asset Managers, 10X Investments and more.

Social investment In Lesotho and Basotho is a passion, and Alliance regards it as the company’s calling to develop the country and its people through meaningful and sustainable investments in the economy and communities. To date, Alliance is proud of its noteworthy achievements in contributing towards the development of sports, education and infrastructure in Lesotho. The company has built two shopping centres in

84 | FINANCIAL SERVICES, INSURANCE & INVESTMENT

Mokhotlong and Mohale’s Hoek, and has made substantial property investments in Maseru, including Alliance Square and Pioneer Shopping Centre. In respect of sports, Alliance sponsors three major soccer teams in the Lesotho premier league: Matlama, Lioli and Masheshena. The company is proud of the achievements of its sponsored teams which have dominated the league and brought joy and pride to many communities. For more information, please contact the nearest Alliance branch, or visit the website: www. alliance.co.ls Thaba-Bosiu Risk Solutions (Pty) Ltd is one of the leading insurance brokers in Lesotho and has a 100 percent local shareholding. Established in April 2006, the company offers a wide array of insurance products that are tailor-made to meet clients’ needs. These include motor vehicle insurance, accident insurance, construction insurance, travel insurance, workman insurance, professional indemnity schemes and goods in transit insurance. The company also offers group funeral schemes, retirement (pension and provident fund) schemes, group schemes (death and disability) as well as students’ medical aid. In its mission statement, Thaba-Bosiu Risk Solutions says it seeks to provide clients with superb coverage and claims handling through careful and diligent underwriting of risks and the provision of business-friendly solutions. The company’s excellent reputation on the market has not gone unnoticed. It has over the past decade been the recipient of several awards for excellence. It was awarded first prize in the PMR Awards that seek to reward excellence in the insurance broking sector in Lesotho for seven consecutive years – from 2012 to 2018. Yet it is Thaba-Bosiu Risk Solutions’ ambitious programme to give back to the community that has set it apart from its peers. Since 2012, the company’s managing director, Matokelo Seturumane, has spearheaded Thaba-Bosiu’s programme to give back to the community. Under the programme, two rural schools were adopted: Boribeng Primary and Boribeng High School in

Leribe District. Every September, the company gives out prizes to outstanding students, with the top student being awarded the coveted ‘white blazer’. It also gives out school uniforms, pays school fees for top performers, and hands out food parcels to vulnerable students and their families. Seturumane, who grew up in Boribeng about 120 kilometres north of Maseru, says the idea is to motivate students who come from very poor backgrounds to dream beyond their rural upbringing. For decades, children who were raised in Boribeng had very limited choices – they would either get married in their mid-teens, go to initiation school or make the long trip to work in the gold mines in South Africa. It was very rare for students, particularly girls, to break past these barriers. The following are statistics which show that the company’s efforts to change the mind-set of children in Boribeng and surrounding villages are bearing fruit. Since 2013, 19 students have been able to complete their High School Leaving Certificate and proceed to tertiary level to study in different fields, such as IT, Humanities, Public Administration, Journalism and Agriculture. Seturumane, together with the company’s staff members, say they are encouraged by the latest academic results at both Boribeng Primary and High schools, although the schools still require additional facilities to create a conducive learning environment. Mapetla Primary School in Maseru is one other school where Thaba-Bosiu Risk Solutions distributed Christmas packages to vulnerable students and their families. Liberty Life Lesotho is a specialist life insurance company that provides group and individual risk insurance, investment solutions and comprehensive health cover, offering an extensive range of products and services to help Basotho build and protect long-term wealth. The company puts the customer’s needs first by creating solutions that are simple, affordable, relevant, flexible, easily accessible and innovative, and has experience in working with and understanding the needs of customers and partners – whether individuals, small businesses, corporates or

affinity groups with many members. Liberty also partners with employers to enhance the lives of their most valuable assets: their employees. They believe that in times of unfortunate events, the last thing customers should worry about is finances. Liberty Life Lesotho is a subsidiary of Liberty Holdings, founded 60 years ago by Sir Donald Gordon, who watched his father work hard all his life yet reap little financial reward for his efforts. This struggle ignited in him the overwhelming belief that all people should have the opportunity to grow their wealth and leave a proud legacy for their family. This belief is captured in the company’s name and its flame, taken from the Statue of Liberty and imbued with the same meaning of freedom and opportunity. Liberty has a presence in more than 27 African countries, offering asset management, investment, long and short-term insurance and health products to millions of people across the continent. It is also one of the biggest listed long-term insurers on the Johannesburg Stock Exchange by market capitalisation. Liberty is an organisation that understands the value of knowledge and its power to change realities. Liberty continues to roll up its sleeves and work with Government, the Regulator and other stakeholders to further develop the insurance industry and contribute significantly to the growth of the economy. The company believes that through financial education and guidance, this can be achieved. Through understanding the power of knowledge, Liberty strives to pioneer new ways to guide people towards financial freedom, with a purpose – and passion – to make a difference in people’s lives.

CONTRACTUAL SAVINGS Contractual savings in Lesotho amount to more than M10 billion. This includes collective investment schemes, pension and provident funds, insurance companies, and medical aid schemes. With the introduction of new regulations, a large portion of these funds are expected to be invested in local instruments. As such, companies from different sectors can issue medium to longterm financial securities to finance their activities.

We offer products which are tailormade to our clients`requirements. Our professional staff will give you sound insurance advice, and will structure a package that suits your specific needs. DOMESTIC INSURANCE Our Personal lines insurance division offers you quality short -term insurance covers. These include: • Motor Vehicle: - Motor Comprehensive - Motor Third Party Fire and Theft - Motor Third Party • Buildings: - Private Residence (Home) • Contents: - House contents - All Risks - Personal Liability - Personal Accident - Personal Computers - Travel Our rates are particularly attractive to those who have invested in security features for their motor vehicles and homes.

CORPORATE AND COMMERCIAL INSURANCE We look after interests of all types and sizes of business from small one “home office” right up to large corporates. These covers include: • • • • • • • • • • • • • • • • • •

Fire & Allied Perils Buildings Combined Business Interruption Accounts Receivable Theft Insurance Money Insurance Glass Insurance Fidelity Insurance Good in Transit Accidental Damage Workman’s Compensation Stated Benefits Group personal Accident Electronic Equipment Business Motor Vehicles Business Motor Fleet Business All Risks Contractors All Risks

AGRICULTURE We understand that your livestock is an asset that needs to be protected, that’s why we offer: • Livestock Insurance • Sheep and Goats

LIFE ASSURANCE /EMPLOYEE BENEFITS Do something different by offering your employees a long-term benefit. Let us help you with these employee benefit options: • Retirement (Pension & Provident Fund) • Group Schemes (Death & Disability) • Group Funeral Schemes • Students Medical Aid

OTHER SERVICES • Risk Management • Claims Management

Boribeng High School Top Achievers Left: Maleshoane Mota, (2018) Right: Itumeleng Sematle (2017)

TRUST US FOR ALL YOUR INSURANCE NEEDS AND RISK MANAGEMENT ADVICE Tel: (+266) 22 313 018 • Fax: (+266) 22 310 513 Email: info@thaba-bosiu.co.ls • Website: www.thaba-bosiu.co.ls • 1st Floor Options Building, Pioneer Road • P/Bag A244, Maseru 100 Stationery packages for the Annual Boribeng Awards Giving Ceremony 2018

Public Officers’ Defined Contribution Pension Fund TEL: +266 2231 3088 www.pensionfund.org.ls

The Fund was established under the Public Officers’ Defined Contribution Pension Fund Act No. 8 of 2008. The fund serves permanent and pensionable Government employees through the Public Offices’ Defined Contribution Pension Fund (PODCPF); The Fund came about as a result of the Government’s decision to change the pension system from a Defined Benefit to a Defined Contribution one. The Fund is managed by a Board of Trustees appointed by the Minister of Finance and chaired by the Principal Secretary in the Ministry of Finance.

The main objective of the Fund is to deliver pension benefits to Government employees; whether they do so through resignation, retrenchment, retirement, total disablement or death. To achieve this, the Fund is obligated to prepare for the above through the establishment of Investment Portfolios and other prudent savings structures. Therefore, the Fund aims to ensure that sufficient funds are available to meet all pension liabilities as they fall due for payment and attains this by adopting an investment strategy that balances risk and return. By 2018, the number of active members stood at 37,738 from 37 260 in 2017. The Lesotho Government’s main objective in reforming the pension system from a Defined Benefit to a Defined Contribution was to, among others, set-up a reasonable and sustainable Pension Fund for the public servants from which they can make a decent living after retirement, as well as build a competitive Public Service with increased ability to attract and retain the best human resources in the labour market. Furthermore, to establish the Government as a socially- responsible employer with an ability to provide better care and support to its employees, even when they are on retirement. The Fund has Service Providers which provide the Board and Secretariat with professional or specialized services. These include Administrators, an Actuary, Legal Advisors, Investment Consultants, Risk Underwriters for insurance purposes, External Auditors and Asset Managers (as independent local and global market investors), as well as a Centralised Custodian to monitor asset manager functions. The Fund uses mostly external investment managers to invest the Fund’s assets within the guidelines set out within the Fund’s Investment Policy Statement. The Fund aims to achieve the objectives of each investment option by investing in mandates that are managed by external professional investment managers. The target Return On Investment is set at Inflation +5% as a realistic target given the global economic conditions. The performance of each manager is closely monitored and changes are made when appropriate. Currently, the Fund employs a mix of Asset Managers as follows; five with balanced mandates, namely, Stanlib, Prudential, Investec, Coronation and Foord Asset Managers; one Private Equity Manager, namely Mergence Asset Managers; one Cash Manage, viz, Aluwani Capital and lastly Internal Bond Portfolio managed by the Secretariat. The way the Fund invests its Members’ money is reviewed every year, in order to assess whether the investment goals are met. The investments are currently invested into the following categories: Global and South African Equities; Lesotho and South African Property; Lesotho and South African Bonds, as well as Lesotho and South African Cash. The Fund also exists to improve the economic and socio-economic wellbeing of all Basotho; through investing in formative industries of Lesotho’s economy and thus creating jobs. The establishment of a high impact SocioEconomic investment environment in Lesotho under the Socially Responsible

Investing (SRI) portfolio was marked by the establishment of an independent mandate, specifically, under the Property Portfolio of the Fund in the form of Lesotho’s only regional malls. The Board of Trustees, however, maintained the same investment strategy, in which the Fund has a performance objective of “Inflation + 5% over a 3-year” rolling period. The 3-year rolling period allows for assessments to be focused on a long-term nature, especially since short-term performance may present bad patches due to market movements.

FINANCIAL HIGHLIGHTS: The Fund’s assets reached a significant value, recording a 13.3% overall asset growth to M5, 711,921,626 as at 31st March 2018 from M5,043,197,380 in 2017. This record milestone was achieved through a portfolio performance that averaged 3.1%. Though a qualified Auditor’s report has been issued for the Fund’s Audited Financial Statements in the Financial Year 2017/2018, it has always been clear that the qualification has nothing to do with the performance of the assets of the Fund, rather the carry-over liabilities as accrued rights from the previous pension scheme (legacy issue) which have created a growing deficit in the Fund. This matter is being addressed with the Government as the employer.

Public Officers’ Defined Contribution Pension Fund

financing as a means of reducing the country’s vulnerability to external sources and financing the budget deficit. Traditionally, when the market for Government securities flourishes, it magnifies the ability of the corporate securities market to prosper.

The pension sector Lesotho’s pension sector is relatively small and underdeveloped. There is a major divergence between coverage in the public (government/ parastatal) sector, where it is very high, and the private sector, where is quite low. However, many companies simply enrol employees in the pension funds of their South African parent company, and the extent to which this takes place is unknown.

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The main pension fund in Lesotho is the Public Officers’ Defined Contribution Pension Fund (PODCPF), which was established in 2008 and has its own Act. The PODCPF is a contributory, defined pension fund, covering most government employees, with both employer and employee contributions. At present, there is no legislation in place that deals with the establishment and regulation of private pension funds; the only relevant legislation is the Act establishing the PODCPF and elements of the Income Tax Act. The Public Officers’ Defined Contribution Pension Fund currently has assets under management of about M5.7 billion. There is a need to develop an overall policy framework for the pension sector in Lesotho to specify the roles of public (statutory) and private pension schemes. Moreover, pension fund members are vulnerable to fraud and mismanagement because there is no regulation of occupational and private pension funds. The Insurance and Pension Regulation and Supervision Project, which is a World Bank FIRST initiative, has been working to strengthen the legal, regulatory and supervisory frameworks of Lesotho’s private pensions schemes, among others. Government has, with the assistance of the ILO, proposed the establishment of a national statutory contributory pension scheme as part of broader social security reforms. This is particularly aimed at employees of the many textile and garment firms in Lesotho. In principle, all those in formal employment would be compelled to join the new scheme.

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The Ministry of Finance, in collaboration with the World Bank and other stakeholders, has drafted the new Pensions Bill. When it becomes law, the bill will regulate the pensions industry and broaden the mandate of the CBL by making it the regulator of Pension Funds in order to deal with regulatory gaps in the subsector. The envisaged scope of application covers both occupational and non-occupational pension funds. The law is intended to: •

Ensure protection of the rights and interests of members of pension funds by imposing certain obligations on those who manage pension funds

•

Ensure that pension funds are properly governed in line with modern principles of governance, with particular reference to reporting requirements, risk management and investment of pension monies

•

Provide for the segregation and definition of duties and responsibilities of key players in

the pension industry, such as administrators, asset managers and custodians During 2017 the CBL completed drafting the implementing regulations of the Pension Bill, including regulations on licensing, disclosure and financial reporting. The regulations were expected to be gazetted after the enactment of the Pension Bill in 2018. Furthermore, supervision frameworks and structures aimed at supporting the implementation of the Pension Bill have been put in place.

MONEY & CAPITAL MARKETS Cultivating money and capital markets has been a financial sector priority for more than two decades. The first phase, introduced in 2008, focused on developing money markets (Treasury bills) by increasing the frequency of auctions and the number of tenors. This was followed by the introduction of Government bonds in 2010, with the objective of cultivating domestic sources of

Following the successful implementation of a Treasury securities market, the CBL embarked on yet another important phase in its efforts to develop domestic capital markets – the drive to establish an organised market for trading stocks. This saw the establishment of an Overthe-Counter (OTC) market, which is a market where stocks which are said not to meet the listing requirements of the major exchanges are traded. This provided private enterprises with a platform to make public offerings of their shares to raise capital for their business needs in a more organised and regulated manner. During 2017, the CBL continued to implement the Lesotho Treasury Bonds Programme. To date, there are seven-year and ten-year maturity bonds, with auctions conducted four times a year, although the number is expected to increase as the market deepens. In an effort to bolster the bond market while addressing the infrastructure deficit in the country, the Minister of Finance ordered that M450 million be issued through Government bonds during 2017. Maseru Securities Market Launched in January 2016, the Maseru Securities Market (MSM) was set up to further the development of equities and the corporate bonds market while also addressing the illiquidity problem of Government securities. The MSM establishes a central location for Basotho to buy and sell local companies’ stocks and bonds, and for trading in the secondary market, thus providing companies that participate in the stock exchange with alternative sources of capital and the public with diversified investment opportunities. Operating in line with international best practices, the MSM is expected to benefit the economy through facilitating the mobilisation and efficient allocation of capital to finance investment.

The Capital Markets Regulations (2014) provide for the orderly, secure, fair and transparent operation of the MSM. The exchange is currently operated by the CBL, but preparations are being made to have it stand on its own. During 2017, the Central Bank managed to register and licence different market player, including three brokers (who also work as sponsors) and five financial advisors.

to be allocated to investment projects with higher returns. As the rate of return to savers increases, savings become more attractive. This encourages the growth of overall savings and investment within the economy. •

Preparations are underway by Government and some private companies to list on the MSM. To make companies realise the value of the securities market, the CBL continues to raise awareness among business decision makers regarding the merits of capital markets as a source of long term capital to finance growth and expand businesses, either by issuing debt or equity securities. The stock market is expected to benefit the economy in a number of ways, including: •

•

Provision of Capital – Stock markets facilitate the raising of capital for companies through the issuance of new stock (selling shares) or by borrowing through bonds and other debt instruments. Thus the MSM’s role is to provide much needed financing for investment within the country. It will also provide an alternative avenue to raise funds for investment instead of depending only on borrowing from commercial banks. This will remove the bottleneck to investment which emanates from the fact that the banks are generally risk averse. Increased Savings – Domestic savings are expected to increase as the securities market provides opportunities and profitable options for people to invest in and increase their savings. It provides incentives to defer consumption in favour of investment. If efficient, capital markets also enable savings

•

Efficient allocation of capital – Investing in the stock market leads to a more rational allocation of resources. Funds which could have been consumed or kept as idle deposits with banks could be mobilised and redirected to finance business activity in the more productive and profitable sectors of the economy. Provision of liquidity – The MSM provides a ready market for the sale and purchase of securities. This gives assurance to investors that their investment could be converted into cash at any time if needed. Improved corporate governance – Capital market development necessitates the creation of a legal and regulatory framework incorporating increased transparency and information dissemination. These monitoring systems reinforce corporate governance practices, improve transparency and enhance investor confidence. Industry-level data from various studies has shown a positive relationship between market-based governance and improvements in industry efficiency. Economic growth – The MSM aims to accelerate economic growth by providing a boost to domestic savings and increasing the quantity and the quality of investment. In particular, it can encourage economic growth by providing an avenue for new and growing companies to raise capital at a lower cost.

TAXATION The Lesotho Revenue Authority (LRA) was established in 2003 to enhance the efficiency and effectiveness of revenue collection and to provide

an improved tax service to the public. Huge improvements have subsequently taken place in revenue collection as well as in raising voluntary compliance among taxpayers and creating a fair and equitable environment. Milestones achieved by the LRA in the past decade include the establishment of the self-assessment system and introduction of Value Added Tax (VAT), which has been instrumental in broadening the tax base. The LRA’s Strategic Plan for the 2014-2019 period focuses on the urgent need to provide the funding required to develop the economy while minimising the cost of compliance to the client and the cost of collecting that revenue. The plan builds on the solid foundation established in 2007 when the authority began to emphasise ‘taxpayercentricity’. In implementing its strategic plan, the LRA has set out to address medium and long-term issues through specific action programmes. In the medium term, this will see the modernisation of the LRA’s processes and systems. In line with its Customs Modernisation Programme, the authority is redesigning and automating customs procedures through the implementation of the Asycuda customs border control system. Another area is the automation of tax processes through the Oracle Tax system. Long-term objectives include working to ensure that relevant policies and legislation are updated in line with changing times, the development and implementation of an integrated border management strategy, as well as the development of a strategy for new markets and for the informal sector, among others. The corporate tax rate in Lesotho is 10 percent for manufacturing companies and commercial farming and 25 percent for other companies. In order to curtail leakages in revenue collection, as of April 2018 payment of all government services and collection of revenue may only take

place at commercial banks, and services are only granted on the production of proof of payment. Revenue mobilising initiatives unveiled in the 2018/19 budget include the following: •

The introduction of a reverse charge mechanism by the LRA to tax imported services

•

The introduction by Government of the Voluntary Disclosure Programme, which is estimated to yield M225 million in additional revenue

•

Enhancement of tax administration measures by the LRA, targeting improved compliance by major tax contributors, which is expected to yield an additional M350 million

•

Introducing a small business tax to simplify and improve tax compliance

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Reviewing the mining tax regime to cater for windfall tax

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Reviewing Fringe Benefit Taxation to expand its base and compliance

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Phased alignment of VAT rates on telecommunications and electricity to the unitary rate of 15 percent

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Reviewing and setting new rates for all nontax revenues by all ministries, departments and agencies

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The introduction of a Government Lottery under the Lotteries Act 1975, with the legislation to be modernised in tandem with the operation of the Lottery

•

The introduction of levies on alcohol and tobacco

In addition, while VAT on exports and basic commodities remains at 0 percent, VAT on electricity has been raised to 8 percent and VAT on telecommunications to 9 percent. The VAT rate on other goods and services has been raised to 15 percent to align it with that of South Africa.

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While Lesotho’s Government continues to invest heavily in healthcare infrastructure, the sector experiences a variety of challenges, which are exacerbated by the country’s topography and the isolation of many rural areas where the majority of the population resides. This represents a significant access barrier to both healthcare personnel and patients. The lack of adequately qualified healthcare professionals is another problem, as is the sector’s ability to retain health workers in the remote parts of the country, where there are chronic shortages of primary healthcare services as well as medical and allied health professionals. The Ministry of Health (MoH) adopted the Primary Health Care (PHC) strategy in 1978. However, health outcomes remain below expectations. High rates of communicable diseases and HIV/ AIDS exert a great deal of pressure on health infrastructure, personnel and resources. Despite these issues, gains have been made in the past decade. The 2016 Population and Housing Census indicates that life expectancy at birth has increased since the census of 2006. For males, it has risen from approximately 40 years to 52 years, while for women life expectancy has increased from around 42 years to 60 years. Overall, life expectancy in Lesotho has risen from 41 years in 2006 to 56 years in 2016.

FRAMEWORK FOR HEALTHCARE The Ministry of Health (MoH) has adopted the Ouagadougou framework for health systems and Primary Health Care (PHC). The National Health Policy 2016 (revised) and the National Health Strategic Plan (NHSP 2017-2022) were both developed under the principles of the Ouagadougou framework. The National Health Policy of 2011 has been reviewed to take into consideration the UN’s Sustainable Development Goals (SDGs) and all other global, regional and national strategies, policies and frameworks. The new National Health Policy (NHP 2016) has as its goal the achievement of the SDGs for Lesotho by 2030 as well as Universal Health Coverage (UHC). Its vision is of a healthy population living a high quality and productive life. The NHP 2016 covers all aspects of health and provides broad

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Healthcare

The goal of Lesotho’s healthcare sector is to achieve Universal Health Coverage, including financial risk protection, and access to quality essential healthcare services as well as safe, effective, quality and affordable essential medicines and vaccines for all Basotho by 2030. direction for the development of health and the determinants of health, comprising 15 objectives and 75 policy measures. A framework has been provided in the NHP to guide implementation, including responsibility for policy oversight and coordination. The National Health Strategic Plan (NHSP 2017-2022) extends the contents of the NHP and explains in more detail its priorities, how its objectives are to be implemented, its expected results, and how these results will be measured. The National Health Strategy provides the basis for stakeholder discussion and dialogue on the priorities of the health sector and the basis for partners (both inter and intra-sectoral) to arrange their programmes and funding plans. Its goal is to achieve Universal Health Coverage, including financial risk protection, access to quality essential healthcare services, safe, effective, quality and affordable essential medicines and vaccines for all people living in Lesotho by 2030. The NHSP has six objectives based on an integration of the nine priority areas contained in the Ouagadougou framework for PHC and the six World Health Organisation (WHO) health system blocks. These objectives cover health service delivery, human resources, health information and research, access to medicines, medical devices and health technologies, health financing and leadership, governance, partnerships, community ownership and participation. The NHSP objectives aim to: •

Ensure equity in access to health services, infrastructure, equipment and technologies for quality primary and secondary health services for all Basotho

•

Ensure a well-trained and motivated health

workforce to deliver effective health services •

Improve ICT and e-Governance systems and infrastructure for timely, relevant, accurate and complete health information and health research development

•

Increase access to quality and safe health technologies, including medical devices, laboratories, medicines and vaccines while improving procedures and systems

•

Ensure an equitable, efficient and sustainable health financing system that protects people from financial catastrophe and impoverishment as a result of using health services

•

Strengthen the national health system’s leadership and governance, improving harmonisation and alignment towards government-led policy

Each objective has a number of strategies that describe how the objective will be achieved, while each strategy has in turn indicators to provide the roadmap towards the achievement of the objective. The NHSP will be used to guide the development of Lesotho’s annual plans in the health sector, guided by the six health sector objectives and their respective strategies. In addition to the UN’s SDGs, the NHSP was developed within the context of other global and regional strategies and frameworks for health. These include the Paris Agreement on Climate Change (2015); Global Health Security; Global Strategy on Human Resources for Health (Workforce 2030); Global Strategy for Women’s, Children’s and Adolescents’ Health (2016-2030); Reducing HIV Transmission by 2020; Elimination of Mother-to-Child Transmission of HIV and

Syphilis; End TB Strategy; WHO Framework Convention on Tobacco Control; and the Global Plan of Action on Violence Against Women and Girls. Current health commitments The Ministry of Health (MoH) is looking to achieve the Universal Health Coverage (UHC) goal of ensuring that all people obtain health services. Currently, health coverage stands at 67 percent, with the target of 100 percent coverage by 2020. This will be achieved by improving accessibility and affordability of health services through decentralisation of public healthcare. Health posts are being built across the country with the objective of having at least one health post per electoral division. This will reduce long distances currently travelled to health centres – an acute problem in the mountainous districts of Mokhotlong, Thaba-Tseka, Qacha’s Nek, Quthing and parts of Mohale’s Hoek. One such initiative was the opening of Tlaling Health Post in the rural Mohale’s Hoek District in October 2018. Prior to this, residents of the area had to journey for three days to access health services at Lithipeng Health Centre. This forms part of the 50 targeted health posts being constructed in hard to reach areas across the country in furtherance of UHC. In addition, mobile clinics are being rolled out countrywide, and the World Health Organisation (WHO) and European Union (EU) have signed a joint statement to accelerate progress in this regard. Importantly, these mobile clinics provide services ranging from HIV testing and adherence to antiretroviral treatment (ART), cancer screening and referral of patients, with Population Service International (PSI) having also partnered with Government with regard to HIV pre-test and testing services. The MoH, in partnership with Elizabeth Glaser Pediatric AIDS Foundation (EGPAF), launched a mobile clinic at Sefika Taxi Rank in August 2018 in order to bring PHC services closer to vendors and taxi operators. The mobile clinic staff comprise a nurse and professional counsellor from EGPAF, while the MoH contribution includes the mobile clinic and medication. Furthermore, Lesotho’s emergency services are

in urgent need of strengthening, and Government has thus also prioritised the drafting and approval of an Emergency Services Policy during the 2018/19 fiscal year. Notwithstanding budgetary constraints, Lesotho increased its allocation to health and social welfare by 15.7 percent in the 2018/19 budget. In respect of maternal health, the intention is to reduce maternal mortality by increasing the number of women giving birth in hospital from the current 77 percent to 90 percent by 2020. At the same time, child health will be improved by raising immunisation coverage from 68 percent to 90 percent by 2020. Regarding HIV and AIDS, Government will step up efforts to focus more on TB and preventative measures by increasing the use of Post Exposure Prophylaxis (PEP), which reduces the probability of contracting HIV by 80 percent. On the coordination side, legislative changes will be undertaken to transition the National AIDS Commission to the National AIDS and TB Commission as these two diseases are closely related. Setting up a Cancer Treatment Centre will necessitate the establishment of a special institution to manage the radioactive materials generated by the centre so as to minimise any possible threats to the environment. Government has already drafted a Radiation Protection Agency Bill, which will culminate in the establishment of a specialised agency to oversee the operation of the Cancer Treatment Centre. The International Atomic Energy Agency (IAEA) will provide the necessary capacity building to ensure effective management of the Radiation Protection Agency. Government initiatives are also ongoing in the area of non-communicable diseases. Renal dialysis is already being offered at Motebang Hospital, and options are being assessed for kidney transplants, which cost around M600 000 in South Africa compared with M200 000 in India. Other issues being considered are alcohol and tobacco control measures.

HEALTH PROFILE Lesotho has an elevated burden of AIDS-related deaths as well as high mortality due to noncommunicable diseases, including cardiovascular and chronic respiratory diseases, diabetes, cancer and road traffic accidents. The vulnerable and socially disadvantaged are more likely to die sooner than people of a higher socioeconomic class due to their exposure to hunger, harmful products (such as tobacco or unhealthy food), and limited access to health services. Fertility and contraception According to the 2016 Population and Housing Census, the Age Specific Fertility Rates (ASFR) curve indicates that most females give birth between the ages of 25 and 29 years. Compared with previous censuses, the age pattern of fertility in Lesotho has remained relatively constant over the years. In the 1976 census, the Total Fertility Rate (TFR) was estimated at 5.4 children per woman. This had declined to 3.2 children per woman in the 2016 census – a similar finding to the TFR of 3.3 recorded in the 2014 Lesotho Demographic and Health Survey (LDHS), which had not changed since the 2009 LHDS, but was slightly lower than the rate of 3.5 reported in the 2004 survey. Fertility is notably higher among rural women than their urban counterparts, with the former group giving birth to nearly two more children during their reproductive years than urban women. This tallies with the finding that educated women from wealthy backgrounds are more likely to use modern contraception than less educated women from poorer homes. Teenage pregnancy in Lesotho remains unacceptably high, with estimates of 20 percent in 2004 and 19 percent in 2014. These numbers are even higher among adolescent girls in rural areas. As regards the contraceptive prevalence rate (CPR), a comparison of results from the last three LDHS reports reveals that the CPR among married women in Lesotho has steadily increased: from 37 percent in 2004 to 47 percent in 2009 and 60 percent in 2014. Similarly, the CPR among sexually active unmarried women has risen from 48 percent in 2004 to 58 percent in 2009 and 73 percent in 2014. Among married women, the

most popular methods are injectables (used by 24 percent), male condoms (used by 17 percent), and the pill (used by 14 percent), while among sexually active unmarried women the most commonly used method is the male condom (45 percent). Furthermore, the survey reveals that 18 percent of currently married women have an unmet need for family planning services, with this figure rising to 20 percent among unmarried sexually active women. Maternal health Proper care during pregnancy and delivery is important for the health of both mother and baby. The 2014 LDHS results show that 95 percent of women who gave birth in the five years preceding the survey received antenatal care (ANC) from a skilled provider at least once. A little less than three-quarters of women (74 percent) had four or more ANC visits. The percentage of women receiving ANC from a skilled provider has increased slightly from 2004 (90 percent) and 2009 (92 percent). In addition, 78 percent of women reported delivery by a skilled provider, and 77 percent of births took place in a health facility – an increase from 59 percent in 2009. Home deliveries are still common in rural areas and among less educated and poor women. The 2016 Census gives the Pregnant Related Mortality Rate (PRMR) of 618 maternal deaths per 100 000 live births. While this compares favourably with the 2014 LDHS of 1 024 deaths per 100 000 live births, Lesotho’s maternal mortality rates are still unacceptably high. This is because important healthcare services during pregnancy, childbirth and after delivery remain limited for the poor, especially those living in remote communities. Prompt postnatal care (PNC) for both the mother and the child is important to treat any complications arising from the delivery, as well as to provide the mother with information on how to care for herself and her child. A large proportion of maternal and neonatal deaths occur in the first 48 hours after delivery. However, only 62 percent of women and 18 percent of newborns receive the recommended postnatal health checks within two days of delivery. First-time mothers are the most at risk, with sepsis, abortion and hypertensive disorders among the major causes of death.

Further, the WHO estimates that some 13 percent of maternal deaths in 2015 were indirectly AIDSrelated. Child health, nutrition and mortality The impact of chronic food insufficiency and hunger is grave and a major concern to Government, the UN and NGOs. For example, one-third of children under 5 years of age are stunted, 3.5 percent suffer from acute malnutrition (wasting), and 10 percent are underweight. Only 11 percent of infants 6-23 months are covered by the minimum accepted dietary standards and more than half of infants 6-23 months are anaemic. More than 27 percent of women and 14 percent of men aged 15-49 are anaemic. The highest levels of chronic malnutrition prevalence is in mountains (42 percent of residents), followed by foothills (41 percent) and the Senqu River Valley (34 percent). While malnutrition remains one of the most serious long-term problems facing the country, Lesotho has nonetheless seen marked improvements in stunting levels among children under the age of five, which has been reduced to 33 percent from 39 percent in 2009. Factors that have contributed to this positive trend include the provision of blanket supplementary feeding of 24 028 beneficiaries (children 6-23 months and pregnant and lactating women) and accelerated support for families and structures at community level to adopt optimal nutrition practices. Lesotho has established a schedule for the administration of all basic childhood vaccines, including BCG vaccination against TB, the polio vaccine, pentavalent vaccine and measles vaccine. Since late 2008, DPT vaccine (to prevent diphtheria, pertussis and tetanus) has not been given to infants in Lesotho as a stand-alone vaccine. Instead, it has been combined with other antigens that protect against hepatitis B and Haemophilus influenzae type b. This vaccine (DPT-HepB-Hib) is known as the pentavalent vaccine. In addition, the MoH has successfully switched from trivalent Oral Polio Vaccine (tOPV) to bivalent Oral Polio Vaccine (bOPV) for routine vaccination and campaign immunisation activities. According to the 2014 LDHS, among all children born in the five years preceding the survey, 68 percent received all basic vaccinations, with

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coverage having increased modestly since the 2009 LDHS estimate (62 percent). In total, 98 percent of children have received BCG, 98 percent the first dose of pentavalent, and 96 percent have received polio 1. Some 85 percent and 76 percent of children have received the third dose of the required three doses of the pentavalent and polio vaccines, respectively. Coverage of vaccination against measles is 90 percent. Only 1 percent of children in Lesotho have not received any vaccinations, which compares favourably to the 2009 LDHS in which 3 percent of children were reported to have not received any vaccinations. Lesotho has significantly reduced its child mortality rates owing to improvements in child nutrition and increased immunisation against measles. Infant mortality has declined considerably in the past decade. From 94 deaths per 1 000 live births as documented in the 2006 census, the rate dropped to 59 deaths per 1 000 live births in the 2014 LHDS, and further to 53 per 1 000 births in the 2016 census. Urban settlements have the lowest infant mortality rates. Further, the infant mortality rate is lower for children born to women who attained secondary level education or higher (34.1 per 1 000 live births), while those whose mothers had no education experienced higher chances of dying before they completed their first year of life (76.0 deaths per 1 000 live births). Tuberculosis (TB) Despite subscribing to the SDGs and the End TB Strategy, Lesotho has a high burden of Tuberculosis (TB). According to the US President’s Emergency Plan for AIDS Relief (PEPFAR) in their Country Operational Plan (COP) 2018, there is an estimated TB incidence (including HIV/TB co-infection) of 724 per 100 000 of the population (16 000 incident TB cases, out of which 12 000 are estimated to be TB and HIV co-infected). With support from the Global Fund and World Bank, Lesotho plans to conduct a population-based TB prevalence survey that will provide a better estimate for TB incidence. Based on the current estimates, TB treatment coverage is around 45 percent nationally.

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The current objective is to increase TB treatment coverage and identify 90 percent of all incident TB cases and place them on appropriate treatment. Lesotho has enough GeneXpert equipment to meet the testing demand, and there is a need to increase, promote and optimise the utilisation of modern TB diagnostic equipment. PEPFAR Lesotho will also continue to support forecasting, distribution, and ordering of TPT (isoniazid and pyridoxine) for all facilities, and will support TB/HIV human resources at different levels so as to ensure eligible patients are initiated on TPT.

HEALTH PROGRAMMES A wide variety of development partners and donors support the Government of Lesotho in the health sector, with a large proportion of technical and financial support coming from the WHO. The Health Development Partners Forum, co-chaired by the WHO and PEPFAR, facilitates coordination of health sector support in the country from the partners’ side. Strategic priorities and focus areas under the WHO Country Cooperation Strategic Agenda (2014-2019) for Lesotho comprise: strengthening the prevention and control of HIV/AIDS, TB and MDR-TB; strengthening family and community health, including sexual and reproductive health; enhancing the capacity for the prevention and control of major communicable and noncommunicable diseases; strengthening health systems capacities and performance; and fostering health sector partnerships, advocacy and equity. The Lesotho United Nations Development Framework and Plan (LUNDAP) is fully aligned with the country’s National Strategic Development Plan and implemented through the ‘Delivering as One’ initiative. Annual reviews of the LUNDAP are conducted jointly with Lesotho’s Government. The UN has provided strategic guidance through the development of national policies, plans and technical guidelines in the areas of Adolescent Health and Integrated Management of Childhood Illnesses (IMCI), Nutrition, Sexual and Reproductive Health (SRH), Non-Communicable Diseases and Neglected Tropical Diseases (NTD). These strategic documents guide the

acceleration of implementation of high impact interventions needed to improve health and reduce the vulnerability of Basotho. The United Nations Population Fund (UNFPA) partners with the Lesotho Planned Parenthood Association (LPPA) and others to make Sexual and Reproductive Health Rights (SRHR), including family planning and HIV prevention services, accessible to all Basotho. Lesotho is one of seven SADC countries participating in the four-year project on Sexual, Reproductive Health Rights, HIV/ AIDS and Governance that is funded by the Embassy of Sweden. Its key objectives include the development of a critical mass of parliamentarians, advocate communities and civil society organisations (CSOs) to drive the HIV and SRHR agenda towards the universal realisation of rights, sustained and effective HIV/ AIDS interventions, and improved programmes on governance. It was reported in July 2018 that notable strides had been made on the project, such as capacity building, promotion of SRHR issues and roundtable meetings for ministers, as well as the formation of a national working group made up of various representatives. In 2018, the MoH in collaboration with the Elizabeth Glaser Paediatric AIDS Foundation (EGPAF) launched a four-year Catalysing Paediatric TB (CaP TB) project. Supported by UNITAID, a global health initiative that is working to end the world’s TB, HIV/AIDS, malaria and hepatitis C epidemics, the project aims to reduce morbidity and mortality, and is being implemented in nine sub-Saharan African countries. The goal is a two-fold increase in paediatric TB case detection. In Lesotho, the project targets diagnosis of approximately 1 100 children with TB, treatment of approximately 1 000 children with TB, and initiation of over 7 000 children on preventive TB treatment. To achieve these aims, EGPAF will work with the MoH and Untiaid over the next four years to implement the CaP TB Innovation Project. This should see a dramatic increase in access to new child-friendly drugs for both active and latent paediatric cases. Up to now, in addition to sub-optimal medications, timely and accurate diagnosis has been a major challenge in fighting paediatric TB.

Cancer screening and treatment Some 312 new cervical cancer cases are diagnosed annually in Lesotho. Cervical cancer is ranked the leading cause of cancer in Basotho women, and the second most common female cancer in women aged 15 to 44 years. In 2013 the Elizabeth Glaser Paediatric AIDS Foundation (EGPAF), with funding from the US Agency for International Development (USAID) and PEPFAR, helped the MoH to launch services at Lesotho’s first-ever cervical cancer screening and prevention facility, the Senkatana Centre of Excellence located in the Bots’abelo Hospital in Maseru. Senkatana now offers comprehensive gynaecological services, with an emphasis on cervical cancer screenings, diagnoses, precancer treatment services, and referrals to facilities for cancer treatment. EGPAF is currently working to decentralise these services to sites throughout the country. It is now well-established that Human papillomavirus (HPV) infection is a cause of cervical cancer, with HPV types 16 and 18 responsible for about 70 percent of all cervical cancer cases worldwide. The immunisation of girls against HPV is viewed as the most cost effective method of managing the occurrence of cervical cancer, and Lesotho has implemented a number of vaccination campaigns in recent years. Prime Minister Thabane officially launched the cancer screening campaign which took place as part of the Stop Cervical, Breast and Prostate Cancer in Africa (SCCA) Conference held in Maseru from 22-25 July 2018. The SCCA Conference brings together heads of state and government, first ladies and spouses, speakers of the national assembly and other relevant stakeholders in order to explore innovative public and private sector collaborations that will address the growing challenge posed by cancer on the continent. Lesotho hosted the 12th Stop Cervical, Breast and Prostate Cancer in Africa Conference (SCCA) at the ‘Manthabiseng National Convention Centre in July 2018 through the Office of the First Lady in collaboration with Princess Nikky Cancer Foundation.

Every year about 900 cancer patients are transferred to South Africa, costing the country approximately M20 million. For this reason, Government plans to build a Cancer Treatment Centre, with assistance from the Programme of Action on Cancer Therapy (PACT), Austria. At the same time, the Government of India has offered to help Lesotho by providing treatment for cancer patients, with the first group of cancer patients taken to India during 2018.

Your Health, our Concern.

THE HIV/AIDS PANDEMIC

HIV and AIDS is a burden to the health sector and has hampered both economic growth and social progress in Lesotho, becoming the leading cause of morbidity and mortality in the country. According to estimates from the US President’s Emergency Plan for AIDS Relief (PEPFAR), based on the latest figures taken from the 2016 national census, UNAIDS Spectrum estimation and projection package, and the Lesotho Populationbased HIV Impact Assessment 2017 (LePHIA), HIV prevalence among men and women 15-59 is 25.6 percent, with women having a higher HIV prevalence than men at all ages. Lesotho continues to be ranked second highest in HIV prevalence worldwide, as well as highest in incidence among people 15-59 years. Nonetheless, HIV incidence has seen a reduction from 1.9 percent in the 2014 LDHS to 1.5 percent in 2017. Although Lesotho has made significant progress on treatment coverage in the past five years, progress on primary prevention has lagged behind. Also, while there are a number of HIV programmes operating across the country, many people struggle to access these services due to factors like gender, socioeconomic status and geography, encountering issues such as insufficient funds to travel to health centres and a lack of drug supplies. HIV stigma and discrimination are also major barriers to accessing vital treatment, prevention and support services. Awareness of status among males 1559 is low (71.0 percent) and urgently needs to be addressed.

HIV PARTNERS & PROGRAMMES The HIV and AIDS response is primarily funded

by the Government of Lesotho, the Global Fund to Fight AIDS, Malaria and Tuberculosis, and the United States Government through PEPFAR. In May 2018, the National AIDS Commission (NAC) launched the Lesotho HIV Prevention Roadmap 2020, which provides the blueprint for scaling up HIV prevention programmes. This forms part of a comprehensive global response from bodies such as UNFPA, UNAIDS and other partners to end HIV and AIDS as a public threat by 2030. The roadmap is the result of a consultative process that brought together civil society organisation, networks of people living with HIV, representatives of key populations, and international organisations. Target-setting guidance for the roadmap was drawn from UNAIDS and localised to suit the context of Lesotho. It strives to accelerate HIV prevention to reduce new infections by 75 percent, and comprises a ten-point plan for HIV prevention at country level, laying out the immediate concrete steps that Lesotho is committed to take in this regard. The UNAIDS Fast Track Initiative seeks to end the AIDS epidemic by 2030 through rapid and massive acceleration of HIV prevention and treatment programmes with a people-centred approach. The set of targets that need to be reached by 2020 include achieving 90-90-90: •

90 percent of people living with HIV knowing their status

•

90 percent of people who know their HIVpositive status on treatment

•

90 percent of people with suppressed viral loads on treatment

Tel: +266 2232 2417 +266 2231 2720 Emergency Calls: +266 6312 9933 Shop No. 5, Husteds Building, Kingsway Road P.O. Box 82, Maseru Shop 29, LNDC Centre Maseru

The results from the Lesotho Populationbased HIV Impact Assessment 2017 show that Lesotho has made substantial progress towards the global 90-90-90 by 2020 targets at 77-90-88 respectively. Fast Track is based on an approach which leaves no one behind, especially populations at higher risk of acquiring HIV, such as sex workers, gay men and other men who have sex with men, transgender people and people who use drugs. Under Fast Track, these groups are supposed to receive assistance regardless of where they live or the legal status of their behaviour. PEPFAR’s Country Operational Plan (COP) 2018 is an expansion of the COP17 approach. The goal is to achieve the UNAIDS 90-90-90 targets in all age and sex bands and national 95-95-95 targets, which will result in 90 percent treatment coverage overall for people living with HIV (PLHIV) in Lesotho and a decline in HIV related deaths. Reaching epidemic control – the point at which new HIV infections fall below the number of AIDSrelated deaths – remains the overall PEFPAR goal. The recent LePHIA results show that in terms of progress towards the UNAIDS 90-90-90 goal, Lesotho is at 77-90-88, with 77 percent of PLHIV knowing their status, 90 percent of those who know their status on treatment, and 88 percent of those on treatment being virally suppressed. For the first 90 (knowledge of status), however, the gap between men and women remains. Although Lesotho has the second highest national HIV prevalence in the world, the LePHIA results show

that progress towards epidemic control is being made. Building on the results of the LePHIA 2017, COP18 will expand facility-based testing, care and treatment to cover 99 percent of all PLHIV. Antiretroviral therapy (ART) coverage will be expanded across all ten districts in Lesotho to 90 percent in order to achieve saturation across all age groups and sexes. PEPFAR Lesotho is also optimising HIV testing channels and strategies to better identify PLHIV – particularly adolescents and men – through expansion of index testing and partner notification, as well as scale-up of innovative approaches such as HIV self-testing. Lastly, COP18 will scale up men’s clinics in order to reach 90-90-90 in this specific population. In October 2018, the American Embassy and Lesotho Government signed a five-year bilateral Development Objective Grant Agreement intended to provide the framework for further PEPFAR funding amounting to US $250 million to combat HIV/AIDS in Lesotho. The funding will go to USAID’s implementing partners to work with local health workers to deliver high-quality, lifesaving prevention, care and treatment services. The US government, through PEPFAR, has committed more than US $384 million to the bilateral HIV response in Lesotho, which amounted to over M4 billion as at October 2018. Since 2004, the Elizabeth Glaser Paediatric Aids Foundation (EGPAF) has worked in partnership with Lesotho’s MoH, district health teams, health facilities and communities. EGPAF currently supports more than 220 sites in ten districts to implement a comprehensive HIV package of services, including adult and paediatric TB and TB/HIV care and treatment, integrated maternal, newborn and child health (MNCH), reproductive healthcare (including cervical cancer screening and treatment), nutrition support, community engagement, community-clinic linkages, and strategic information and evaluation. From 2004 to date, EGPAF-supported programmes in Lesotho have: •

Conducted more than 1.489 million HIV tests, resulting in the identification of 89 000 HIV-positive individuals

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•

Provided Prevention of mother-to-child transmission (PMTCT) services to more than 278 000 women

•

Initiated more than 209 000 individuals on ART, including more than 10 700 children

•

Provided HIV services to more than 22 200 new and relapsed TB cases (since October 2014)

The USAID-funded Providing Universal Services for HIV/AIDS in Lesotho (PUSH) Project runs for five years (2016-2021) and aims to effect sustained reduction in HIV transmission, morbidity and mortality. PUSH will capitalise on gains made under the USAID-funded Comprehensive HIV/ AIDS Services Expansion project by sustaining support of a comprehensive package of HIV services in six districts (Botha-Bothe, Mafeteng, Maseru, Mohale’s Hoek, Mokhotlong and Thaba-Tseka) at 111 health facilities, including operations research in 12 health facilities. Based on the PEPFAR/Government of Lesotho prioritisation strategy, Strengthening the TB and AIDS Response in Lesotho (STAR-L) Project (2015- 2020) sees EGPAF supporting the MoH in implementing a comprehensive HIV service package in four districts of Lesotho (Leribe, Berea, Quthing and Qacha’s Nek) at 64 health facilities with funding from the US Centres for Disease Control and Prevention. The goal of STAR-L is to scale-up effective, sustainable, comprehensive HIV and TB/HIV prevention, care and treatment interventions to reduce HIV transmission, morbidity and mortality. The package of services offered in these health sites includes HIV counselling and testing, PMTCT services, adult and paediatric TB and HIV care and treatment, integrated maternal and child health services and nutrition support, health systems strengthening, community engagement, community-clinic linkages, and strategic information and evaluation. HIV testing and counselling HIV testing and counselling (HTC) services have been steadily expanding across Lesotho, particularly at the community level. PEPFAR offers direct support to MoH sites for Provider-Initiated Testing and Counselling (PITC) services, which is when service providers offer HTC rather than

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waiting for an individual to request it. With the aim of scaling-up high impact interventions to reduce HIV transmission and HIV-related morbidity and mortality, the focus is now on ART, voluntary medical male circumcision, PMTCT, pre-exposure prophylaxis (PrEP) and post-exposure prophylaxis (PEP). The MoH has already adopted the policy for HIV self-testing (HIVST), which is currently being piloted, with preliminary data having demonstrated high uptake, especially among males above the age of 20 years. During COP18, Lesotho is continuing to scale up PrEP and HIVST, with PEPFAR assisting in expanding channels for HIVST kit distribution at facility and community levels, introducing open access for HIVST, and ensuring male-dominated workplaces are adequately covered. Test and Start Lesotho was the first African country to launch the ‘Test and Start’ strategy for HIV and HIV Testing Services (HTS) guidelines, which stipulated that ART should be initiated in everyone living with HIV, regardless of their CD4 count. The Government of Lesotho has wasted no time in implementing the programme, which was launched in June 2016 and has subsequently been rolled out countrywide. The focus currently is on increasing treatment uptake for all PLHIV, and the policy shift for treatment monitoring has boosted uptake of routine viral load monitoring. Antiretroviral therapy The scale-up of Anti-Retroviral therapy (ART) in Lesotho has accelerated dramatically in recent years. Currently it is estimated by PEPFAR that out of 332 900 PLHIV, 254 428 are on ART – representing coverage of 76.5 percent compared with 42 percent in 2015. This is against a target of 80 percent ART coverage. PEPFAR’s Accelerating Children’s HIV/AIDS Treatment (ACT) initiative implemented in the five lowland districts has significantly contributed to improved paediatric treatment coverage from a baseline of 15 percent (2014) to 70 percent coverage, based on LePHIA 2017. PEPFAR’s target under COP18 is to increase the number of PLHIV receiving ART to 300 321 in order to achieve coverage of 90 percent. This

entails expanding ART throughout all ten districts in Lesotho to achieve saturation across all age groups and sexes. Voluntary medical male circumcision Evidence from international research, as well as the findings of the MoH situational analysis, indicates that male circumcision reduces transmission from a woman to a man by 60 percent. Implementation of Lesotho’s voluntary medical male circumcision (VMMC) programme began in 2012. The effective implementation of COP18 activities is expected to achieve the target of 36 719 VMMCs to reach 80 percent saturation in the five priority lowland districts of Berea, Maseru, Leribe, Mafeteng and Mohale’s Hoek. Technical assistance will be provided for the integration of early infant male circumcision in maternal and neonatal child health programmes in the saturated districts for sustainability. The mobile clinic initiative will increase VMMC coverage, not just for hard-to-reach rural areas that do not have access to a health facility, but also to populations such as herd boys and farmers who do not have the time to travel to a facility multiple times as a result of their work. Demand creation activities in scale-up districts will include forging collaborations between medical and traditional male circumcision practices due to the high prevalence (32-65 percent) and cultural significance of traditional circumcision. The MoH, with the support of Jhpiego – an international, non-profit health organisation affiliated with the Johns Hopkins University – has conducted mapping of traditional circumcisers in the supported districts to facilitate further engagement. Jhpiego will provide medical circumcision to traditional initiates at health facilities prior to the rite of passage ceremonies, and the Ministry of Education and Training has given Jhpiego permission to implement demand creation activities for VMMC in learning institutions.

estimated to be TB and HIV co-infected. Current priorities include improving the early diagnosis of TB among PLHIV to close the gap between the estimated TB incidence and notification rates. TB case detection is being intensified through the use of mobile laboratories focusing on high risk groups within the country, while support is provided for TB/HIV services at border points of care, and the integration of TB/HIV care and treatment services in PEPFAR scale-up sites. TB preventive therapy is also being intensified for all PLHIV without active TB disease.

DREAMS PEPFAR’s DREAMS (Determined, Resilient, Empowered, AIDS-free, Mentored and Safe) initiative aims to reduce HIV infections among adolescent girls and young women (AGYW) in ten Sub-Saharan African countries. Services include school-based HIV risk avoidance and violence prevention, community mobilisation and norms change activities, condom promotion and distribution programming, post-violence care, testing and counselling services, contraceptive mix options and PrEP. For COP17, the implementation of DREAMS focused on the districts of Maseru and Berea, with a greater emphasis on bio-medical interventions for AGYWs as well as increasing their linkages to testing services, and enrolment and retention into care and treatment for those needing it. Implementation in the two priority districts continues during COP18, and although there will be no geographical expansion of DREAMS, the Global Fund is implementing similar activities in Lesotho’s other eight districts. Pre-Exposure Prophylaxis

TB/HIV co-infection

Though the HIV epidemic is generalised, incidence is disproportionately highest among adolescent girls and young women (AGYW), female sex workers, men who have sex with men, multiple concurrent partners, and those reporting sexually transmitted infections. The revised national guidelines on the use of ART for HIV prevention and treatment recommend use of oral TDF/3TC for HIV-negative individuals at significant risk of acquiring HIV infection.

Around 75 percent of incident TB cases are

PEPFAR and the Lesotho Government are

working to extend Pre-Exposure Prophylaxis (PrEP) services to targeted groups in the priority districts using hybrid service delivery models. For COP18, the aim is to provide PrEP treatment to 11 208 new beneficiaries, which include AGYW in DREAMS districts, serodiscordant couples across all ten districts, and key populations in Berea, Leribe and Maseru. Government has committed to procuring PrEP medication for the beneficiaries as well as guaranteed access to infrastructure such as laboratory services, and has branded the national PrEP programme. The policy has not only resulted in increased access to PrEP services, but also geographic expansion of the programme. Prevention of mother-to-child transmission Lesotho has a high burden of HIV among pregnant women, with a prevalence of 24.6 percent. The National Prevention of motherto-child transmission (PMTCT) Strategy is to eliminate new paediatric HIV infections and improve maternal, newborn and child health and survival in the context of HIV. Routine viral load monitoring for all pregnant and lactating women and children was adopted as a standard of care in 2016. PEPFAR programme data show that the mother-to-child transmission rate among HIV exposed infants aged less than two months has dropped to 1.2 percent. LePHIA 2017 shows significant improvements in the national PMTCT response: 97.1 percent of pregnant women have attended at least one antenatal care (ANC) visit. The number of new paediatric infections due to vertical transmission continues to decline, from 1 600 in 2014 to 1 242 in 2016. This could be attributed to the high PMTCT coverage, where 95.6 percent of women (aged 15-49 years) who gave birth 12 months prior to the LePHIA survey knew their HIV status and 98.5 percent of HIV-positive pregnant women received ARVs for PMTCT. In COP18, PEPFAR Lesotho will continue supporting the national PMTCT elimination goal of attaining the MTCT rate of less than 5 percent,

with the strategic goals being to achieve 95 percent coverage of HIV testing services, 95 percent treatment coverage for HIV-infected pregnant and lactating women identified, 90 percent uptake of early infant diagnosis (EID) services at two months of age, 95 percent retention of mother-infant pairs, and 90 percent viral suppression rates. To achieve these targets, PEPFAR will shift to expand the direct service delivery approach from five to ten districts, targeting pregnant/lactating women, their children and partners. In addition, the programme will consolidate the gains made in the existing sites, while expanding integrated service delivery for adolescents living with HIV focusing on primary prevention, prevention of unintended pregnancies among adolescents living with HIV, and providing them with HIV treatment and care services. Expanding early infant diagnosis UNITAID is currently funding a project which aims to increase access to early infant diagnosis (EID) and ART among eligible children. Catalysing Expanded Access to Early Testing, Care and Treatment among HIV-Exposed Infants (2015-2019) sees EGPAF-Lesotho working with in-country partners and the MoH to strategically place new-to-market point-of-care EID platforms within health facilities. The aim is to have 29 EID testing sites, mostly at ‘hubs’ or high-volume sites, receiving samples from an additional 160 ‘spoke’ sites, by the end of 2018. The project aims to achieve reduction in turnaround time between blood sample collection and results receipt by caregiver from the current 30-60 days to zero days at hub sites and seven days at spoke sites. It also aims to reduce the number of days from receipt of results by a caregiver to ART initiation among HIV-infected infants to less than 14 days, and ensure 648 infants (90 percent of identified infants) are receiving treatment by project end.

HEALTHCARE INFRASTRUCTURE The delivery of health services in Lesotho takes place at primary, secondary and tertiary levels. There are a network of hospital, filter clinics, health centres, health posts, outreach services

and mobile clinics at the primary level, district hospitals at the secondary level, and the National Referral Hospital and two specialised hospitals at tertiary level. Altogether, there are 372 health facilities in Lesotho. In addition to the referral hospital and two specialised hospitals, these comprise 18 district hospitals, three filter clinics, 188 health centres, 48 private surgeries, 66 nurse clinics and 46 pharmacies. Health centres are the first point of care, and this is aimed at making the patient load at district and referral hospitals lighter. The Government of Lesotho through the MoH provides about 42 percent of the health centres and 58 percent of hospitals, while 38 percent of all hospitals and health centres are owned by the Christian Health Association of Lesotho (CHAL), which is a private-not-for-profit public health provider. The remaining facilities are either operated by NGOs, the Lesotho Red Cross Society (LRCS), or are privately owned. In addition, there is an extensive network of private surgeries, nurse clinics and pharmacies providing healthcare and dispensing medicines. The MoH, through a public-private partnership arrangement, has a memorandum of understanding with CHAL and the LRCS for the provision of a defined Essential Health Service Package (EHP) to the population through their network of health centres and hospitals. The ministry also works with a large variety of development partners, with donors including Irish Aid, the Global Fund, US Government, CDC/PEPFAR, Millennium Challenge Account, European Union, Gates Foundation, Gavi Vaccine Alliance, UNDP, UNAIDS, UNFPA, UNICEF, World Health Organisation, World Bank and World Food Programme in the design, financing and delivery of health care services. About 90 percent of Lesotho’s private health facilities are situated in the four lowland districts of Maseru, Berea, Mafeteng and Leribe. The Queen ‘Mamohato Memorial Hospital in

Maseru is a state-of-the-art referral hospital named after the late Queen ‘Mamohato Bereng Seeiso. Accommodating 425 patients – 35 private and 390 in the general ward – and some 700 employees, the ultra-modern hospital was opened in 2011 and serves 20 000 inpatients and 310 000 outpatients a year. Queen ‘Mamohato Memorial delivers significantly more services and services of a higher quality than its predecessor, the Queen Elizabeth II Hospital. Offerings include magnetic resonance imaging, laparoscopy procedures, neurosurgery, pathology services, intensive-care facilities, and 24-hour obstetrics at filter clinics. An additional dental laboratory has also been established here. Scott Hospital, the birth place of the King Letsie III, is an institution of the Lesotho Evangelical Church in Southern Africa (LECSA) and was founded some 80 years ago. The Scott Hospital Improvement Project (SHIP) aimed to make the hospital into the nation’s premier facility for paediatric healthcare, including constructing of a new maternity wing and major renovation work and upgrading of both Scott Hospital and the Scott Hospital School of Nursing. Lesotho’s other top hospitals include Maseru Private Hospital in Thetsane, and Wilies Hospital in Khubetsoana, Maseru. Additional health facilities in the Maseru area include Mohlomi Hospital for the Mentally Ill; Baylor College of Excellence, which caters for children with HIV/ AIDS; Senkatana for the provision of ART to adults; and the NHTC, which trains nursing professionals and medical students. Lesotho’s only military health institution, Makoanyane Military Hospital (MMH) was established in 1988 by the Lesotho Defence Force to provide health services for those in the military as well as their family members. Infrastructure development has seen the creation of various medical and non-medical departments, such as physiotherapy, laboratory, maternity ward extension and expansion of medical stores, as well as the creation of a Wellness Centre containing a TB clinic, hypertensive and diabetes clinic, mother and child health and family planning clinic and HIV/AIDS clinic.

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Lesotho has a history of high levels of investment in education, and indicators such as ‘expected years of schooling’ are well above the regional average. The country’s revamped education policy has seen improvements in the education components of the UN’s Human Development Index (HDI), reinforced by participatory approaches, service delivery and good governance. Since 2005, favourable policies implemented regarding gender and universal primary education have also benefited the sector. Great progress has been made in eliminating the gender gap in education, and Lesotho is ranked 73rd out of 144 countries in respect of gender parity in the World Economic Forum’s Global Competitiveness Report for 2017. The literacy rate among women is higher than that for men, and over half of all women and 40 percent of men have at least some secondary schooling, while 9 percent of women and 8 percent of men have achieved higher levels of education. Other positive interventions include the introduction of the School Meals Programme, whereby the Government and the World Food Programme (WFP) provide school meals to pupils throughout the country. Government covers two-thirds and the WFP one-third, with the latter focusing almost exclusively on children living in the remote mountain regions.

Education

& Training

The development of effective education, training and literacy programmes has seen Lesotho make significant progress in the past decade. primary education, there are concerns that focus has been more on getting pupils into school, with less attention having been paid to the quality of education. Another obstacle is the shortage of adequate classrooms. The provision of new classrooms has been constrained both by resources and implementation capacity. The difficult terrain and climate are contributory factors, as the logistics of undertaking civil works in remote mountainous areas are extremely challenging. Other issues relate to poor retention rates at primary and junior secondary levels and lack of secondary schools in remote rural areas.

Since 2013, the Ministry of Education and Training (MoET) has implemented various measures to address the challenge of access to and quality of primary and secondary education. These include developing early learning standards, a review of the basic education curriculum and assessment, and localising ordinary levels. Another important achievement was the development of the 2016-2026 Education Sector Strategic Plan.

Lesotho’s enrolment statistics suggest that there are about 300 000 primary and high school dropouts. These are people who left school before they could acquire the skills needed for survival and employment. While boys drop out of school to herd cattle, girls drop out to provide child labour to households, with many children having to take care of siblings and sick parents. These issues can be attributed to sociocultural norms and practices, as well as economic and social factors such as poverty, distance from school, the impact of HIV, teenage pregnancies, child marriages and the lack of sanitary material.

While Lesotho has worked hard to build human resources, progress has been constrained by factors such as poverty and inequality, high HIV/ AIDS prevalence and other health challenges; not to mention the education and skills mismatch, reflected in elevated unemployment rates. Despite Government’s strong commitment to free

Expenditure on education in relation to GDP is very high. In 2018/19, Government allocated more than 13.5 percent of its budget to education and training. However, educational outcomes do not reflect financial input to the sector. Significant challenges remain in respect of the efficiency and effectiveness of public spending in education.

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Current concerns, such as the country’s skills mismatch, are being addressed through a review of the school curriculum and raising expenditure on school materials. The Ministry of Education and Training is revamping its Technical and Vocational Education Training (TVET) policy, and engaging with employers to ensure that the curriculum matches the jobs currently being created. In spite of Lesotho’s budgetary constraints, the allocation to Education and Training rose by 13.2 percent in the 2018/19 budget. One of the strategic goals of the 2018/19 Budget Strategy Paper for the 2018/19 to 2020/21 period is to improve the country’s productivity and innovation capacity by strengthening human capital through investments in health, education and training. This goal requires the following key strategic actions in the education sector: •

Review the primary and secondary school curricula and delivery methods to integrate entrepreneurial, problem solving and critical thinking skills.

•

Adopt strategies to improve enrolment rates in secondary education and address gender equality.

•

Strengthen TVET institutions.

•

Strengthen the country’s capacity to anticipate and match the labour market with skills.

Development partner programmes The World Bank’s US $2.1 million Basic Education Improvement Project for Lesotho aims to improve basic education service delivery and student retention in targeted schools. Being implemented between 2016 and 2021, the project targets the 300 poorest-performing primary schools across all districts as well as 65 junior secondary schools in their catchment areas. It aims to support Government in its efforts to improve the equity of basic education and enhance the skills of Basotho students, thereby contributing to positive social and economic outcomes, particularly for the poorest citizens. Due the similarities between this project and the IDA-funded Lesotho Education Quality for Equality (LEQEP), all of its main preparatory activities were carried out under LEQEP. The disbursement condition of the grant has been fulfilled, and training of junior secondary school and primary school teachers began during 2018. The LEQEP is based on three complementary components: improving the teaching and learning environment; strengthening accountability for student learning and retention; and strengthening institutional capacity. Key role players at the school level, including school principals, teachers, school boards and local communities, are being empowered, while a new model for teaching mathematics and science is also being piloted in some junior secondary schools.

FORMAL EDUCATION The formal education system in Lesotho has eight levels. This comprises pre-primary or kindergarten (Level 0) for children between the ages of three and five, followed by elementary or primary school (Level 1), which starts in Grade 1 and lasts for seven years. At the end of Grade 7, pupils sit for the Primary School Leaving Examination (PSLE). Secondary education begins with junior or lower secondary (Level 2) and lasts for three years (Forms A, B and C). Senior or upper secondary (Level 3), lasts for two years (Forms D and

E), and is usually referred to as high school. Progression from junior secondary to high school is through the Junior Certificate (JC) examination. High school candidates sit for the Cambridge Overseas Certificate (COSC) of the University of Cambridge Examination Syndicate. The COSC, currently known as the Lesotho General Certificate in Secondary Education (LGCSE), forms the entry requirement for higher and tertiary programmes. The LGCSE is locally prepared while COSC was internationally prepared. Level 4 refers to post-secondary education, and comprises institutions offering technical and vocational training. All such institutions are owned by the government. Tertiary or higher education (Levels 5, 6 and 7) is made up of institutions such as the Lesotho College of Education (LCE), National University of Lesotho (NUL) and Limkokwing University of Creative Technology (LUCT). There is also Non-Formal Education (NFE) that cuts across primary, secondary and tertiary. LCE partners with NUL to provide basic preservice teacher education for teaching in primary and secondary schools. The LCE also provides inservice, part-time and distance teacher education to enable unqualified and under-qualified school teachers to achieve diploma-level qualifications. School and technical education examinations are managed by the Examination Council of Lesotho, together with the Technical and Vocational Education and Training Commission. Pre-School Education Early childhood is viewed as a time of immense growth and development, and access to Early Childhood Care and Development (ECCD) programmes is able to improve learning outcomes at the primary level. This is because such programmes enhance children’s readiness for school, with ECCD activities reducing the number of repeat cases and failure rates. In addition, ECCD has strong gender implications as it enables mothers to go to work and participate in development activities while children are being cared for.

The Early Childhood Development unit established under the MoET coordinates all ECCD activities and endeavours to increase access to ECCD, standardise the training of teachers and attach the ECCD programme to pre-existing primary schools. ECCD in Lesotho presently takes three forms: •

Community-run pre-schools offer homebased care for disadvantaged children aged three to five years, who are taken care of by unpaid volunteers. The same national curriculum is used and no fees are paid.

•

Centre-based approach for children aged three to five years through mostly privatelyowned ECCD centres, where both fees and teachers are paid.

•

Reception Classes for five-year-olds where children are prepared for entry into primary school. No fees are paid and teachers are paid by government.

In reception classes attached to primary schools, enrolment has risen from 3 930 children in 119 schools in 2008 to 5 832 children in 241 primary schools in 2016. Total enrolment in all ECCD facilities increased from 53 530 in 2015 to 53 793 in 2016. Between 2015 and 2016, the Net Enrolment Rate (NER) in ECCD rose from 23.5 percent to 29.49 percent – 28.83 of boys and 30.15 percent of girls. The total number of ECCD facilities grew from 2 204 in 2015 to 2 287 in 2016. Of these, 1 606 (70 percent) were owned by the community and 362 (16 percent) were privately owned, with government facilities numbering 103 (5 percent).

with equitable access to comprehensive, continuous, culturally appropriate, high-quality, participatory and sustainable IECCD services, from preconception to five years of age. The IECCD Strategy has, among others, focused on improving and expanding preconception, antenatal and neonatal services; ensuring vulnerable children with developmental delays, malnutrition, HIV and AIDS or disabilities receive early childhood intervention services; developing, improving and expanding pre-school services and improving transition from home and preschool to primary school; and expanding and improving the system for pre- and in-service training. Primary Education Primary education spans Grade 1 to Grade 7, and begins when a child is at least six years old. Successful candidates usually complete primary school at the age of 12 or 13, although some complete primary level when they are older as they begin Grade 1 late. Implementation of the Free Primary Education (FPE) Policy commenced in 2000, beginning with Grade 1. Universal access to primary education has been supported by various measures, such as the school feeding programmes, child grants, the provision of learning materials, and integration of children with special educational needs into primary schools.

By 2016, there were 2 914 teachers in ECCD facilities. In order to address the limited absorption capacity of the LCE to enrol more trainees, the MoET offers in-service training to teachers using its area resource teachers’ structure with a UNICEF-supported curriculum and other learning materials.

As of 2017, there were 1 478 registered primary schools and agencies in Lesotho, most churchowned. The Catholic Church has the majority (34 percent), followed by the Lesotho Evangelical Church (32 percent), and Anglican Church of Lesotho (12 percent). Some 11 percent are Government-owned, while 4 percent are community owned and just 1 percent are private. The MoET is responsible for the payment of teachers and provision of financial support for most registered schools, including those belonging to churches and communities.

Lesotho’s Integrated Early Childhood Care and Development (IECCD) Policy aims to provide all Basotho children and their parents or guardians

Physical access to schools in the mountainous and remote areas is a major challenge, particularly for children from food insecure

households. Government has been building schools in remote areas to reduce long walking distances. These new schools are better equipped with facilities and teaching staff, which leaves old schools with few children and accounts for the decline in the number of schools in the past decade. According to the latest Education Statistical Report (ESR) released in 2018, total enrolment at this level was 360 756 in 2016. Out of this number, 51.1 percent were boys and 48.9 percent girls. Just under a quarter of all children enrolled had either lost one or both parents through death, while 5.1 percent of enrolled children had a form of disability. The NER in primary schools was 89.4 (89 for boys, 89.8 for girls) in 2016. At the same time, the pupil-teacher ratio was 33:1 – a huge improvement since the year 2000 when it was 48:1. Furthermore, repetition rates at primary level have decreased, from 16.5 percent in 2011 to 9.2 percent in 2016, with 10.7 percent of boys and 7.5 percent of girls being repeaters. Lesotho is one of two countries in SubSaharan Africa to have eliminated gender gaps in educational attainment. In 2016, 87.3 percent of children who sat their PSLE passed, compared with 87.4 percent in 2015. Transition rates to secondary school have fluctuated since 2001, with the lowest transition rate recorded in 2003 at 61.6 percent and the highest at 77.3 percent in 2016. Presently, more females than males progress from Standard 7 to Form A. Secondary Education The number of registered secondary schools increased to 341 in 2017. As many teachers resist teaching in remote rural locations, schools in the urban areas or lowlands tend to be overcrowded. Furthermore, secondary school fees are still unaffordable to many poor families. According to the ESR, there were 128 780

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learners enrolled in secondary education in 2016 (55 032 boys and 73 748 girls). Unlike primary schools, where enrolment rates have been decreasing, secondary school enrolment has generally increased over the years, with the NER rising from 22.0 percent in 2002 to 38.7 percent in 2015, and further to 43.1 percent in 2016. Despite some fluctuations, the pupil to teacher ratio has remained relatively unchanged over the past decade, registering 24:1 in 2016. Although more females than males are enrolled in university education in Lesotho, this has not translated into changes in socio-cultural norms and practices. Studies have shown that girls’ course selection and performance at secondary schools were influenced by the persistence of traditional gender roles and cultural norms. For example, the perception that boys are good at mathematics, science and technology while girls are good at languages and home economics is widespread among teachers, parents and, consequently, male and female students. In addition, teachers and principals are often not gender sensitive in their attitude, behaviour and teaching practices, which negatively influences the opportunities of girls’ access to, retention in, and completion of secondary education.

VULNERABLE CHILDREN The Child Grants Programme (CGP) is a nonconditional social cash transfer for poor and vulnerable households with the objective of improving the living standards of Orphans and Vulnerable Children (OVCs) as well as reducing malnutrition, improving health status and increasing school enrolment. As a result of the CGP, there have been significant reductions in children’s morbidity rate and school dropouts, along with an increase in birth registration and school enrolment. The CPG has also contributed to lessening vulnerabilities at community level, particularly in situations where children from poor households often have to drop out of school and are forced to seek employment in an effort to help families survive. The World Food Programme (WFP) works with

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Unit provides courses to out-of-school candidates at JC and non-formal COSC levels. The Institute of Extra-Mural Studies (IEMS) in the National University of Lesotho also provides a range of courses.

In addition to the LDTC, there are other institutions and associations involved in NFE initiatives in Lesotho. These include the Lesotho Girl Guides’ Association (LGGA), Lesotho Correctional Services (LCS) and Lesotho Association of Non-Formal Education (LANFE). These institutions or associations are affiliated with LDTC in terms of providing training of teachers, teachers’ guide materials, and learners’ books. Other umbrella bodies helping to coordinate the sector include the Lesotho Council of NGOs (LCN), Lesotho Youth Federation and Lesotho Cooperative Credit Union League (LCCUL).

the Government of Lesotho to provide 250 000 children in 1 173 primary schools with morning maize meal porridge and a lunchtime meal of the staple food served with either pulses or fish. This helps boost micronutrients and improves the learning environment, increasing enrolment and attendance and reducing dropout rates. WFP also supports the Government in extending its own School Meals Programme to inaccessible areas. ‘Mamohato Children’s Centre Opened in November 2015, the ‘Mamohato Children’s Centre at Thaba Bosiu aims to provide vulnerable children affected by HIV/AIDS with the best care and support available. The facility is an initiative of the Sentebale charity, which was cofounded by Britain’s Prince Harry and Lesotho’s Prince Seeiso in 2006. Activities held at the centre include: hearing assessments for children with hearing disabilities; workshops and training for community-run organisations caring for vulnerable children; and youth education and life skills workshops. The centre is also hosting weeklong residential camps which aim to ensure that all 1019 year olds living with HIV access and adhere

to their treatment, feel supported in school, at home and in the community, and are able to lead healthy and productive lives.

NON-FORMAL & SPECIAL EDUCATION Non-formal education (NFE) is essential for all those that have been excluded from the formal schooling system. In Lesotho, there is some provision for adults and out-of-school youth to receive education at the primary and secondary level, most of which takes place through skills development centres. Generally community centres rather than government institutions, these NGOs rely largely on sponsorship from donor agencies. The Government budget for NFE (literacy and adult basic education) is mainly channelled through the Lesotho Distance Teaching Centre (LDTC), which comprises two main divisions. The Basic Education Unit is for those wishing to acquire reading, writing and simple arithmetic skills as well as life skills, and offers a free Literacy Programme. The Continuing Education

In the 2016 census, the national literacy rate was estimated at 97 percent, having improved from 87 percent at the time of the 2006 census. LANFE provides literacy education as well as vocational skills and training to herd boys, other OVCs and their families, training of trainers in literacy and small business management, and empowerment of villagers in development and poverty reduction. Established in 1991, LNFOD provides support for disabled peoples’ organisations, empowering their members with life-skills, financial and material resources, and representing their needs to Government, development partners and society at large. In 2016, of those enrolled in NFE institutions, 6 994 (71 percent) were male and 2 828 (29 percent) female. Some 27 percent of learners were below 19 years of age, while 72 percent were older than 18, and 88 percent of those in the younger group were enrolled in literacy and numeracy programmes, followed by those pursuing secondary (14.4 percent) and primary (4 percent) education.

TECHNICAL & VOCATIONAL TRAINING

Technical and Vocational Education Training (TVET) involves occupation and employmentbased education, designed to prepare learners for specific trades, crafts and careers, largely through practical learning and relevant theory to equip them to be competent to perform in their respective occupations in the labour market. TVET institutions are either publicly or privately owned formal schools, centres or institutions that offer informal, traditional apprenticeship and/ or non-formal semi-structured training. They offer a range of study fields from agriculture, basic handicrafts, home economics, hospitality, construction and engineering, to business, management and IT. Students who emerge from these institutions are awarded national or international certificates. TVET falls under the Department of Technical and Vocational Training (TVD) of the MoET. The TVD accredits TVET institutions, regulates their curricula, and inspects and assesses them through trade tests. It sets out to improve the quality of education and training through curriculum development; inspection and assessment; accreditation of programmes and institutions; administration of trade tests to determine skills proficiency; support in terms of provision of workshops and equipment, training of staff at TVET institutions and schools; and continual assessment of skills needs. Overall enrolment in TVET institutions rose from 3 296 in 2012 to 4 410 in 2015 (an increase of some 34 percent) and further to 4 584 students in 2016. There are more female learners (57.7 percent) than male (42.3 percent). On average, most learners at this level are aged between 18 and 25 years. Government is currently focused on skills development, which requires reforming basic, secondary and TVET education curricula and introducing new market-oriented curricula at Higher Education Institutions.

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HIGHER LEVEL EDUCATION The Council on Higher Education (CHE) promotes quality in higher education in Lesotho and ensures that all such institutions adhere to set standards and produce high calibre graduates who can contribute positively towards socioeconomic development. CHE regulates Higher Education Institutions (HEIs) offering academic qualifications higher than COSC/ LGCSE or equivalent, as opposed to technical and vocational training programmes. According to CHE’s latest report on HEIs in Lesotho, in 2016/17 there were 15 tertiary education institutions in the country. Private institutions comprise the Paray School of Nursing (PSN), Roma College of Nursing (RSN), Scott Hospital School of Nursing, Limkokwing University of Creative Technology (LUCT), Maluti Adventist College (MAC), Lesotho Boston Health Alliance (LeBOHA), and Botho University (BU). The eight public institutions are the Centre for Accounting Studies (CAS), Institute of Development Management (IDM), Lesotho Agricultural College

(LAC), Lesotho College of Education (LCE), Lesotho Institute of Public Administration and Management (LIPAM), Lerotholi Polytechnic (LP), National Health Training College (NHTC), and the National University of Lesotho (NUL). A certified institute of higher learning, Lerotholi Polytechnic began as a technical and vocational school over a century ago, and has transformed itself into an independent institution that provides quality TVET for the needs of Lesotho. The polytechnic offers education and training programmes of between one and three years in its four schools, which comprise the School of the Built Environment (SOBE); School of Enterprise and Management (SEM); School of Engineering and Technology (SET) and School of Continuing Education (SOCE). Lerotholi Polytechnic celebrated its 23rd graduation ceremony on 13 October 2018, with 747 graduates having completed their studies. The polytechnic is currently focused on acquiring a Chancellor by next academic year in order to ensure the effective and independent functioning

of the institution. The Lesotho Institute of Accountants (LIA) was established by the Accountants Act of 1977, which gives the institute the mandate of regulating the accountancy practice in Lesotho. This involves: •

Determining the qualifications of persons for admission as members

•

Providing for training, education and examination by the institute or any other body involved in the accountancy profession

•

Setting the standards and rules governing the practice and ensuring that compliance with these is maintained

The Centre for Accounting Studies (CAS) was established in 1979 through a memorandum of understanding between the governments of Lesotho and Ireland in order to strengthen the accountancy profession in Lesotho, and provides tuition leading to the attainment of professional accounting qualifications in both the public and private sectors. Qualifications including certified accounting technician (CAT), general accounting (GA), and chartered accounting (CA) are offered by CAS through examinations administered by the UK-based Association of Chartered Certified Accountants (ACCA), which has partnered with LIA. CAS has since 2007 provided training to accountants in the public sector, and offers international qualification in public finance and accountancy under the umbrella of the Chartered Institute of Public Finance and Accountancy (CIPFA). Graduates under this programme are accountants specialising in public financial management and reporting. In 2013 CAS introduced a programme to train management accountants under the auspices of the Chartered Institute of Management Accountants (CIMA). Following accreditation by CHE in 2016, the programme was re-launched with support from the National Manpower Development Secretariat (NMDS). Demand for the programme is growing since CIMA graduates

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are fully recognised by the South African Institute of Chartered Accountants (SAICA). As global trends move towards localisation while maintaining global affiliation and quality standards, LIA has developed the Lesotho Professional Accountancy Programme (LEPAP) for both the public and private sectors with the support of the World Bank. The programme is being implemented with funding from the European Union, with CAS operating as LIA’s strategic partner. CAS aims to transform itself into a Business School of repute both locally and regionally, with a number of degree programmes in specialised areas having been lined up for introduction in the next few years. Complementing this agenda, CAS has a growing Business Development Unit (BDU) which provides short courses, consultancies and research tasks in the fields of governance, leadership, management, strategy, entrepreneurship, accounting, finance and business law. Universities Established on 8 April 1945, the National University of Lesotho (NUL) has over the years produced a number of renowned alumni who have served as corporate, social and political leaders both locally and internationally. While its main campus is situated at Roma, 34 kilometres southeast of Maseru, NUL has a physical presence in four districts with five campuses in total, and boasts a student population of approximately 10 000. NUL offers undergraduate qualifications at Certificate, Diploma and Degree levels. The revamped postgraduate qualifications offered include Postgraduate Diplomas, Honours, Masters and Doctoral degrees in all the faculties except the Faculty of Health Sciences. The qualifications are offered through seven faculties: Agriculture; Education; Health Sciences; Humanities; Law; Science and Technology; and Social Sciences;

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as well as the Institute of Extra Mural Studies (IEMS), which offers all first year programmes by the Open and Distance Learning (ODL) mode of delivery. Central to the NUL Strategic Plan of 2015-2020 is the growth of academic programmes and student enrolment, which it aims to increase to 18 000 by 2020, including on-campus student accommodation for not less than half of the student body. NUL’s research agenda 2016-2020 commits to targets in growing the number of PhD holders and the professoriate. Other areas of focus include the upgrading and refurbishment of university premises, enhancing communication and sharing of information via an Intranet system named THUTO, expansion of freely-accessible Wi-Fi, the furnishing of computer laboratories at the Roma and Maseru campuses, adoption of new technologies in teaching and research, and commercialisation of research interventions. NUL has established an Energy Research Centre (ERC), which is an all-inclusive centre for low-carbon research work (solar, wind, hydro, bio-energy), social engineering (energy policy, economics, finance & project management, climate change & environment, energy & gender), capacity building, consultancy and outreach programmes. It has multi-disciplinary scientists from diverse backgrounds working collaboratively towards achieving clean power generation, efficient use of energy and access to clean energy for all households. Short courses in sustainable energy as well as an MSc in Renewable Sustainable Energy were introduced during 2018. Furthermore, the university Senate has approved the establishment of the NUL Water Institute (NULWI). The establishment of a School of Engineering is planned in order to expand programmes aimed at providing the kind of education that is able to respond to market needs. Five departments have been proposed, namely: Chemical Engineering, Civil Engineering, Electrical Engineering,

Mechanical Engineering, and Built Environment. This development will cut costs for students who would otherwise have to pursue engineering studies outside the country, while motivating more Basotho to enrol in the programme. The establishment of a sports academy is also in the pipeline in order to promote sporting activities in and outside the campus. Launched in November 2018, NUL’s Innovation Hub has been sponsored by Metropolitan Lesotho in an amount of M1 million to secure space and buy equipment that will incubate a range of products. Some of these products have already been developed into successful prototypes. The NUL-LNDC Industrial Park will assist the incubated businesses to achieve mass production and facilitate growth. The proposed NUL School of Engineering and Product Development and Testing Labs will add fuel to innovation through idea generation and product development. The Sekhametsi Disability Centre launched in September 2018 aims to ensure universal access to education and contains, among others, assistive equipment such as braille machines, spectacles and computers for students with disabilities. The Lesotho Agricultural College (LAC) was established in 1964 and merged with the Faculty of Agriculture at the NUL in 2000. With two campuses, one at Maseru and the other 100 kilometres north of the capital, the college trains extension staff at certificate level (two years) or diploma level (three years) in areas such as agriculture, agricultural mechanisation, home economics, forestry and natural resources management. A Diploma in Agricultural Education is offered jointly by LAC and NUL. NUL offers a four-year Bachelor of Science in Agriculture degree, a two-year Master of Science in Agriculture degree, and PhD degrees in the areas

of Soil Science, Crop Science, Animal Science and Agricultural Economics and Extension. With its main campus in Malaysia, Limkokwing University of Creative Technology (LUCT) is a private international university boasting a presence across three continents. In excess of 30 000 students from more than 150 countries study in its 12 campuses in Botswana, Cambodia, China, Indonesia, Lesotho, Malaysia, Swaziland, United Kingdom and Sierra Leone, to mention but a few. Limkokwing has a collegial network of over 282 universities in over 77 countries. The Lesotho campus of LUCT was launched on 15 October 2008 and is located in Maseru. LUCT Lesotho offers transformational curricula under the TVET model, enabling students to get the best academic qualifications as well as experience a variety of activities that will develop their talents through industry-related projects as well as extracurricular involvement. Its aim is to transform tertiary education and empower the youth with creative learning through its new teaching methodologies such as thinking skills, innovative mind-sets and creativity. Harnessing the potential of smart technology to help students gain a global perspective, LUCT focuses on empowering graduates with cuttingedge skills to tap into new opportunities and fuel the creative industries. Limkokwing is recognised by a leading UK accreditation body which conferred the accolade of ‘Global TVET Model University’ upon the university. The university’s industry-centric portfolio of programmes is beginning to shape, develop and transform the national business environment in Lesotho through a number of significant collaborations. More than 800 of the country’s brightest young minds graduated from the university on 18 October 2018 at a ceremony held at Lehakoe Recreational Centre, Maseru. Over 5 000 young leaders have graduated from Limkokwing over the past decade.

ÂŠ LHWC

Index to Advertisers Alliance Insurance.............................80 Avis Budget.......................................44 Central Bank of Lesotho....................70 Directorate on Corruption and Economic Offences....................7 Econet Telecom.................................65 & 67 G4S Security.....................................21 Husteds Pharmacy............................93 Kayhil Freight.....................................45 Leo Internet Service Provider............62 Lesotho Communications Authority..63 Lesotho Electricity Company............59 Lesotho Funeral Services..................10 Lesotho Highlands Development Authority............................................52 Lesotho Highlands Water Commission......................................55 Lesotho National Development Corporation.......................................OBC Lesotho National Insurance Group...79 Lesotho PostBank.............................73 Lesotho Revenue Authority...............5 Liberty Life.........................................IFC Moores Rowland...............................82 Morija Arts.........................................33 National University of Lesotho..........99 Nedbank............................................77 Pick n Pay Meseru.............................23 Public Officersâ&#x20AC;&#x2122; Defined Contribution Pension Fund...............86 Puma Energy.....................................104,IBC Roma Trading Post Lodge.................29 R L Chartered Accountants...............78 Specialized Insurance Company.......83 Standard Lesotho Bank.....................75 Thaba Bosiu Risk Solutions..............85 Zenith Horizon Insurance .................88

INDEX TO ADVERTISERS | 103

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In executing its mandate, the Corporation is expected to apply commercially sound principles, Investment opportunities in Agriculture and Agro-processing Industries

and to prepare a programme to show how it

Piggery Investment Opportunities

proposes to act in that regard. For the past five decades, the Corporation has substantially concentrated its resources in developing the manufacturing industry, particularly textiles and clothing. Going forward, this Strategic Plan proposes a re-balancing of resources into high tech agro-processing and its associated, commercially sound agricultural supply chain activities. Thus, the Strategic Plan 2018 – 2023 complies with the requirements of the statute, aligns with

Winner of the UNCTAD award for a large horticulture investment project that will create 15,000 direct and indirect jobs.

the National Strategic Development Plan II (NSDP II), and the National Industrialization Policy on

Investment opportunities in Agriculture and Agro-processing Industries

economic diversification.

To find out more, contact: The Chief Executive Officer, LNDC, Private Bag A96, Maseru 100, Lesotho Tel (+266) 2231 2012 • Telefax (+266) 2231 0038 • E-mail: info@lndc.org.ls • Website: www.lndc.org.ls