Lesotho: How the Economy of the Small, Land-Locked Mountain Kingdom Can Be Improved

I have undertaken a number of business and leisure visits to Lesotho. The last was just a few weeks ago when a few friends and I tackled the precarious Sani Pass rocky mountain track from KwaZulu-Natal Province into Lesotho in a reliable 4×4. We enjoyed breathtaking views of steep slopes and long, rushing waterfalls as we slowly negotiated the sharpest hairpin bends I have ever encountered.

After crossing into Lesotho, we drove some 20 kilometres on a surprisingly excellent new tar road to the “Highest Point 3240 metres” for a typical tourist photo session. The rugged beauty of the rolling hills could not hide the obvious poverty of the local populace. Crop cultivation was clearly not possible in this barren brown landscape. Shepherds draped in their customary, hardy blankets were herding flocks of sheep and goats on the slopes between the small villages. The rocky ground was dotted with small, wiry bushes. We wondered how these animals could survive without sufficient feed sources. Groups of small children in ragged clothes chased our vehicle shouting for hand-outs.

On the way back down the pass, we were stopped by an old man carrying a pile of sticks on his back. He stood in the middle of the track and would not let us pass until we found something to give him. No  smile nor words came from his wizened face as we handed him some of our food.

How can this small, 30 355 square kilometre mountain kingdom of 2,3 million mainly young people, completely encircled by South Africa, sustain itself? Let alone prosper? A closer examination reveals that the Basotho have done surprisingly well under harsh circumstances, and are constantly striving to find innovative ways of improving their economic fortunes.

Clothing and textiles are a large component of the country’s manufacturing sector. Textile and apparel production dropped sharply during the COVID-19 pandemic, but is slowly recovering. Sixty percent of the population depends on agriculture and livestock, but this only represents 15% of GDP. The mining sector contributes some 8% of GDP, with six diamond mines featuring strongly. The ongoing Lesotho Highlands Water Project (which supplies the South African industrial heartland) is a major source of revenue. Remittances from Basotho working in South Africa are another revenue source. (Basotho miners are particularly sought for deep-shaft mining.) Receipts from Lesotho’s membership of the Southern African Customs Union are also important. Lesotho is endowed with much tourism potential, but this has not been fully exploited. The unemployment rate is a serious challenge for the government, (although the rate decreased in 2023 to 16,3%.)

The government’s National Strategic Development Plan II (NSDPII) from 2018 to 2023 targeted the creation of nearly 50 000 jobs. Most of these were to come from four designated sectors: manufacturing, agri-industry, tourism and creative industries, and technology and innovation. The Lesotho National Development Corporation (LNDC) is a key state entity driving the NSDP.

The World Bank has contributed US$ 13,4 million for private sector development through its Private Sector Competitiveness and Economic Diversification Project. The Millennium Challenge Corporation of the USA has included private sector development in its US$ 358 million compact with the Lesotho government. The African Development Bank and the Lesotho Chamber of Commerce and Industry concluded a grant agreement of US$ 915 000 for a fund for private sector assistance. The United Nations Development Programme has been assisting NGOs with provision of skills development and equipment supply to businesses.

One manufacturing operation which has registered some success is the supply of automobile components to the vehicle assembly plants in South Africa. These include leather car seat covers, interior accessories and some electrical fittings. A survey and analysis of the current and future requirements of these assembly plants could give rise to the supply of additional automobile components.  

Lesotho has adopted a ‘Made in Lesotho’ strategy. This can be expanded upon to establish a reputation of quality for Lesotho’s export products in key export markets. Production of globally-recognised brands will enhance perceptions of quality. Lesotho is already well-recognised as a producer of Levi Strauss jeans.

Specialised footwear is a particular opportunity. There are two footwear manufacturing operations in the country. Lesotho-based Jaguar Shoes used to produce Puma-branded sandals. Other holders of major brands could be approached to endorse production of specialised footwear such as sports shoes. These can be marked with the relevant brand as well as the ‘Made in Lesotho’ label.

The textile industry produces large quantities of off-cuts. Development agencies such as the Global Environment Facility are supporting the recycling, re-use and conversion of textile/garment discards for the production of a variety of products such as quilts and clothes for infants. I visited a textile factory situated on the outskirts of the capital, Maseru. The plant manager expressed considerable frustration over the difficulty he was experiencing in meeting the high quantities ordered by his customers. “I need to triple my production. I’ll have to recruit many more workers.“

The World Bank has estimated the percentage of arable land in Lesotho at just over 14%. Staple crops such as maize, sorghum and beans are produced. The country is endowed with ample water, but piped distribution systems are limited. Electricity transmission and distribution is also inadequate. The LNDC has undertaken research on horticulture opportunities for the production of high-value crops such as tomatoes, mushrooms, spinach, peas and asparagus.

The NSDP makes specific reference to “technology and innovation” as a designated sector to achieve economic growth. The Lesotho Communications Authority commissioned a feasibility study into development of call centres. Some success has been achieved and a number of outsourced call centres are now operating. 

Information and communication technology initiatives have focused on the education and health sectors. The Microsoft-supported Lesotho School Technology Information Centre focuses interalia on training local teachers. A laboratory information system was developed with support from US agencies.

Although access to telecommunications services is limited to those in urban areas, the government is placing much emphasis on e-commerce to stimulate small and medium-sized businesses.

Another of my business missions to Lesotho included a visit to the 1 950 million cubic metre Katse Dam which is a major component of the Lesotho Highlands Water Project. Although the dam’s construction was complete and many construction personnel had left, I was surprised at the small number of guests at the Katse Lodge, which overlooks the giant reservoir and is nestled in the Maluti mountains.

According to a World Bank report, a little over 1,1 million tourists visited Lesotho in 2019. This number can be increased. Lesotho’s mountainous terrain makes it ideal for adventure tourism activities such as rock climbing, zip-lining and mountain biking. The Lesotho Sky Event is a three-day endurance mountain cycling tour which accommodates a limited number of riders. There is considerable scope for less strenuous adventure events that can attract a wider range of tourists who are less physically-enabled.

Many more affluent South Africans are keen on skiing, and spend considerable sums visiting Europe’s famed ski slopes. Lesotho is unique in Africa in that its barren hill slopes are snow-covered for limited periods of the year. The country’s famed ski resort, AfriSki has unfortunately been compelled to close, reportedly due to infrastructural and power supply problems. Efforts should be made to revive the resort.

The ‘highest pub in Africa’ is situated at the top of Sani Pass close to the Lesotho border post. It thrives on supplying food and drink and accommodation to the many exhausted riders, drivers and their passengers who have braved the perilous ascent from South Africa. Nearly all return back down the pass once they have spent a few hours refreshing themselves. So much more could be done to entice them to stay for just a few days and enjoy what Lesotho has to offer by way of mountain adventures. In any event, the local Maluti lager is good and deserving of more time for imbibing.