UNDAF Fact sheet: Pillar 3- Sustainable and Inclusive Economic Growth for Poverty Reduction

HIGH POVERTY, INEQUALITY AND UNEMPLOYMENT

Lesotho is one of the poorest countries in sub-Saharan Africa, and one of the 10 most unequal nations in the world. Poverty is highest in rural areas, where more than three quarters (77 per cent) of the country’s people lives. Nearly 6 in 10 people live below the national poverty line, while over a third (34 per cent) survive under the food poverty line of Maloti 138 (US$10.3) per adult per month. A third of the working-age population is unemployed, with women and young people disproportionately affected. Only 1 in 10 people is formally employed in the country.

LIMITED PRIVATE SECTOR DEVELOPMENT

In the context of limited state employment in Lesotho, the private sector offers an opportunity to generate employment, especially for the youth. However, the country has a small, highly fragmented and undiversified private sector, mainly attributed to lack of business sophistication, limited innovation and lack of access to information and technology. Lesotho is ranked towards the bottom of international indices such as the World Bank Doing Business Index and the Global Competitiveness Index.

More than 80 per cent of private companies in Lesotho are micro-, small- and medium-sized enterprises, of which the majority are sole proprietorships. While 45 per cent of these enterprises are using formal financial services, only 2 per cent have access to credit and insurance services. Most young people are literate but do not have the relevant employment-ready skills needed to thrive in the private sector. 

FINDING EMPLOYMENT IS DIFFICULT FOR WOMEN AND VULNERABLE GROUPS

While women are generally more educated than men, they are less likely to be employed. Young people also struggle to find employment. In addition, they are affected by limited opportunities for apprenticeships or internships that provide gateways for young people to enter the workforce. Adding to their woes is the fact that young women and men often do not have the skills in demand by the labour market. People with disabilities are especially excluded from employment, and rely heavily on government social grants to survive. Child labour is an additional concern, with 23 per cent of children aged 5–14 working. Boys are at heightened risk, especially those involved in potentially harmful child labour, such as livestock herding. Low-skilled migrants from Lesotho who are working in neighbouring countries, often in inhumane conditions, are another vulnerable group that needs support and access to decent work.

POSITIVE ECONOMIC DIVERSIFICATION; TOURISM REMAINS WEAK

Lesotho is a popular tourist destination. However, direct tourism receipts comprise only 1.5 per cent of GDP. The country ranks low on overall competitiveness and more needs to be done to improve tourism infrastructure, services, customer service, attractions and business conditions. In addition to tourism, greater investments need to be made in other sectors such as services, construction, processing and manufacturing as a way of conquering unemployment and underemployment, particularly in rural areas.

CHALLENGES TO THE PREDOMINANT SUBSISTENCE AGRICULTURE

Agriculture and survivalist activities are the primary means of earning a living in rural areas in Lesotho, contributing 29.5 per cent of household income on average. However, only 10 per cent of the country’s land is suitable for agriculture. Despite the government’s efforts to commercialize the sector, challenges relating to ownership of land, limited technology and financial risk appetite constrain investments and participation of youth in the sector.

INFRASTRUCTURE CHALLENGES ACROSS MULTIPLE SECTORS

The country’s surveillance system for agriculture and human health is fragmented and unable to share critical information during public health events. The country continues to face infrastructure challenges, with just 36 per cent of the population able to access electricity. Access to the Internet and associated technologies is still low. While 15 per cent of GDP is remittances from abroad in 2016, bank charges for remittances through official channels from South Africa to Lesotho have forced migrants to use high-risk unofficial channels.

CRITICAL DATA GAPS

Lesotho needs to produce better statistics to inform policy-makers and development frameworks such as the National Strategic Development Plan (NSDP II), the Sustainable Development Goals (SDGs), Vision 2020, and other national and sectoral development plans. The most recent Labour Force Survey is outdated (published in May 2008). In addition, there are no reliable employment data and child labour statistics available. Significant data gaps also exist across much of the employment and agriculture sector.