The Government of Lesotho takes cognisance of the 27th Anniversary of the SADC regional integration from which she has reaped great benefits for the development of her economy. We are very grateful for the cooperation that SADC has created between Member States and hope to further develop effective strategies towards the achievement of the Free Trade Area by 2012.

Lesotho’s investment regime is fairly liberalised and embraces Foreign Direct Investment (FDI) virtually in all sectors of the economy, through provision of attractive incentives and stable political environment. In order to retain and maintain the existing FDI, the Government of Lesotho hosts dialogues with investors to contribute towards improvement of the country’s competitiveness in the manufacturing sector. The manufacturing sector, which predominantly supports the country’s economic growth, has provided far reaching benefits for the locals with specific reference to job creation which is estimated to 60,000 jobs in 2004, assuming a multiplier effect of 1 to 5. Over 250,000 Basotho have benefited thus making a significant contribution to poverty alleviation. The country also takes cognisance of the expiry of Multi-Fibre Arrangement and has embarked in the development of further competitive advantages through negotiations of Free Trade Agreements such as SACU/US, SACU/EFTA and SACU/MERCOSUR. Furthermore, efforts to create and improve other sectors which have the potential of attracting labour-intensive FDI and to adequately address obstacles faced by existing foreign affiliates to upstream investment in the garment industry are underway. The implementation of the master plan will address the glaring supply-side constraints which prevent Lesotho from being integrated into the global economy. The United States of America remains the largest market for Lesotho’s exports, especially the garment industry.

The introduction of export finance and insurance scheme is a positive step towards the expansion of the local SMMEs and cooperatives export base. This initiative is envisaged to lead to substantial economic growth as well as capacity expansion of these businesses and further attract new entrants into the sector.

The agricultural sector in Lesotho has been experiencing declining productivity and poor value-added performance. However, the agricultural policy framework has been shaped to encourage farmers and small scale producers to take up a stronger market orientation and make use of new opportunities arising out of developing trade liberalisation as enshrined in trade agreements to which Lesotho subscribes. Initiatives are underway to resuscitate the cannery for Lesotho’s agro products. Another project which is closely linked with the agro industry is that of developing the Moshoeshoe I International Airport into cargo airport for export of local produce as well as to service neighbouring SADC countries, particularly those within the SACU region. This is part of a bigger initiative to broaden the industrial base in Lesotho.

The Lesotho Highlands Water Project (LHWP) is a body mandated to harness the water resources of the highlands of Lesotho. The LHWP supplies and transfers water to locals and the Republic of South Africa. The LHWP also generates hydroelectricity which provides competitive tariffs for consumers. Additionally, the establishment of natural environment and heritage programmes to partially mitigate the disruption of certain rural communities by further developments and damage or loss to certain natural resources has contributed to the tourism development.

Lesotho has been chosen among the 16 countries that are taking greater responsibility for their own development as eligible for Millennium Challenge Account assistance. Lesotho has therefore been selected for MCA assistance, particularly on the criteria based on values that Basotho uphold so dearly, namely the prevailing peace and stability, accountable, good and democratic governance, respect for the rule of law, human rights and fundamental freedoms. Lesotho’s MCA proposal focuses on three main areas, viz-a-viz water resources development, agriculture and food security, industrial development as well as tourism development, which are seen as programmes that will have measurable impact on employment creation, poverty reduction and sustainable development.

P. LEBESA
Minister of Trade and Industry, Cooperatives and Marketing