THE Country’s key economic sectors have been undermined severely with agriculture expected to contract by 5.2 per cent in 2020/2021, posing a serious threat to food security and livelihoods, the Minister of Finance Thabo Sofonea has shown.
Nov. 9, 2020
2 min read
Lesotho’s key economic sectors undermined – Finance Minister
Minister of Finance Thabo Sofonea
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“The industry and services are projected to contract by an estimated 36.9% and 4.4 % respectively. Furthermore, the disruption of supply chains in South Africa and the consequent decline in global demand for manufacturing (textiles) and diamond exports will further dent Lesotho’s export earnings during the coming year.
“Trade is particularly important for Lesotho with intra SADC exports accounting for 27.8 % of total exports of goods in 2018/2019 and 71.3 % of total imports of goods during the same period. Thus, any disruption to trade routes chokes our economy from many fronts and magnifies our challenges,” Mr Sofonea said.
He added: “Under very peculiar conditions precipitated by the COVID-19 pandemic which has wreaked havoc across the world since being declared a pandemic in November 2019, our economies continue to be devastated by the direct and indirect impact of the pandemic.
“This has further deepened the challenges carried forward from the fiscal year 2019/2020 including the adverse impact of the unsettled global trading environment induced by the USA-China trade tensions, the slowing growth in the economies of our key trading partners, including South Africa, and the adverse climate conditions that have left our agricultural sector reeling.”
The Minister noted that real growth in GDP in Lesotho had been subdued during the three years prior to the pandemic with the economy contracting by 2.5% and 2.6% in 2017/2018 and 2018/2019 respectively, while 2019/2020 preliminary estimates projected a further contraction of 3.2 %.
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Nevertheless, he said, the government continues to persevere in striving to meet the basic needs of the citizens in the face of drought and joblessness as well as the increasing numbers of laid off Basotho returning from South Africa.
Hence, he said the government has increased spending on social protection programmes.
“Four months ago, Lesotho commemorated the United Nations Micro, Small and Medium Sized Enterprises (MSMEs) Day under the theme ‘Covid-19: The Great Lockdown and its impact on Small Business’. In our case, private sector-led manufacturing contribution to GDP has consistently being around 16 % against a regional average of 10 % in 2019.”
In this regard, he said the commodity value chains, both in textiles and diamonds have to create opportunities for MSMEs, through backward, sideways and forward linkages.
He said the National Strategic Development Plan (NSDP II) envisages a new growth model focused on creating private sector jobs and eradicating extreme poverty through shifting to a private sector/export-led growth model, hence the continued push for the accelerated growth of private enterprises.