Paper profits and palpable losses
LNDC’s governance allegory falls as revenue collapses
TEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
In the enclosed world of state-owned enterprises, annual reports are often exercises in strategic optimism – glossy confections of infographics and aspirational language designed to soothe stakeholders.
But the Lesotho National Development Corporation (LNDC) has. At some point, released a document for the 2023/24 financial year that reads less like a progress report and more like a confession.
The numbers are brutal. Revenue collapsed by M98.102 million, a 39 percent drop from the previous year, landing at M150.826 million. The result was a net loss of M54/405 million, a staggering 172 percent swing from the prior year’s profit.
Yet, buried deeper in the same document is a curious claim of progress – the Board of Directors completed “comprehensive Corporate Governance training” to foster “institutional integrity.”
When juxtaposed against the latest Africa Economic Update (Spring 2026) from the World Bank, the LNDC’s performance is not merely a corporate misstep; it is a structural indictment. While the region grapples with exogenous shocks, the LNDC appears to be suffering from a self-inflicted paralysis, raising the uncomfortable question – If a board trained in governance cannot halt a 39 percent revenue collapse, what exactly is the training for?
The revenue wreckage: More than a bad year
To understand the depth of the crisis, one must look beyond the headline loss. The LNDC operates under a dual mandate: to initiate industrial development and to act as a development finance institution. In 2023/24, both legs of that stool buckled.
Revenue from operations fell off a cliff. While the Chairperson’s statement vaguely attributes the loss to a decrease in income, the financial statements reveal a corporation increasingly reliant on government capitalisation (M450 million in development grants) to stay afloat rather than generating its own economic energy. The operating loss stood at M107 million, meaning the core business of promoting investment is deeply unprofitable.
This is not merely a cyclical downturn. It is a crisis of revenue generation. A development corporation that cannot generate its own revenue cannot lend, cannot guarantee and cannot fulfil its statutory duty to “raise, lend, or borrow money” for industrial growth.
The M54 million loss effectively wiped out any capacity for new, large-scale development finance interventions without further state bailouts.
The governance gap: Training vs Transformation
Sandwiched between the balance sheet and the chairperson’s signature is a proud assertion regarding the Board’s training with the Institute of Directors South Africa (IODSA). The stated goal is “fostering institutional integrity by promoting good governance.”
This is where the critique becomes sharp. Governance, in the corporate sense, is about oversight, risk management and strategic direction. If a board is governance-trained, it should be able to forecast revenue volatility, mitigate geopolitical risks (like AGOA uncertainty), and hold management accountable for financial targets.
Yet, the 2023/24 report shows a board that was reactive, not proactive. How else to explain that during a year of supposed “governance enhancement,” the LNDC recorded six company closures against the launch of only two new companies?
Employment in assisted manufacturing fell 13 percent in a single year, from over 39 000 to 34 151.
Good governance is not a certificate on a wall; it is the ability to say “no” to vanity projects and “yes” to hard performance metrics. The LNDC report is silent on whether the Board challenged the strategy that led to a 172 percent profit swing. Instead, it praises management’s “dedication.”
This is the language of a cosy club, not a rigorous oversight body. Institutional integrity is not built by training modules; it is built by firing non-performing CEOs and scrapping failing policies. The LNDC did neither.
The real estate mirage: Landlord of last resort
The most damning critique of the LNDC’s operational strategy emerges when one analyses its asset base. The corporation’s non-current assets increased by M331 million to M2.8 billion, driven by the capitalisation of the Belo and Tikoe estates.
In effect, the LNDC is transforming into a real estate company.
It manages industrial estates with occupancy rates of 82 percent (industrial) and 87 percent (commercial). For a property trust, those are decent numbers. For a National Development Corporation, they are an admission of failure.
The World Bank’s Africa Economic Update (Spring 2026) warns explicitly against this trap. In its section on industrial policy effectiveness, the bank notes that “industrial policy often fails when ecosystems are absent.” It cites Nigeria’s Calabar Free Trade Zone – anchored by a port that was never dredged – as a cautionary tale of infrastructure without industry.
Lesotho is falling into the same hole. The LNDC builds shells (Belo, Tikoe) but does not build the complementary ecosystem – reliable power (We still suffer from high tariffs and import dependency), logistics connectivity, or a skilled workforce. Consequently, the LNDC is not an engine of structural transformation; it is a landlord with a marketing budget, collecting rent while jobs disappear.
The regional reality check: Lesotho’s 1.3 % ceiling
To fully grasp the LNDC’s failure, one must contrast its performance with the macroeconomic reality laid out by the World Bank and the Africa Economic Update.
The Spring 2026 report is a document of global anxiety. It details the spill-over of the Middle East conflict, the rise in oil prices (Brent crude spiking to over $110), and the tightening of global financial conditions. For Lesotho, a net oil importer with 9.4 percent of GDP exposed to fuel volatility, the external environment is brutal.
Yet, even accounting for these headwinds, the LNDC’s performance is inexcusable. The World Bank notes that Sub-Saharan Africa is projected to grow at4.1 percent in 2026. Lesotho is projected to grow at a paltry 1.3 percent. This disparity is not a weather event; it is a policy failure.
The Africa Economic Update highlights that remittances are a “critical lifeline” for Lesotho (nearly 20 percent of GDP) and that the Middle East conflict puts these flows at risk. What is the LNDC doing to diversify the economy away this dependency? The annual report offers the Nation Brand pillars – Investment, Trade, Tourism – but provides no evidence of capital deployed or strategies executed to mitigate the remittance risk.
Furthermore, the World Bank report specifically calls out the “erosion of certainty” regarding the African Growth and Opportunity Act (AGOA). For Lesotho’s textile sector, which forms the bulk of LNDC’s “retained jobs,” the shift to annual AGOA renewals is a “structural deterrent.”
The LNDC’s response in the 2023/24 report? To mention attending a “WRAP Certification site visit” and a seminar on China-Africa cooperation. This is the strategic equivalent of rearranging deck chairs on the Titanic.
The partial credit guarantee: A footnote of concern
The LNDC touts its Partial Credit Guarantee (PCG) Scheme, noting that M207.8 million in loans has been facilitated for 128 enterprises since 2011. On the surface, this sounds like development finance in action.
However, the report is conspicuously silent on the performance of these loans. In a year where the LNDC posted a M54 million loss, one must ask – how many of those PCG-backed loans are non-performing?
The World Bank’s diagnostic framework in the Africa Economic Update warns that without “learning metrics” (like repayment rates or productivity gains), activity metrics (like loans disbursed) are meaningless.
The risk here is that the PCG scheme has become a vehicle for politically connected patronage – a common pitfall in Lesotho’s political economy. The report’s lack of transparency on default rates and beneficiary selection erodes the very “institutional integrity” the Board claims to champion.
Vision vs Reality: The strategic disconnect
The LNDC’s vision is “to facilitate Lesotho’s economic growth through private sector development.” Its mission is “making a positive and sustainable impact on our Economy, Community, and Environment.”
The 2023/24 report demonstrates a catastrophic disconnect from this vision.
· Economic impact: Negative. M54 million loss, 17 000 jobs lost over four years.
· Community impact: Neutral at best. While a staff gym was launched (a curious priority during a fiscal crisis), no meaningful data is provided on local supplier development beyond procurement spend.
· Environment: The LNDC notes it engaged a Safety, Health and Environment officer. That is a baseline compliance activity, not a strategic achievement.
The corporation claims to have “retained” 34 151 jobs. But in economics, retention is not a victory when the baseline is falling. The LNDC is managing decline, not facilitating growth.
The cost of complacency
The LNDC appears to have fallen into the classic African institutional trap – prioritising the appearance of governance (training courses, glossy reports) over the substance of performance (revenue growth, job creation).
The World Bank’s Africa Economic Update offers a way out – the “Frontier Builder” archetype. For countries like Lesotho with low implementation capacity, the prescription is not expensive real estate or untargeted credit guarantees.
It is “economy wide cost reduction; trade facilitation; regulatory reform.” It is about making it cheaper and easier to do business, not building more shells.
Until the LNDC Board and Management realise that a corporate gym does not replace a corporate strategy, and that a training certificate does not excuse a 39 percent revenue collapse, Lesotho will remain trapped at1.3 percent growth. The nation does not need a landlord with a logo.
It needs a development corporation that earns its mandate. The 2023/24 report proves that, by that measure, the LNDC is bankrupt.
