…Lesotho to focus more investments in agriculture
MASERU – Lesotho will have to swallow some of the most bitter prescriptions in order to emerge out of the current economic distress as a result of the global shocks as well as the Covid-induced setbacks to national economies. A shift in policy and growth strategies has been inevitable in the past with the Kingdom having to absorb the harsh realities of its having an economy heavily tied to external factors.
The country’s investment arm, the Lesotho National Development Corporation (LNDC), has now adopted a somewhat high risk hair-pin policy bend on the investment strategy electing to move almost 100 percent from being reliant on the manufacturing sector to a 80/20 percent focus on agriculture and food processing investments.
“What risk?” quips LNDC’s General Manager Corporate Services, ’Mamoiloa Raphuthing, saying the country learnt one of its biggest lessons during the Covid pandemic. “If it is risky, then it is worth taking. All we need is a lot of research and strategic positioning such that we don’t have an economy dependent on what the foreign markets dictate,” explains Raphuthing, adding that investing heavily in agriculture will help Lesotho mitigate a number of areas that have been a huge challenge, such as food security, jobs and wealth creation.
She added that Basotho already have land and in comparison to manufacturing where skills and huge capital need to be mobilised, tilling the land and producing food and then processing the harvest, may just be what the country had always needed all the time.
The LNDC has had to shift its policy drastically following the review of its five-year strategic plan last year, which will run into 2023. The new driver looks at shifting focus to closer markets for the apparel and clothing industry, in which the country already has a competitive edge having participated in the AGOA market, in the US which is coming to an end in 2024, after about three decades in operation.
As ‘M’e Mphuthing explains what is important is for the country’s manufacturing sector to secure a market within the SADC region and in other parts of the continent, while still competing for a stake at international level in Europe, the US and other parts of the world.“We know of the market instabilities affecting us and we need the partial offset of external shocks that are not within our control,” she says. “What we need is build skills and capacities in order to produce quality and good quantities that will meet the required standards to conquer the markets.
“This way we can feed ourselves and sell the surplus while at the same time building a strong local agro industry that will create jobs and bring value to economic growth,” outlines ‘M’e Raphuthing. She says the LNDC is way ahead in its strategic planning to ensure the new policy shift bears fruit, saying one of the main drivers would be to build local capacities and ensure that Basotho participate directly in all the investment sectors.
One of the plans is to establish an ‘export consortia’ that will enable Basotho to participate in competitive international markets where they can share logistics and other costs, while at the same time teaming up to meeting the economics of scale. To level the playing field and meet Basotho half-way in the new economic growth drive, the LNDC has decided to decentralise and open regional offices in the north and south so as to ease access for Basotho, including those from the rural mountain areas, to visit their offices and engage with local experts for advice and investment tips.
“It is important to have everybody on board and while seeking to do our investment and trade promotion at a higher level, we should now also go down to the grassroots and talk to Basotho and alert them to the opportunities arising,” she concludes. Puseletso Makhakhe, the LNDC General Manager Investment and Trade Promotion, says the project is long overdue and its benefits will be enjoyed by all Basotho. “As the LNDC, our core business is to attract local and foreign investment, but we also have to take care of such investments and make they grow and expand,” she states, saying with the local policy shift the yoke will even be more testing as Basotho would not be put into projects they cannot sustain.
She says there are a number of areas, apart from pure agriculture, where Basotho could put and grow their money and benefit the whole country. Among the projects she mentions areas such harnessing local indigenous herbs for the beauty industries for perfumes and skin moisturises, beef and other areas where the country has an added advantage because of the environment and favourable climate conditions.
“LNDC is for Basotho and not anyone else, and that is why we now want to make sure that everyone has a stake in the supply chain,” says ‘M’e Makhakhe. Diversification has always been the remedy ordered for Lesotho in order to stabilise its economy and, with the new policy shift by the LNDC, it will take a whole new turn of the wheel to spur Lesotho’s economy to higher and higher levels.
With the manufacturing and mining sectors having experienced huge setbacks during the height of the Covid pandemic, the Government of Lesotho has re-prioritised locally infused growth activities as a way of addressing the country’s recovery plan and challenges. “The manufacturing sector is set to record a disappointing growth of -14.2 percent in 2020/21, with textiles, clothing, footwear, and leather expected to contract by 18.6 percent due to disrupted supply chain and demand side shocks caused by the Covid-19 pandemic.
“The reduction in factory activity has led to huge cost-cutting measures employed by firms. These measures have led to a decrease in employment of 3.5 percent in the first quarter of 2020/21, while on average 7.3 percent of the jobs have been lost to date. “In 2021/22 the sector is expected to recover to 4.6 percent before growing at an annual average rate of 5.3 percent in the medium-term,” finance minister Thabo Sofonea said as he outlined in his fiscal policy statement earlier this year, calling on more robust policy shift to steer Lesotho on the positive recovery road.