business

Aug. 13, 2021

NEO SENOKO

4 min read

Economic conditions poor before COVID - Analysts

Economic conditions poor before COVID - Analysts

Managing Partner, HLB Lesotho-Accountants and Advisors, Robert Likhang

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LOCAL politicians and policy makers are now using the COVID-19 pandemic as a scapegoat for weak economic conditions in the country, however, economists think otherwise.

Long before the pandemic, the country’s economy has always been in the doldrums.

Issues of high unemployment, corruption, political instability and poor management of funds have always been at the forefront of Lesotho’s stagnant economic state.  

The COVID-19 outbreak has simply exacerbated the already crippling economy, the analysts say, adding that poverty and unemployment among others have been aggravated.

Using the cross-country comparable international poverty line of US$1.90 per day, 27.3 percent of Basotho were poor in 2017, according to the World Bank findings.

Pre-COVID-19, during the last decade, the World Bank says job growth was on average at only 1 percent per year, less than half of the annual growth rate of the working population.

The country lags behind other countries in southern Africa in terms of structural transformation of the economy, with 67 percent of employment still concentrated in low productivity jobs in agriculture.

Food security is a serious problem, with the country ranked 78th among 199 qualifying countries on the Global Hunger Index (GHI).

Over one third of children aged below five display evidence of long- term malnutrition. The country’s stunting rates are among the highest in the Southern African Customs Union (SACU) region.

For many years, corruption has remained the order of the day in Lesotho.

The Lesotho Corruption Perceptions Index was at level of 41 score in 2020, up from 40 score the previous year, representing a change of 2.50 percent.

The CPI score relates to perceptions of the degree of corruption as seen by business people and country analysts, and ranges between 100 (highly clean) and 0 (highly corrupt).  

Local analysts have sent a strong message, warning the government and politicians generally to refrain from shifting blame towards the pandemic while in fact the country has been failing significantly over the past years.

“The poor performance of our economy is as a result of many factors, both within and outside our control. Our conditions could not have been this serious if we had applied proper fiscal discipline. We had to actively and vigorously implement our good NSDP II,” said the Managing Partner, HLB Lesotho-Accountants and Advisors Robert Likhang, in an interview with Metro this week. .

The Lesotho National Strategic Development Plan II (NSDP II) has ambitious policy targets of the transformation of the Lesotho economy from a consumer driven economy to a producer based economy led by the private sector.

Mr Likhang said the country’s political instability has affected foreign direct investment while not much has been done to support domestic Micro, Small and Medium Enterprises (MSMEs) development.

“Our political instability has affected our foreign direct investment. We have never given serious attention to domestic MSME development. There is still no meaningful MSME policy and BEDCO is still under-resourced, although we need to appreciate efforts to restructure it and develop programmes for it, funded by the World Bank.

“It is also a fact that COVID-19 has had negative effects from global ecosystems to national economic macro environments. Lesotho is a consumption country feeding its greed with imports, and because of lowered production and pressure on supply chains, there has been low exchange of money in the market, affecting economic performance,” he also said.  

He said the country needs NSDP III which will build agility and resilience in times of pandemics and other grey and black swans’ catastrophes.  

“The issue has been poor planning and the loss of eye on the economic development ball,” he added.

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Another local economist, Majakathata Thakhisi Mokoena shared similar sentiments, saying the economy has been suffering since former Prime Minister Pakalitha Mosisili left office.

“They cannot blame the COVID-19 pandemic. The economy has been struggling since Mosisili left office. Before then, the country’s economy was growing at a steady 4.4 percent,” Mr Mokoena said.

Born on March 14, 1945, Dr Mosisili retired from active politics in January 2019. He was Lesotho’s Prime Minister from 1998 to June 2012 and again from March 2015 to June 2017.

In November 2018, he announced his retirement from politics. His party, the Democratic Congress (DC), held its elective conference in January 2019 and Mathibeli Mokhothu was elected as his successor.

Lesotho’s economic performance has been negatively affected by sluggish global economic growth amid a major downturn in both emerging markets and advanced economies, as well as natural disasters.

Sustained political instability, coupled with slow economic growth in the South African economy, also contributed to slow economic performance.

Real GDP growth rate, according to the World Bank, is estimated to have contracted by 1.2 percent and 0.4 percent in 2018 and 2019 respectively and is projected to average 0.6 percent between 2019 and 2023, largely attributed to the expected negative impact of the COVID-19 pandemic.

 

 

 

 

 

 

    

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