Small country, Big potential

Corruption, HIV and Aids, and unemployment are some of the problems currently facing Lesotho. But the country’s Finance Minister, Dr.Leketekete Victor Ketso, remains optimistic. He explains why

Surrounded entirely by its only neighbor, South Africa, Lesotho may be one of Africa’s smaller countries but it is one that nonetheless has big plans. Agriculture, tourism and the country’s natural resources hold the key to a more prosperous future, according to Minister of Finance, Dr. Leketekete Victor Ketso.

Certainly, it is clear why he cites tourism as a sector ripe for growth. With mountains aplenty, as well as natural scenery far removed from other, more developed countries, there is much to enjoy. Agriculture, together withthenatural resources of diamonds and vast water reserves, also offer potential sources of sustainable growth.

“In the past, agriculture was one of the larger contributors to economic growth but its contribution has declined over time,” admits the Minister. “So we have to turn it around because we believe it has potential to diversify from just crop farming. We also believe our country has beautiful scenery so tourism has a lot to contribute to our future economic growth. Mining has gone down in terms of its contribution but, again, we are prioritizing it as a key sector. We are very close to South Africa and there is no reason that some of the minerals that are found there in abundance will not be available in our country as well. We are also looking at manufacturing. In the past, we have relied very heavily on textile industries that we are exporting to the United States. But we think there is room for diversification, not necessarily away from textiles, but we are looking into other opportunities.”

Clearing the barriers to growth

There remain considerable obstacles to overcome, however. Not only does Lesotho have one of the world’s highest rates of HIV and Aids, but about 40% of the population lives below the international poverty datum line of US$1.25 a day.

“We have infrastructure constraints, specifically the hard infrastructure of roads, schools, electricity and water,” admitsDrKetso.“So, closing the infrastructure gap is a priority. We are also trying to build up a better environment for attracting investment.” As part of this approach, he and his ministerial colleagues are looking at greater deployment of Public Private Partnerships (PPPs), while at the same time admitting that they will not solve every problem.
“PPPs are not a “catch-all” solution as not every project is suitable for PPP,” he says.“As far as roads and ports are concerned, the cost  is very high and, even if liquidity is high in the private sector, it has often turned away from these high costs and focused on other areas, rather than the type of hard infrastructure which can boost economic growth.So, we are exploring this but we have to have the appropriate structures and institutions for ensuring that this method works for us.”

Lesotho’s infrastructure challenge is far from unique in Africa — something that the Minister readily admits. “I think for my country, and for Africa in general, the infrastructure deficit is the biggest challenge we face,” he says.“We have to address, as Africa, this deficit. I don’t know how it is going to be financed because the cost is very high — individually some of these countries may not be able to afford these types of projects — so we have to look at the options in terms of investment.”

He also identifies problems that are more common to smaller countries. “A challenge we recognize, like many others in Africa, is corruption and this is one area we need to address — both for our benefit and for protecting the investment that comes into the country,” he says.“In the health sector, HIV and Aids are also major problems and we have to put a lot of resources into fighting this scourge. And finally, we are seeing an increasing number of unemployed university graduates. This means that we’re beginning to realize that maybe there is a mismatch between the requirements of the labor market and what is being produced by our academic institutions. So we need to refocus our education systems and direct more resources toward creating the type of skill levels that are required by the labor market and the private sector in general.”
But the overriding priority is one shared by policy-makers across Africa — closer collaboration with the private sector. “In general, I think we need to focus more on the private sector to help deliver economic growth, rather than rely on government investing just its own resources,” he concludes.