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7. Lesotho: Taking advantage of good economic conditions
and strong political will to increase social protection
7.1. Country profile
The Kingdom of Lesotho is a small landlocked country of southern Africa with a total surface area of 30,355 square kilometres. It has a single neighbour, South Africa, which
surrounds the kingdom on all sides. Lesotho became independent from the United Kingdom in 1966. Politically speaking, Lesotho is a parliamentary system with a
Constitutional monarchy.
The total population in Lesotho was estimated at 2,067,000 inhabitants in 2009 United Nations-Population Division of the Department of Economic and Social Affairs.
Population growth has averaged 1.8 per cent per year since 1960 but the annual rate has oscillated since 1982, declining for a while, recovering and then dropping off again. Since
1998 population growth has been lower each successive year; between 2004 and 2008 the average growth rate was 0.92 per cent figure 46.
Figure 46. Lesotho: Population growth rate, 1960-2008
Source: United Nations-Population Division of the Department of Economic and Social Affairs, 2010.
The median age of the population in Lesotho is 22.6 years, with a projected 25.2 years by 2025. Fifty-five per cent of the population is under 25 years of age, but this group is
expected to decline to 49 per cent by 2025. Over the next 15 years the country will experience a transition to a more mature society in which the 35 to 49 year-old age bracket
will increase its share from 12.6 per cent to 20.3 per cent of the total population. People over 65 years of age will not increase their share significantly and are expected to account
for 5.9 per cent of the total in 2025.
From an economic standpoint, contrary to what occurred in many countries in the southern part of Africa Mozambique and Botswana, for instance where the economy grew at
impressive rates, Lesotho did not exhibit an outstanding macroeconomic performance or
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benefit from any special feature that might distinguish its economy from that of the rest of the region.
Lesotho’s economy is small, with a GDP per capita of US775 in 2009 US1,700 PPP that was ranked 156th in the Human Development Index HDI. GDP per capita has
multiplied by a factor of 13 since Independence, at an average rate of 4.6 per cent per year 2.8 per cent in per capita terms. Lesotho ranks below the sub-Saharan Africa region in
terms of gross national income GNI and its per capita income is half the average among lower-middle income nations.
The country relies heavily on the United States for exports and on South Africa for employment and remittances. Some 59 per cent of total exports go the United States, while
most of the remittances received by Lesotho come from miners working in South Africa. Services account for the biggest share of the economy 58 per cent and agriculture for 7
per cent of GDP. By contrast, 86 per cent of the occupied labour force works in the agriculture sector, but 45 per cent of the total labour force is unemployed. Finally, exports
achieved their highest ever level of 58.2 per cent of GDP in 2002, since when they have decelerated year after year to 47.3 per cent of GDP in 2008.
The Government plays a critical role in Lesotho’s economy. During the second half of the 2000s public spending accounted for 45.6 per cent of the economy, having increased
steadily since 1990 figure 47. Tax revenue followed a similar pattern to expenditure and, with the exception of the period 2000-04, the Government has enjoyed fiscal surpluses.
These surpluses were 8.3 per cent in 2007 and 4.1 per cent in 2008 Ministry of Finance and Development Planning, 2009b.
Figure 47. Lesotho: Public revenue and expenditure as a percentage of GDP 5-year periods, 1990-2008
Source: World Bank, 2010.
The major source of revenue is taxes 89 per cent and, within this group, custom revenue constitutes more than 60 per cent of the total 36.3 per cent of GDP. This strong
dependence on one category of funds, far from declining over the years, has become even more marked, rising from 54.4 per cent in 2004 to 62.0 per cent in 2008 figure 48. The
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