MASERU — The coalition government is expecting to create 47 000 new jobs in the next five to eight years, according to the strategic goals for 2012/2013 to 2016/2017 of the trade ministry. The five-year National Strategic Development Plan, released by the Ministry of Trade in March, says formal employment will continue to grow at an annual average rate of three percent. The strategic plan is referred to by the Diagnostic Trade Integration Study (DTIS) report which was released by Trade’s acting Principal Secretary Hlompho Mpeta at a workshop yesterday.
The implementation of this strategic plan is expected to result in a change in the structure of the economy and the transition to a more sustainable growth path, reads the DTIS referred document. To achieve this goal, the strategic plan suggests that Lesotho needs “to define a future that is characterised by the capacity to produce goods and services for regional, African and global markets”. “This can be achieved by addressing the most binding constraints to growth and by exploiting our comparative advantages,” reads the document. “These advantages include our central location within South Africa, which provides access to its markets and advanced infrastructure that creates links with the rest of the world, trade preferences and our relatively large, young, competitive and literate human resource base.”
“The natural landscape and resource endowments offer great prospects for a greener economy. These windows of opportunity will pass if Basotho do not act quickly and decisively.” Releasing the DTIS report yesterday Mpeta said between 1982/83 and 2010/11, Lesotho achieved an annual average growth rate of 3.8 percent at constant prices. The objective of the workshop was to inform principal secretaries and ministers about the DTIS update and the Enhanced Integrated Framework (EIF) programme, and the role of each stakeholder in the implementation of the DTIS.
“Despite this consistent positive growth, income inequality, unemployment and poverty rate in the rural areas remain high, implying that economic growth has not been socially inclusive,” Mpeta said. “Although Lesotho has made a reasonable economic and social progress during the past decade, some critical challenges that constitute major barriers to sustainable private investment and thus broader development remain.”
Lesotho faces a variety of structural and supply-side constraints such as weak physical infrastructure, insufficient financial resources, low technological and productive capacities as well as the dependence on a narrow range of export products. He said Lesotho cannot address these challenges alone.
“Therefore, donor agencies, development partners and the private sector have an important role to play in stimulating the economic growth of this country,” he said. “Lesotho has recently developed the National Strategic Development Plan (NSDP), within which trade issues are considered important growth drivers. It covers issues of manufacturing, investment climate, infrastructure, trade, entrepreneurship development and access to technology.”
A DTIS evaluates internal and external constraints on a country’s integration into the world economy, and recommends areas where technical assistance and policy actions can help the country overcome these barriers. The studies are conducted by teams who analyse specific sectors of the economy as well as cross-cutting institutional issues, such as market access, transportation and trade facilitation, standards, poverty, and core trade policy. An action matrix facilitates discussions with the government, donors, and the private sectors after the diagnostic study is completed.
The national strategic planning document says growth will be driven by expansion of diamond mining and major water projects, the Metolong Dam and the Lesotho Highlands Water Project Phase II. “The mining investment of more than M 5 billion will lead to increased diamond exports, higher GDP and faster growth in tax revenues,” reads the document. “These two projects will have significant impact on the growth of construction activities during the implementation phase.” “However, these large impacts on growth will not be sustained in the long-term.”
The strategy paper says only a few jobs will be maintained post construction phases and mining is highly capital intensive and will not yield many jobs.
“Therefore, in order to sustain growth and employment creation, four sustainable growth generators have been identified. These are agriculture, manufacturing, tourism and deeper investment climate reforms.” “Growth in these leading sectors will stimulate demand in the “followers” sectors which include transport, telecoms, construction and business services.”