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Lesotho plunges in global business ranking


Bereng Mpaki

THE World Economic Forum has ranked Lesotho 131st   out of 137 countries in the Productivity and Prosperity Competiveness Rankings for the period 2017/18.

This is yet another plunge following poor performances in three consecutive years, starting in 2014/15 when the country ranked 107 before tumbling to position 113 in 2015/16.

Lesotho’s poor performance can be attributed to factors including the political and security instability that has impacted on economic performance and Foreign Direct Investment (FDI) starting in 2014.

The rankings of 137 economies were published in the annual Global Competitiveness Report, which is compiled by the World Economic Forum.

A competitiveness assessment is conducted to provide insights into the drivers of countries’ productivity and prosperity.

The World Economic Forum defines competitiveness as a set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn set the level of prosperity that the country can achieve.

This comprehensive study, combines a whopping 114 indicators that capture concepts that matter for productivity and long-term prosperity for a country.

These indicators are grouped into 12 pillars including institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

The pillars are then further classified into three sub-indexes, which are basic requirements, efficiency enhancers, and innovation and sophistication factors. These serve to describe a country’s stage of development.

The report details some of the problematic factors that influence the ranking criteria, which include access to financing, corruption, governance, political and social instability, inadequate infrastructure, inefficient government bureaucracy, policy instability and insufficient capacity to innovate.

Lesotho is classified in the early stage of development (stage one), which is a factor-driven stage along with 35 other world economies.

The study assumes that in the first stage, the economy is factor-driven and countries compete based on their factor endowments—primarily unskilled labor and natural resources.

Maintaining competitiveness at this stage of development centers on four pillars namely well-functioning public and private institutions; well-developed infrastructure; a stable macroeconomic environment; and a healthy workforce with basic education.

The report further indicates that, as a country becomes more competitive, productivity increases while wages also improve.

Countries will then move into a stage where they start developing quality products more efficiently without affecting or hiking price of goods.


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