LESOTHO: Building a market economy from scratch
Thomas Cromwell

The Kingdom of Lesotho is one of the most unusual nations in the world. A largely mountainous country, a little smaller than Maryland, and with a population of less than two million, Lesotho is entirely surrounded by another nation, South Africa.

On achieving independence from Britain in 1966, the kingdom barely had an economy of its own. Its men worked primarily in South African mines, and the only local employer of significance was the government. However, with the modernization of mining techniques and the growing number of South Africans in the mines there, many miners from Lesotho have been sent home, and Lesotho has had to look to new sources of income for its people, and develop an independent economy. There are only some 16,000 miners from Lesotho still working in South Africa, whereas Lesotho used to be the main source of labor for those mines.

A major stimulus for developing a private economy was the US Congress' enactment of AGOA, the African Growth and Opportunity Act, signed into law in 2000, which offers preferential trade terms to Africa's developing nations. The first fruit of AGOA for Lesotho was that several Taiwanese firms made investments there to be able to circumvent US quotas for their textile and clothing products.

According to Lesotho's charming ambassador to Washington, Mrs. Molelekeng Rapolaki, AGOA-related investments have reached some $300 million to date, and employ some 50,000 workers. Recently, a major Taiwanese investor spent $100 million setting up a plant to produce denim.

Interestingly, 90 percent of the newly employed workers are women. The ambassador explains that "Our men-folk don't think of the future, and the family." To illustrate what she means, she says that when she is having something for lunch, she will be thinking about sharing her food with her children, wondering how they are and how she can help them.

When you compare this growth in private sector jobs to the 30,000 people the government employs, it becomes clear that Lesotho is well on the way to creating a market economy. And Ambassador Rapolaki says that "diversifying the economy is a challenge for the government right now." She says the government has identified agricultural products as the best prospect for exports. As it is, 86 percent of the population is engaged in subsistence farming. The challenge, then, is to develop the sector commercially, and secure export markets.

For example, asparagus can be grown well in Lesotho, and can be shipped with South African asparagus, which has an excellent market in Europe. Lesotho wants to take advantage of its mountains, and develop cash crops that flourish in cooler temperatures.

The mountains hold other valuable resources, too. One of these is sandstone, which Lesotho has in large quantities and which can be sold in regional markets, including South Africa, Mozambique and Botswana. There are three companies in this business already, but there is a need for more investment, the ambassador says.

Lesotho also has diamonds, and a De Beers mine that was shut down some years ago has now been reopened. There are plans afoot to open two more diamond mines.

The ambassador says that Lesotho needs to add more value to its exports, creating jobs and increasing income. She also acknowledges that Lesotho has to be very competitive in the areas it chooses to develop industry. "We have to do [what we do] superbly," she stresses.

"What does Lesotho have compared to other countries?" she asks, voicing the key question that the government is asking itself. "We have to be strategic… and we have the chance to be so."

But one of the main hurdles the government has to overcome is the poor infrastructure. To date, most investment has been in the capital, Maseru, simply because other parts of the country lack the roads, phones, water and electricity essential for industrial development.

One thing going for Lesotho is political stability. "Five years ago we had political problems," the ambassador says. "Now we are stable." Elections in 2002 put an end to a period of political turmoil.

Lesotho suffers from a severe HIV/AIDS epidemic, with an estimated 29 percent of the adult population suffering from the disease. The ambassador says that when the first case was identified, in 1986, it was a foreigner who had been infected. The general population came to think of the disease as belonging to others, and for a long time nothing was done.

It was not until fairly recently, when it became clear that large numbers were dying from the disease, that King Letsie III and the government embarked on a major educational campaign to inform citizens of the dangers of the disease. The campaign was modeled on Uganda's successful ABC (Abstinence, Be careful, use Condoms) program. Each ministry was instructed to allocate two percent of its budget to HIV/AIDS prevention.

The lack of domestic action also meant that no international aid was forthcoming. That has finally changed, and in 2003 a German company began to provide retroviral medications free of charge. US organizations also got involved. Boston University is helping train health workers and Baylor University will set up a pediatric center. The Clinton Foundation is looking into what it can do, and in February of this year $6.5 million from President Bush's AIDS fund was allocated to Lesotho. Ambassador Rapolaki says, "We are very thankful to the US government and private sector for their assistance."

Despite the obstacles, Lesotho is looking forward to growth. The ambassador says that a business-friendly legal framework is being put in place, and that there are good prospects for investment in the services sector, including tourism. "We have done nothing about tourism, but have a great potential," she says.

H.E. Molelekeng Ernestina Rapolaki

H.E. Ambassador Molelekeng E. Rapolaki assumed her assignment as Ambassador Extraordinary and Plenipotentiary of the Kingdom of Lesotho to the United States of America in December 2001.  She is also accredited to Brazil, Canada and Mexico on a non - residential basis.  

She completed her BA degree in Economics at the National University of Lesotho in 1980 and obtained her MPA with specialization in Population Policy at the University of Southern California in the U.S. in 1993.

Prior to her appointment as Ambassador of the Kingdom of Lesotho to the United States, She held the following positions in the Ministry of Development Planning:  Planning Officer, 1980 –1985; Senior Planning Officer, 1985 - 1987; Director of Economic Policy, 1987 - 1992; Director of Population and Manpower Planning, 1994 - 1997 and that of Principal Secretary of the Ministry, 1997 – 2001.

The Ambassador led the process of establishment of the Department of Economic Policy within the Ministry of Development Planning in 1987. She spearheaded the establishment of the Department of Population and Manpower Planning in the same Ministry in 1994. She won a research awarded on Population Policy Communication from the Population Reference Bureau in Washington D.C. in 1993.  She contributed Chapters on Population, Health, Education and Mining Sectors in the Economic Options for Lesotho published by the Institute of Southern African Studies (ISAS) at the National University of Lesotho (NUL) in 1997. She wrote and presented a keynote address on Lesotho’s Economic review since independence for “Vision 2020” forum held in January 2001.  She also received “Women who Make a Difference Award” from the National Association of Negro Business and Professional Women’s Clubs inc. USA in 2002.