Lesotho

Lesotho is small, landlocked and surrounded by South Africa, the region’s largest economy. With few exploitable natural resources – diamonds, water transfer and wonderful mountain landscape with possible tourist potential – and strictly limited agricultural potential, the people have developed a strong culture of wage employment. Historically, Lesotho sent migrant labourers to the mines in South Africa, with remitted wages providing sustainable livelihoods and general household security for their families living mainly in rural areas. However, such opportunities for migrant employment have declined sharply since the political and economic reconfiguration of South Africa after 1994. Fortuitously, a substantial influx of foreign direct investment created an export-oriented garment industry from the late 1990s, providing jobs for 50,000 (mostly female) employees.

Poverty is multi-faceted and deeply entrenched in Lesotho, with a third of the population barely surviving on under half of the poverty datum. Subsistence agriculture, the main standby in many other parts of Africa, is not able to support many rural households in competition with lower-cost producers in South Africa. Internal migration in search of employment is resulting in increasingly high levels of poverty in the Lowlands and around the towns.

The Government of Lesotho (GoL) has a well-defined development framework – concerning what is to be done – in its Poverty Reduction Strategy (PRS), emphasising the pursuit of economic growth as the main remedy, supported by better living conditions for the poor (with improved education, health and environment) and public sector reforms including the establishment of effective and sustainable local government institutions and improved public services. The Millennium Development Goals (MDGs) established for Lesotho appeared ambitious but achievable.

However, the positive trends detected in the period after 2000, driven by helpful external economic circumstances, have been reversed by the very rapid onset of HIV/AIDS in the country. The prospects are not good and the MDGs now clearly out of reach. The pandemic is threatening the future of Lesotho, being a disaster for the lives, social structures and livelihoods of the people. One tenth of the population are now orphans and vulnerable children.

GoL is now striving to cope with the immediate and medium-term effects of HIV/AIDS in addition to implementing the PRS. A difficult task may have become almost impossible.

In generating an optimum response from Development Partners for the period 2008 -13, the European Community (EC) has collaborated with the EU Member States most active in Lesotho (Ireland, Germany and United Kingdom) in the spirit of harmonisation. The situation analysis set out in this Country Strategy represents a broad consensus and points the way towards joint programming and development management in the future.

After extensive stakeholder consultations, it has been agreed that EC assistance in Lesotho will continue to be supportive of poverty reduction through economic growth and better provision of basic services, with the crucial addition of a major contribution to the defeat of HIV/AIDS and TB as a necessary condition for the country's survival and development.

EC assistance under the 10th European Development Fund (EDF) will focus on the following two areas Human Development, predominantly through the campaign to eliminate HIV/AIDS and TB; and Infrastructure, continuing EC support for the key public service areas of water & sanitation provision and of road transport. Macroeconomic support and capacity building will accompany this assistance, with EC funding being linked to progress with GoL implementation of the PRS and the achievement of targets specific to improved public financial management, public sector reform and the decentralisation of service delivery. The indicative allocation for the 10th EDF A-Envelope is €136 million and the indicative allocation for the B-Envelope is €2 million.