Lesotho’s declaration of a self-inflicted disaster

Lesotho has declared a national state of disaster over “high rates of youth unemployment and job losses”. This measure in the landlocked southern African kingdom is likely to be in force until 30 June 2027.

The immediate government justification is the uncertainty over the 50% US tariff hikes announced by Donald Trump on April’s Liberation Day. Lesotho is dependent on apparel exports to the US market under the African Growth and Opportunity Act (AGOA). Lesotho was one of the biggest beneficiaries of AGOA, which is up for renewal this September, granting duty- and tariff-free access to African countries.

Even though the tariff hikes were paused, the uncertainty generated has seen orders slump in the all-important textile sector, which employs 40,000 people, with imminent job losses. Officially, one in three Basotho are unemployed, but the country remains heavily dependent on jobs in South Africa, legal and illegal. Many Zama-Zamas are Basotho.

The declaration, in line with Lesotho’s Disaster Management Act, allows the state to “take all necessary measures to… minimise the effects of disasters” among others. Using this legislation, the government could fast-track youth employment schemes among a cohort where over half don’t have jobs.  

While Trump’s tariffs might be the proximate reason, this disaster has been long in the making, and is entirely man- (or leadership-) made. While Trump can be blamed for acting precipitously, it’s the paralysing effects of business as usual which have led Lesotho into a crisis of its own making.

We were involved in assisting the government of Lesotho at its invitation with various reform initiatives from 2008, not least since one of us (Greg) had written his Master’s dissertation on the place. Roughly every four years, we returned on invitation to write yet another reform strategy, but as the former prime minister (and finance minister) Moeketsi Majoro reflected, “the energy and focus to implement your plan left on the plane with you, and nothing happened”.

“From here?”

Never say never again, then. In the film of that name, James Bond is asked to fill a beaker with a urine sample to which he responds after eyeing it from across the room: “From here?” Change in Lesotho requires more than a leap of faith.  

In 2023, we returned for another crack, this time with the government of Sam Matekane, a millionaire businessman-turned-prime minister whose Revolution for Prosperity had been formed specifically in March 2022 to transform the country, winning 56/120 seats in the October election that year, creating the rump of a multiparty coalition government. 

But Matekane, despite having a reputation for getting things done, found the political going much tougher, a reminder (yet again) that businesspeople don’t always adapt well to the world of politics, in part because it’s much a less binary business than the single metric of making money, and people don’t always do what you tell them.

Matekane had, predictably, led his government with a 100-day programme, which was focused on delivering 21 priorities. These included enhancing inclusive and sustainable economic growth and private sector job creation, strengthening human capital, building an enabling infrastructure, strengthening national governance and accountability systems for improved service delivery, as well as strengthening climate risk management, resilience and adaptation along with public financial management. There may have been some apple pie and 12th day of Christmas promises in there too, since all of this was officially aimed at increasing accountability, transparency, performance, and social engagement.

Little more than tinkering

It’s a good thing that very few of these “priorities” could in fact be empirically measured because, at the end of 100 days, it was clear that the new government had managed little more than tinkering with methods, improving lighting in Maseru’s streets and refurbishing the airport. Matekane owns several private aircraft.

There were a couple of promising developments, including reducing the cabinet from 37 to 15. Matekane said in his report-back after 100 days in office that the government was behind on some of the challenges, as they needed intensive investigation. Play it again, Sam.

In June 2023, at the invitation of his government, we made a presentation to a team led by his finance minister, identifying the structural constraints and suggesting a priority list of actions. Nothing came of that, and the letter of invitation needed to go ahead with the work required to flesh this out appeared to be stuck in the mail.

This followed the 2022, 2017 and earlier efforts, all of which had, despite considerable effort, resulted in absolutely no visible reforms.  

The main thrust of our advice was always that Lesotho needed to diversify to reduce its dependence on AGOA manufacturing, grow its agriculture, mining and tourism sectors by turning itself into a giant SEZ offering potential investors an alternative to regulation-laden, low-growth South Africa, which provides no economic stimulation. Although enthusiastically welcomed, these suggestions appeared unable to find any traction with those who had to implement them.

From this, one can only deduce that Lesotho had neither the political will nor the administrative wherewithal to make the necessary reforms, none of which were particularly painful. Why change a system which rewarded the political class handsomely in comparison to ordinary folk for no actual contribution to growing the economy?

Triple-whammy

Now Lesotho has been hit by a triple-whammy of Trump’s cutbacks in aid, trade access and especially Aids relief.

Matekane was inaugurated at the Setsoto Stadium on October 28, 2022. Then he vowed to be at the helm of “The Lesotho We Want.”

The disastrous state of the economy can hardly be classified as a surprise, however tragic the effects. The national disaster is shorthand for a government asleep at the wheel. Getting out of this predicament is unlikely to come from hand-outs, not in the current aid environment and absent local, reciprocal political will, even though urgent action is needed. But will the right action be taken?

Special power, including the ability to fast-track and bypass procurement measures under the state of disaster, could well be a recipe for greater disaster in a government unable to reform or to control spending. There is a risk that these measures remain symbolic in failing to address structural issues like skills mismatches and informal labour markets.

There is a real danger that Lesotho, already a very poor place, could be made much poorer still, not only by Trump’s actions, but by the poverty of government in Maseru attempting to pick winners. Already, two-thirds of 2.3 million Basotho live below the poverty line.

Reforms and ingenuity

The good that might come out of this admission could be that the government now has no choice but to live on the wits of its reforms and ingenuity, more Zama-Zama than Gomma-Gomma. That requires hoping against past form since otherwise they would not be in this position anyway.

Without reform, no Lesotho prime minister is going to get the Lesotho the people want, only the one they are stuck with.