Majoro calls for shake-up

Majoro calls for shake-up

MASERU – FINANCE Minister Dr Moeketsi Majoro wants a radical shake-up of Lesotho’s economy that he says was not geared towards creating jobs. Majoro was speaking at a post-budget indaba organised by the Transformation Resource Centre (TRC) last Thursday.
He said the slow pace of industrialization in Lesotho since independence in 1966 was a real cause for concern.
Majoro said something is seriously wrong if for the past 50 years the country’s industrialisation is still weak.

Turning to the recent economic activities, he said Lesotho has been experiencing a serious economic crisis since 2011.
He said when the Africa Growth Opportunity Act (AGOA) was passed in 2005, Lesotho’s employment rate shot to 50 percent but today it is now hovering around 40 to 45 percent.

“The LNDC (Lesotho National Development Corporation) every year is in operation but cannot employ people in the firms. So, people are stuck in minimal wages, the employment rate is declining instead of rising,” he said.
Majoro also said even the materials used in the industries do not come from Lesotho but come from other countries.
“There is no transformation at all,” he said.

He also said only electricity, wages and water are being paid to Lesotho while everything is taken away to investors’ countries.
“There will always be minimum wages because the structuring of our industry is wrong from the scratch and we have to look for possible ways to escape all this,” he said.

“More critically we have an economy that is not aimed at creating jobs (because for a long time) we have been depending on mines in the neighbouring country.” He said at some point there were more than 126 000 mining jobs in South Africa.

“Our biggest challenge is that now those jobs are not available at all,” he said.
Majoro also said some of the people have zero qualifications and are not employable anywhere and they are either trapped in not-so-good textile factories or remain vendors in the informal sector.

“We do not discuss such things on radio and the Ministry of Education is only focusing on scholars, not those who dropped out or did not go to school at all,” he added.

He said the South African economy is also underperforming.
“Their underperformance reflects in SACU revenue as they gave us M600 million less revenue for next year,” he said.

He also said next year the government will not be able to cover even salaries because there are not enough funds, unless something is done urgently.
In his budget speech last week, Majoro said “SACU revenue is significantly down in both nominal and real terms”.

He said net international reserves are “below the target we set for ourselves to maintain parity with the rand, while government deposits have finally run out and any fiscal deficit will now have to be financed through new borrowing”.
“These are new times,” Majoro said.

“Our government now has to bite the bullet and make decisions that would be painful, but which if not taken would impose political and economic chaos on Lesotho,” he said.
He said poverty, hunger and joblessness are high and even higher amongst the youth, ill-health is pervasive and there is a persistent mismatch between the skills needed and those that are produced.
“Hundreds of our young people looking for jobs dropped out of school at end of primary school when they were 12 years old or at Form E when they were only 17 years of age,” Majoro said.

“The fiscal resources required to redress the situation are scarce and limit any meaningful participation by government,” he said.
The World Bank Lesotho 2017 report says unemployment in Lesotho remains high at 24 to 28 percent, coupled with high inequality and poverty.
“The country finds itself at a crossroads needing new engines for growth, a more streamlined role for the state, and a dynamic private sector to help it seize opportunities in regional and global markets,” the World Bank said.

It said Lesotho has made important progress in improving its Doing Business indicators, especially in terms of streamlining business and property registration processes that hinder the growth of local businesses, as well as in incoming Foreign Direct Investment (FDI).
“However, more progress is needed to improve the business environment and achieve the country’s development goals,” it said.

The World Bank said the decline in SACU revenues pose a challenge to the country’s fiscal outlook: revenues fell from 25 percent of GDP in 2014/15 to 13.6 percent of GDP in 2016/17, and are expected to remain low in the medium term.
The Bank said with public spending at 50 percent of GDP in 2016/17, and a wage bill of 18 percent of GDP, “government’s ability to drive growth further is limited”.

According to the CIA Factsheet, Lesotho depends on a narrow economic base of textile manufacturing, agriculture, remittances, and regional customs revenue.

It says about three-fourths of the people live in rural areas and engage in animal herding and subsistence agriculture, although Lesotho produces less than 20 percent of the nation’s demand for food.

Lesotho relies on South Africa for much of its economic activity as it imports 90 percent of the goods it consumes from South Africa, including most agricultural inputs.

The CIA Factsheet says households depend heavily on remittances from family members working in South Africa, in mines, on farms, and as domestic workers, though mining employment has declined substantially since the 1990s.

Nkheli Liphoto

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