Majoro warns of tough times

Majoro warns of tough times

MASERU – FINANCE Minister Dr Moeketsi Majoro yesterday warned of tough times ahead as he presented his M16.1 billion budget.
Majoro said over the past eight years he has come to appreciate deeply the dire straits our country and economy are mired in.
The main problems, he said, were poverty, hunger and unemployment. These are in addition to the pervasive ill-health and lack of skills in the country.

He said in addition the government does not have enough financial resources to tackle these problems.
In the budget Majoro tried to find ways to generate more revenue while cutting the government’s expenditure.
He said the austerity measures as well as efforts to create new sources of revenue were necessary because of a decline in receipts from SACU and a drop in local revenues.

He said SACU revenues for the next financial year which started on April 1 is expected to decline by a staggering M616.1 million.
This, he said, means the government would need to find a further M1 billion from somewhere to fund its programmes.
Local output would fund 43.3 percent of the budget. The minister said while revenues are declining expenditure remained high, mainly driven by the wage bill as well as transfers to Tšepong and CHAL hospitals.

The fiscal budget which is projected to be 5.2 percent will be financed through a combination of domestic borrowing of M1.2 billion and M729.5 million in foreign financing. Majoro said he did not expect the debt ratio to deteriorate much.
“The financing strategy is aimed to lighten pressure on international reserves and indeed begin to accumulate some modest amount of reserves,” he said.

The finance minister also bemoaned the lack of transformation within the textile sector.
Majoro said the sector, which employs nearly 47 000 people of which 82 percent are women, is still mostly owned by Asians and its products predominantly destined to the US market.

“Also the number of people employed and their salaries has (sic) remained stagnant since the mid-2000s,” he said.
Turning to other sectors, Majoro said mining and quarrying play a significant role in promoting economic growth, “but does not generate a lot of employment due to the high degree of mechanisation”.

“While mining may not contribute significantly to employment, it is valuable in two important ways, namely revenues and procurement,” Majoro said.
He said on revenues, Basotho’s concern is whether Lesotho is getting the maximum value from its minerals.
To safeguard its rights, he said, the government will review the entire handling of the process chain until the minerals have been sold in the 2018/19 financial year.

“At bilateral level, the government will consult with Belgium, International Monetary Fund and other experts in order to put in place a failsafe mechanism for diamond handling,” he said. He said the new handling regime will probably introduce independent diamond valuation services and domestic off-taking for beneficiation.

Majoro said the Ministry of Mines will focus on construction of a Geoscience Laboratory, implementation of the Geochemical Mapping project, legal frameworks and development of capacity on valuation of diamonds.

The geochemical mapping project will assist in the collection of mineral information which is important in attracting investors for mining and creating exploration sites.

Turning to agriculture, he said the output for the 2017/18 crop year is expected to rebound, and maize prices have fallen moderately, mostly on account of declining prices in South Africa.

He said food, medicines, and creams produced from Lesotho’s endemic plants are produced in small quantities that do not generate much employment or profit.

“One successful broiler producer in Lesotho has determined that the minimum size of a commercially viable broiler operation should start with at least 1 000 birds,” he said. “Yet most of these operations have much smaller scales.”

Majoro said Lesotho’s rangeland supports the production of red meat, hides, wool and mohair.
When well-managed, he said, it also helps the protection of wetlands and the recharge of water sources.
He said the rehabilitation of rangelands and the widespread introduction of management grazing should stimulate the livestock and deciduous fruit value chains, both of which are priority sectors for this government.

“Government has instructed the Ministries of Forestry and Land Reclamation, Agriculture and Food Security, Trade and Industry, Small Business Development, Cooperatives and Marketing and Water to work collectively with private investors to rehabilitate rangelands and wetlands with the objective of stimulating investments in these two value chains,” he said.

“Investments in commercial red meat production, hides and related products, wool and mohair and related products, chicken broiler and egg production, and fruit tree production, and sale of water to Botswana and continued sale of water to the Republic of South Africa should be the outcome of collective work and the dialogue between the selected ministries and potential private investors,” he said.

He said the successful rehabilitation of rangelands together with improved grazing methods will not only improve the grazing resources, it would also protect the sources of water (wetlands) and help restore high water recharge rates across the country.

In addition, Government intends to set up a Savoury Hub in Lesotho to help reverse desertification and intrusion of shrub species on the rangelands, he said. Majoro said expansion of orchards together with irrigation is likely to benefit immensely from a successful programme of rehabilitation of the foothill and mountain rangelands.

“The Lesotho beef industry could be transformed by one single investment,” he said, adding that a Chinese company has proposed a large beef investment in Lesotho for export to China and Europe.
“The investment will include construction of a large slaughterhouse and feedlots around the country to fatten cattle before slaughter.”
He said the government is in discussion with the company and in 2018 will conclude pre-investment discussions.
When completed, the scale of this operation will not only place Lesotho on the international beef market, it will also foster the development of an industry in hides, and stimulate other products along the beef value chain.

He said government will undertake feasibility studies to catalyse private sector investment to support construction of poultry and piggery abattoirs, upgrading of national abattoir to meet international standards as well as construction of 50 feedlots throughout the country.
“Government will continue to support improvement of wool and mohair and the associated value chain,” Majoro said.
“M277.8 million has been set aside to pursue this livestock economy investment,” he said.

About the deciduous fruits, he said a large part of Lesotho is suitable for deciduous fruit production.
He said a suitability map produced by government shows that fruits can be produced successfully from Butha-Buthe, cutting across the western lowlands and running all the way to the southern foothills near Mphaki. “Government will support the expansion of orchards and the development of a deciduous fruit industry as part of the strategy to create additional jobs,” he said.

He said the Ministry of Forestry and Land Reclamation, Trade and Industry, Small Business and Cooperatives and the Ministry of Agriculture and Food Security working with banks, insurance companies, buyers, and investors will lead the roll out of fruit orchards.
“Their efforts will build on the successful operation of the Likhothola Orchard in Mahobong, Leribe.”

He said government is also attempting to lure Du Toit Agri (Pty) Ltd and other large fruit growers to take interest in investing in Lesotho’s virgin fruit industry. On other high value cash products, he said Basotho farmers could produce herbs, spices and aromatic plants for export to the United States under AGOA and Europe under Everything but Arms.

Government through the Ministries of Forestry and Land Reclamation, Trade and Industry, Small Business and Cooperatives, and Agriculture and Food Security, working with farmers and contract farming investors will during FY2018/19 explore the feasibility of this idea, he said.
“This same approach will consider scaling up honey production and commercialising organic peaches and dried fruit.”

Staff Reporter

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