Poor SACU revenues hobble economy

Poor SACU revenues hobble economy

MASERU – SLUGGISH economic performance highlighted by declining Gross Domestic Product (GDP), unstable border revenues and gender inequality are threatening Lesotho’s regional competitiveness, according to latest figures released by the Bureau of Statistics.
The Bureau of Statistics on Tuesday published the 2017 country profile for Lesotho, showing how Lesotho is lagging behind its peers in the Southern African Development Community (SADC) in economic terms.

The country profile is intended to provide periodic assessments of socio-economic development focusing on policy analysis, regional integration and economic transformation, gender and development.

The country profile shows that Lesotho’s GDP has been declining since 2012. Economic growth has been slowing, with the country recording 2.3 percent growth in 2017 in contrast to the strong performance of 7 percent in 2011, the recently released figures show.

Slow and uneven global and regional economic recovery, specifically that of South Africa has negatively affected the country’s ability to export and collect Southern African Customs Union (SACU) revenues. South Africa, whose economy has been on a rollercoaster in recent years, is Lesotho’s largest trading partner and export destination. The countries, together with Botswana, Namibia and Swaziland are also part of SACU, the world`s oldest custom union that provides a substantial amount of revenue for member states.

Weak recovery of the manufacturing industry globally and gender disparities in Lesotho have accounted for the country’s lethargic economic performance, according to the 2017 country profile.

Women empowerment in the manufacturing sector could boost economic growth and increase revenue collection badly needed for poverty alleviation and social development programmes, according to the country profile.
It emphasises the manufacturing sector’s importance due to the spinoffs that flow to the rest of the economy.

The sector, which accounts for over 40 percent of the country’s exports, has served as an engine for economic growth in Lesotho and provides employment to the most vulnerable groups of workers.

Njoroge said factors that contributed to volatility and the decline in economic growth include weak and uneven global economic recovery with attendant weaker global manufacturing and mineral demand.

She said reliance on a few trading partners and the slow growth experienced by the country’s major trading partners posed major challenges.
“The slow growth undermines the progress towards the attainment of national aspirations adopted in the national vision,” she said.
She further said the regional comparisons through progress towards the African Integration milestones will help Lesotho streamline its priorities in this global environment where regionalism is particularly important.

Speaking at the launch of the country profile, the Director of Bureau of Statistics ’Malehloa Molato attributed Lesotho’s volatile growth figures to fluctuations in the external demand for the country’s manufacturing exports and dependence on a few trading partners and developments in the trading partners’ markets.

“The low implementation of public investment has taken its toll on the construction sector,” Melato said.
“Generally, however, good performance of mining and services over the period boosted the economic standing of the country,” she said.
The government has since announced that it is in a financial squeeze that has seen failing to meet its obligations. It has since announced a battery of austerity measures to balance its books.

Tokase Mphutlane

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