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Fitch and Moody affirmed the country’s investment grade credit rating. That is, South Africa has avoided downgrades from the two agencies.
For long, two ratings agencies — S&P and Fitch — ranked South Africa only one level above “junk”, or non-investment grade status.

The downgrades were driven mainly by slowing GDP growth, which makes South Africa more vulnerable to capital outflows, rand depreciation, and rising budget and current account deficits ( among other things).

The economy has been hit by slower-than-expected growth due to the detrimental impact of the five-month platinum sector strike — Amcu shut down the industry for five months, the longest sector-wide strike in the nation’s history, in 2014 — on the economy, other labour unrest and generally weak demand both locally and globally.

Plenty of times the assessments get to the heart of the dilemma facing South Africa Reserve Bank governor Lesetja Kganyago, who is struggling to keep the weakening rand from fuelling inflation at a time when interest rates, at their highest level in five years, have left gross domestic product growing at its slowest pace since 2009.

Amid the growing concern that US Federal Reserve could raise interest rates next month, which is likely to weaken the rand and further fuel inflation, it must have been increasingly hard for the SA Reserve Bank to hold the repo rate at 7 percent at their last meeting this year.
If South African economic data pointed out to improving labour market, I am certain that the Reserve Bank would move in lock-step with the Fed to avoid accelerating the capital exodus from South Africa.

But let’s us not divert attention from the real problem; the Reserve Bank is not where the problem is. The problem is that the government doesn’t see growth as the biggest crisis in SA.
The government’s ability to carry out reforms has always been hamstrung by the standoff between senior leaders in the ruling ANC party.
Oftentimes, South Africans have found themselves standing at a cross roads; betwixt and between, watching an intense power struggle play itself out at the expense of governance and the economy.
It’s for the same reason that the nation stands in awe for what Pravin Gordhan, SA minister of finance, has done.

The once embattled minister thought beyond himself even amidst the fierce storm. What Gordhan, has done is laudable: he has done a sterling job in averting a downgrade.
He has been driving fiscal consolidation — cutting expenditure and reducing debt — and economic reform in anticipation of the S&P review this month.
The report will be issued next month. He has steadfastly refused to grant SAA a R5- billion bailout and has said SA cannot afford the nuclear deal or a zero percent fee hike for universities.
Gordhan knows that stalling the momentum in economic reforms maybe detrimental to economic growth and investor confidence.

There’s a lot of things that have happened in SA, many of which are naturally credit-rating-negative and may have been seen by foreign investors as a precursor to a full ratings downgrade to junk status in December and somehow compelled them to start to position their investment for that eventuality rather than wait for the actual downgrade.
But, I believe it did many investors well, and helped them think otherwise, to see a superlative job Gordhan was doing to put a downgrade at bay.
Gordhan, his deputy, Mcebisi Jonas, and the Treasury stood as a bulwark between SA and a devastating downgrade. Did I mention that they are the incorruptible bones that increase investors’ confidence?

We are yet to know S&P’s decision regarding a downgrade in December.
But that is not much of a big deal anymore: in assessing a sovereign rating, credit analysts, assets managers and others typically would not rely on the analysis of one agency.
Wage deal, also, may help in making S&P decide against a downgrade: agreeing to a three-year wage pact in the platinum sector has boosted the outlook for SA’s big three mines and SA’s chances of avoiding a junk status come December.

South Africa’s big three platinum producers are celebrating wage deals reached with unions without a single day lost in strike — the very strikes that negatively affected economic growth of SA and landed it in this hot mess — and that might benefit South Africa credit rating in December.

Gordhan did not blink in the war of attrition over SA’s future and in so doing saved South Africans, and non-South Africans, from a disaster that was to happen. A disaster that would last for many years given SA’s huge debt.
Africa is then happy that Gordhan is not pliable as in standing for what he believes in, what is right, he became a lifeline for Africa.

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Jobs galore for Lesotho

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94 000 jobs.

That is what the Millennium Challenge Account (MCA-Lesotho) will create in the next 10 years, according to Prime Minister Sam Matekane.

The MCA-Lesotho was created by the Lesotho parliament last year after the United States’ Millennium Challenge Corporation (MCC) found Lesotho eligible to receive development funds.

The MCC gives development grants to poor countries that respects democratic principles and human rights.

The MCC has unlocked a staggering US$322 million (over M5 billion) to the government of Lesotho after the country enacted three laws the protect people’s basic rights this week.

Matekane advised youths to visit MCA-Lesotho offices to understand how best they can benefit from the fund and the projects that will be financed.

The MCC’s investments are aimed at increasing the availability of water for household and industrial use, enhance watershed management and conservation methods, rehabilitate health infrastructure and strengthen health systems, and remove barriers to private investment.

The MCA-Lesotho’s Health and Horticulture Compact seeks to assist the country in unlocking equitable and sustainable economic growth in partnership with the private sector by addressing key constraints to growth.

Matekane said the job creation potential of the horticulture project alone is estimated at 4 000 jobs.

This excludes indirect jobs that will be created through packaging supplies, logistics, cold chain activities as well as the processing of the output.

“Let us all be ready and ensure we spend all the funding that is available,” Matekane said.

He said the money is going to be invested in agriculture, trade and industry, value chains, infrastructure development, tourism and creative sectors.

“The Compact has come at a critical time when the country is in dire need of financial injections to revive the economy,” he said.

“This second Compact forms the core of Lesotho’s private sector-led economic growth, recovery and job creation agenda.”

He said the MCA staff should work diligently, to implement this Compact.

“There are several Basotho businesses out there that are eager to seize the opportunities that the Compact brings,” Matekane said.

“Serve them with integrity, accountability and dedication.”

Matekane said the government has established the Cabinet Sub-Committee on the Compact which is under the leadership of Deputy Prime Minister Nthomeng Majara.

The sub-committee is mandated to ensure that the government provides overall oversight, strategic direction and support for successful implementation of the Compact.

He said he expects the MCA-Lesotho to ensure the full implementation of the project within the next five years.

“Our economy needs this capital injection to boost productivity and job creation,” Matekane said.

Matekane said the government had to enact three pieces of legislation which were necessary to support the investments that the MCC is making.

The enacted laws are the Labour Code Amendment Bill, the Administration of Estates and Inheritance Bill and the Occupational Safety and Health Bill.

Majara Molupe

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Bank spearheads career expo

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Standard Lesotho Bank will tomorrow host a career expo at the ’Manthabiseng Convention Centre for high school students who will sit for their final exams this year.
The 14th Annual Standard Lesotho Bank Career Expo was launched in Mokhotlong on Monday where the Lesotho Highlands Development Authority (LHDA) welcomed students in areas around the Polihali Dam construction site.

On Tuesday the expo was at the Butha-Buthe Community High School, yesterday it was at Assumption High School in Teya-Teyaneng while today it is in Quthing at Holy Trinity High School.

The five-day nationwide event is dedicated to connecting ambitious Basotho youths with exciting career opportunities.

Standard Lesotho Bank says it’s career expo “is a cornerstone of the bank’s commitment to empowering Basotho youth and shaping the future of Lesotho’s workforce”.

The 2024 edition of the event is the 14th where the bank is now the headline sponsor of this important expo that reaches about over 10 000 students countrywide.

The expo promises to be an even better offering where over 35 institutions of higher learning from Lesotho and South Africa as well as professional bodies will explain different career options to Basotho students.

Standard Lesotho Bank communications manager, Manyathela Kheleli, said students in Mokhotlong did not only learn about different engineering disciplines but got to appreciate engineering in action at Polihali.

He said it was a lifetime experience for students from Mokhotlong, “thanks to the collaboration with LHDA, who are fully responsible for the Polihali leg of the event”.

There were also motivational speakers from different professions in the bank and other selected institutions.

Key influencers in the football fraternity, former Likuena captain and now Corporate Responsibility Manager at Letšeng Diamonds, Tšepo Hlojeng, and former Orlando Pirates dribbling wizard, Steve Lekoelea, are among the influencers that have been invited to address the students.

The event is a sponsorship initiative under Personal and Private Banking that is open to all youths, communities, and individuals, where the bank intends to use this event to drive the new Youth or student Customer Value Proposition and attract high school students to open accounts ahead of their enrolment into tertiary institutions.

The objective of this sponsorship is to first create an environment where future leaders of Lesotho will be nurtured and informed of top career choices that demonstrate various skills requirements for the growth of Lesotho’s economy.

Secondly, the career expo is a clear demonstration of the bank’s intention to put youths at the centre of its initiatives.

This position is shown by the bank’s initiative to not only develop special products for youths, such as the Youth Account but also through several initiatives that promote youth empowerment. These include the bursary scheme and the Bacha Entrepreneurship Project.

“We are more than a bank for our youths, but a good corporate citizen and a partner for the education for Basotho,” Kheleli said.

“We believe that as we grow our youths, they will become assets to this country and by extension, develop into a feeder market for our banking products when they enter the job market,” he said.

The bank has invested M150 000 towards sponsorship of the annual Career Expo.

Staff Reporter

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Ministry launches fresh industrialisation drive

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A new policy to drive industrialisation in Lesotho was launched in Maseru this week.
The Lesotho National Industrialisation Policy 2024–2028 is being spearheaded by the Ministry of Trade.

The ministry says the policy seeks to accelerate economic diversification in the industrial base, enhance productivity and productive capacity for industrialisation and advance domestic and regional value chains for industrialisation.

It also seeks to promote and develop industrial clustering, promote inclusive industrialisation, support entrepreneurship development and strengthen business linkages.
The new policy will also seek to enhance energy efficiency and sustainability, promoting technology adoption and innovation, services-based industrialisation, and stimulating agro-based industrialisation.

This is not the first time Lesotho has launched an industrialisation policy. Previous policies have all failed.

The first attempt was the 2015–2017 industrial policy, whose aim was to accelerate the industrialisation agenda and address key challenges facing the country.

The second one was the 2018–2023 policy, which after its unsuccessful execution during the three years of implementation, the government extended it to the National Strategic Development Plan Strategic Focus (2023/24-2027/28).

The new industrial policy’s target is set to activate implementation on innovation to enhance the efficiency and competitiveness of domestic industries, create decent jobs and improve the welfare of Basotho.

Thabo Moleko, the Ministry of Trade Principal Secretary, said the implementation of the new policy is set to deepen economic growth, promote industrialisation and enhance competitiveness.

“The plan includes greater investment in industrial development with the intention to create employment and incomes while building on maintaining the existing industrial trade,” Moleko said.

Mamello Nchake, a consultant for the United Nations Economic Commission of Africa (UNECA), said the development goals of the industrial policy are set to ensure an achievable inclusiveness and equitable growth as they aim to create sector-led quality jobs for Basotho.

Nchake said the goals are meant to “develop and maintain enabled infrastructure that is critical to the private sectors and also to promote gender equality, environmental and climate risk management”.

“Moreover, the policy (will seek to) harness the collaboration with private sector firms to address common challenges and promote industrialisation,” she said.

The workshop discussed constraints that hindered the implementation of the 2018 – 2023 policy that undermined investment and trade opportunities.

The constraints include access to land for investment, inadequate provision of infrastructure, an outdated and a lack of appropriate regulatory environment, low productive capacity, market size and topological constraints, unstable macroeconomic environment, external factors, and over-dependency of trade preferences.

To address the strategic objectives, the previous industrial policies had proposed tax incentives for industrial development, trade policy and regional integration as the main vehicle for industrialisation and structural transformation.

They had also proposed mechanisms for policy coordination and implementation, institutional alignment and linkages.

However, several key challenges were identified in the implementation of the 2015-2017 industrial policy.

They included limited financial and investment capacity to effectively implement the industrial policy actions.

“Financing instruments are not aligned with the level of development needs of the private sector,” stakeholders heard at the workshop.

They also heard that there is “persistent dependency on few industries that poses risks in the face of global economic uncertainties and ever-changing consumer preferences”.
Another identified problem is limited investment climate that makes it costly for foreign firms to invest in Lesotho.

It was also observed that a shortage of specialised education and skills crucial for growth of industries impact the ability of firms to adopt advanced technologies and improve productivity and the productive capacity.

Stakeholders also heard that there is limited global competitiveness and access to global markets.

Lesotho’s industries, they heard, particularly textiles and garments, face competition from other low-cost manufacturing countries.

The country is also spooked by poor coordination between the implementing agencies due to a lack of a clear implementation framework.

Khahliso ’Molaoa

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