Lesotho: What does the future hold?

When people are asked to name African nations, a few common answers come to mind, such as Nigeria, Egypt and Africa for those less knowledgeable about the region. Africa is a diverse continent with 54 countries, and a unique one this article seeks to highlight is Lesotho, a landlocked country encircled by South Africa.

Much like other former colonies, Lesotho became independent in 1966 from the United Kingdom, making it a relatively young nation. Given its history and lack of natural advantages like being along a shipping route, it does not come as a surprise that Lesotho is a lower middle-income economy. How then, can Lesotho leverage its limited advantages to drive investment and growth into its economy?

Lesotho holds a comparative advantage amongst its other African peers in having an 82% literacy rate (Knoema Atlas). That is a lot higher than the average rate of reading in the whole continent, which stands at around 67% (Galal). Lesotho also has many beautiful landscapes and natural resources, boasting large amounts of diamonds and the highest peak in Southern Africa (Wikipedia). Despite this, the Lesotho economy is still largely reliant on agriculture, livestock, mining and remittances from workers in South Africa (Government of Lesotho).

To diversify its economy, Lesotho should focus more on the service industry, namely the tourism industry and business services. These areas boast great potential to improve wages and drive economic growth without requiring large and risky investments.

Firstly, Lesotho should expand more on the African Growth and Opportunity Act (AGOA) and expand more into the service industry, such as being a hub for Call Centers. There are two reasons why this might be effective. Firstly, Lesotho is strategically located in GMT +2 timezone, meaning that it is possible to provide after-hour call services for American companies. Secondly, international trade is reliant on good relations between nations, and Lesotho already provides Visa-free access to all US tourists. Having worked with many American companies to become the biggest exporter of garments in sub-Saharan Africa, it would be strategic to suggest the building of call centres and potentially remote tech-related support services to American companies in the future. With proper investment in education, the people of Lesotho should be equipped to perform these jobs at high levels.

Secondly, Lesotho should expand more into the tourism industry. This would require large investments in roads, hotels and infrastructure. The potential benefits to more tourists are wide-ranging. In the short term, tourism would bring about many jobs and economic spending. In the long term, it would be easier for Lesotho to seek foreign investment into the country because more people know of and maybe will visit Lesotho in their lifetime.

The lack of infrastructure is a major hurdle to bringing tourists into the country. There is only 1 international carrier that has flights to Moshoeshoe International Airport. People cannot explore the beauty Lesotho has to offer if it is so difficult to get there. Lesotho also has a large potential for eco-tourism, with its undeveloped countryside and wildlife. The country would do well to promote the fact that it has the only ski resort in sub-Saharan Africa (International Trade Administration).

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Source: Reuters

With an expanding middle class in Africa that is expected to exceed 40% of the population by 2060 (Duarte), Lesotho is in a good position to benefit economically from the region’s growth in wealth. All these good things must be marketed heavily to foreign investors, such as hotel and restaurant chains who might view this as a good opportunity to gain a foothold into the Southern Africa tourism scene before their competitors do so.  

The suggestions listed for Lesotho are not unique to Lesotho alone. In truth, many African nations would stand to benefit economically from shifting from an agricultural-based economy to one with an increased focus on manufacturing and services. What stands in the way of this are a few common pitfalls. Firstly, corruption and the misappropriation of funds are common among those in power. Without a transparent and clean government, it is hard to convince foreign investors to invest in a country. Secondly, very closely tied to corruption is the absence of foreign investments to fund large infrastructure projects. The lack of financing is often the largest obstacle to economic growth. Finally, the health of citizens is often an issue, because issues such as the widespreadness of AIDs not only affects the healthcare system but the economic productivity of workers in an economy (Wilkie and Young).

In summary, in the process of writing this article, I have learnt so much more about Lesotho, enough for me to promise myself that I would visit the country within the next 5 years if possible. However, for others to share my sentiments, Lesotho would do itself favours by promoting itself more to the outside world both in being able to provide economic services to developed nations and in tourism. Despite its unique struggles as a landlocked nation, there is no reason to believe that economic growth is out of reach for the land of Peace, Rain and Prosperity.

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jit shen

Jit Shen, a proud Singaporean, is currently pursuing a degree in Business Economics at the University of California, Los Angeles (UCLA). With a fervent interest in business and economics, Jit Shen is driven by a profound belief in the transformative power of economic principles to improve the quality of life for individuals worldwide. Hailing from the bustling metropolis of Singapore, Jit Shen developed an early fascination with the intricate workings of the global economy. Growing up in a city known for its economic dynamism and multicultural environment, Jit Shen recognized the pivotal role that businesses play in shaping societies and driving progress. This upbringing instilled in them a deep appreciation for the importance of maximizing the efficient allocation of scarce resources to create opportunities for all. What sets Jit Shen apart is his belief in the power of cross-cultural collaboration to spur innovation and propel societal advancement. Recognizing that diversity fosters creativity and resilience, Jit Shen actively seeks opportunities to engage with individuals from various cultural backgrounds. He believes that embracing diverse perspectives is essential for addressing complex challenges and driving sustainable development on a global scale. Looking to the future, Jit Shen is committed to leveraging his education and experiences to make a positive impact in the realms of business and economics. Whether through advocating for inclusive economic policies, fostering innovative business solutions, or promoting cross-cultural understanding, Jit Shen is determined to be a catalyst for positive change in the world, guided by their unwavering belief in the potential of business and economics to uplift lives and create a more equitable and prosperous future.

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