Instability the bane of our economy
AS reported elsewhere in this edition, forecasts by the central Bank of Lesotho and International Monetary Fund (IMF) are pointing to a downward trajectory for the economy in 2016. The causes of the bleak economic outlook are many, and include global economic developments that are beyond the control of policymakers in the Mountain Kingdom.
the tumbling of the South African rand, on which the loti is pegged, has resulted in increases in the prices of goods and services. the rand, and other African currencies have fallen to record lows due to the economic slowdown in china — which is Africa’s biggest trading partner. the IMF has in recent months sharply cut its projections for the continent. credit rating agencies have also downgraded or lowered their outlook on commodity exporters such as Lesotho.
Added to that is the el nino-induced drought which has drastically reduced the farming season, leaving many Basotho food insecure and needing food aid. the implications of the drought, which is said to be the worst in decades, will only be seen over the course of the year. Admittedly, the aforementioned challenges are by no means unique to Lesotho, but plague the rest of the southern African region and beyond.
However, in its statement, the IMF pointed out areas of concern which are unique to Lesotho and bogging down the Mountain Kingdom’s socio-economic advancement. In addition to calling on the government to reduce its expenditures which amounted to 60 percent of gross domestic product (GDP), the IMF warned of the further weakening of the business environment due to perennial political instability.
the global agency noted that the continued political tension in Lesotho was negatively affecting economic performance, with the ripple effect of lowering investment, consumption and confidence. Consequently, the implementation of the national Strategic Development Plan (NSDP) has stalled while the coalition government remains in firefighting mode to fend off its perceived enemies.
the IMF further warned that continued political turmoil would not only affect macroeconomic stability and gross domestic product growth, but also stifle external financial support from the international community. there cannot be a louder clarion call for our leaders across the political divide than this. the warnings put out by the IMF and other global economic agencies can no longer be ignored. It is as clear as day that the current trajectory will yield a harvest of thorns.
the challenges before this nation are many. the IMF report also notes that most health, education, and social indicators have shown little or no improvement since a decade ago, with poverty and unemployment rates remaining high. However, such challenges can only be resolved by a change of attitude and approach. After all, the purpose of any government is to promote economic growth and prosperity for its electorate. the first port of call in untangling Lesotho from the web of political instability is for the government to publish Justice Mpaphi Phumaphi’s report into the killing of former army commander Maaparankoe Mahao.
While the report’s recommendations might be a bitter pill to swallow, its publication would be a positive sign to the rest of the world that the government is prepared to go to uncomfortable lengths to ensure the nation’s progress. By tackling the report, the government will be able to finally focus on implementing the NSDP and address the pressing needs facing this nation.
However, if the tension continues, the unity of the seven-party coalition government cannot be guaranteed as it will be vulnerable to internecine conflicts. In an unstable political environment, politicians will always be plotting to unseat the incumbent government.
Ultimately, Lesotho cannot pretend to be able to address its challenges on its own. We need the financial and technical assistance of the regional bloc and development partners to get out of this logjam. this can only happen if peace and stability reign in this nation.