Resource information
The report reviews the Bank's
development assistance to Lesotho, a poor country, of
predominantly rural populations, landlocked and completely
surrounded by, and economically dependent on, South Africa.
Not surprisingly, a major development challenge for the
country is that half the population lives below the poverty
line, and income inequality is among the highest in the
world. Other challenges are low quality of education, and
health services, widespread HIV/AIDS, weak institutions, and
lagging private sector development. Given the circumstances,
Bank assistance evolved from an emphasis on stabilization
and growth, to a focus on poverty reduction and private
sector development towards the end of the 1990s. Throughout
this period, the Bank supported joint work with the
Government, and the International Monetary Fund on
successive Policy Framework Papers, as well a Poverty
Assessment, and a Strategic Economic Options Report;
regrettably, other analytical work was not fully completed,
and, notably absent were periodic reviews of public
expenditures. Although the Lesotho Highlands Water Project
(LHWP) featured substantial macroeconomic impact, serving as
a catalyst in securing external financing, the Bank did not
provide adequate technical support. The Bank assistance is
rated as moderately satisfactory, institutional development
as modest, with an uncertain sustainability, since growth
has depended on aid inflows, linked to the LHWP, but which
is likely to decline. Recommendations suggest a continued
assistance, centered on poverty reduction, focusing on the
quality of education, and human capital development.
