Lesotho

Lesotho is one of the poorest and most
unequal countries in the world. It is a small, mostly
mountainous, and largely rural country of about 2 million
people, completely surrounded by South Africa. The
persistence of poverty and rising inequality are striking
for an economy that grew at annual rates of 4 percent per
capita over the past decade. Redefining the role of the
state will be critical for meeting the twin goals through
boosting inclusive growth and avoiding macroeconomic and
social risks. In this context, this Systematic Country
Diagnostic (SCD) is intended to assess development
challenges and identify priorities for rapid progress in
achieving the objectives of: (i) eliminating extreme poverty
on a sustainable basis and (ii) ensuring shared prosperity
by improving the welfare of Lesotho’s poorer citizens. The
report analyzes the opportunities and challenges in meeting
these objectives, focusing on growth, inclusiveness, and
sustainability. The SCD concludes by prioritizing the key
challenges. Lesotho has an opportunity to eradicate extreme
poverty and boost shared prosperity in coming years. It will
require shifting to a growth model led by an export-oriented
private sector, fortified by higher skilled, more
productive, and more entrepreneurial individuals,
households, and firms. Lesotho cannot realize this new
growth model without redefining the role of the state. For
this new model to develop, strong political consensus is
necessary to push the difficult reforms needed.