Economic relations and support for development [fr]

Overview of the country’s economy

“Lesotho is a small open low income economy ($836 GDP per capita in 2010), landlocked within South Africa with whom it has close trade and monetary links inside SACU and the common currency zone. Lesotho is in the category of the under-developed countries, poverty and social issues (HIV/AIDS especially) being the country’s main challenge.
The country’s farming is exposed to environmental hazards and drought. Almost 75% of the population lives in rural areas and depends directly on agriculture and cattle to survive. However, almost the half of household incomes is derived from migrants employed in South Africa, in particular in the mining sector. The textile sector, facing difficulties, plays a main role for employment and exports.
Water is nowadays the country’s major natural resource. The Lesotho Highlands Water Project (LHWP), the most important project of the country’s history, made the country self-sufficient in the electricity field and gave it a new source of income, thanks to the sale of water resources to South Africa.”

(source: presentation page about Lesotho on the website of Direction Générale du Trésor (French only))

It’s worth-mentioning that France supports Lesotho through indirect aid. In fact, French financial contribution to the Global Fund, as well as through support given by the European Union, play a core role in the set-up of projects in various fields such as health, child protection, resources management, etc.

Lesotho Highlands Water Project

Consisting of 4 phases, the Lesotho Highlands Water Project is a water distribution and power generation initiative, launched in 1986 in a partnership between the Basotho and South African governments. The project is managed by two public entities: the Lesotho Highlands Development Authority (LHDA), in Lesotho, and the Trans-Caledon Tunnel Authority (TCTA), in South Africa. It consists of a system of multiple dams and tunnels, as well as a hydroelectric complex. The project’s goal is, on the one hand, to provide the installations needed for water distribution in Lesotho and to generate hydroelectric power. On another hand, the aim is to get the country new incomes in providing water to the Gauteng province, where South Africa’s major industrial and mining activity is concentrated.
The first phase of the project, which was completed in 2003, has proven to generate 72MW power. At the end, the Lesotho Highlands Water Project is supposed to contribute to 4% of GDP and 10% of the country’s public revenue. Several French companies follow with interest the developments of this important project.
(Source: Department of Economic Affairs for Southern Africa)

- To find out more about this project, visit the dedicated website.

Following France’s participation in phase I of Lesotho Highlands Water Project, the AFD and some French companies indicated a strong interest to participate in the project’s phase II.

Cooperation between the EU and Lesotho

In addition, the European Union supports Lesotho’s Development National Plan, aiming to decrease the incidence of poverty and to promote sustainable growth. For the 2008-2013 period, the cooperation EU/Lesotho beneficiated of a €139M budget, in which France’s participation was around 20%.

- To find out more, visit the EU website

Support to the health sector

On December 31, 2013, multilateral contributions to Lesotho in the field of health were:

  • Global Fund since 2002: $123M, among them $16,6M from France;
  • UNITAID since 2006: $8M, among them $4,9M from France;
  • GAVI (Global Alliance for Vaccines and Immunization) since 2000: $2,6M, among them $164 000 from France.

publie le 04/02/2014

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