The Government of Lesotho Zero Draft & Not for Referencing NATIONAL STRATEGIC DEVELOPMENT PLAN 2018/19-2022/23 In pursued of Economic and Institutional Transformation for private sector led job creation and inclusive economic growth Table of Contents LIST OF FIGURES ....................................................................................................................................................... 4 LIST OF TABLES ......................................................................................................................................................... 4 FOREWORD ..................................................................................................................................................................... 8 EXECUTIVE SUMMARY .................................................................................................................... 9 1. INTRODUCTION ....................................................................................................................... 10 1.1 THE POLITICAL CONTEXT ........................................................................................................................... 10 1.2 SOCIAL STRUCTURE ....................................................................................................................................... 10 1.3 NSDP I 2012/13-2016/17: PROGRESS ....................................................................................................... 12 1.4 NSDP I IMPLEMENTATION: ACHIEVEMENTS, CHALLENGES AND LESSONS .................................... 13 1.4.1 Major Public Sector Investment Projects under NSDP I and Performance of PCM .................................... 16 ......................................................................................................................................................................................... 18 ......................................................................................................................................... 18 1.5 PLAN OBJECTIVES .......................................................................................................................................... 18 PART I ................................................................................................................................................. 22 2. DEVELOPMENT CONTEXT: CHALLENGES, THREATS AND OPPORTUNITIES ........... 22 2. CONTEXT AND PROSPECTS .............................................................................................................................. 22 2.1. GEOGRAPHICAL LOCATION ............................................................................................................................... 22 2.2 WEATHER AND CLIMATE ..................................................................................................................................... 22 2.3 DEMOGRAPHIC PROFILE ..................................................................................................................................... 23 2.5.1 Population .......................................................................................................................................................... 23 2.4 THE ECONOMIC STRUCTURE .............................................................................................................................. 24 2.5 DEVELOPMENT AND STRUCTURAL CHALLENGES, AND THREATS ...................................................... 26 2.5.1 Development Challenges ............................................................................................................................. 26 2.5.2 Structural Challenges .......................................................................................................................................... 30 2.5.3 Threats ............................................................................................................................................................... 30 Shifting Geo-Political Power ......................................................................................................................................... 30 2.6 DEVELOPMENT AND JOB CREATION OPPORTUNITIES ................................................................................. 33 2.6.1 Economy Wide Opportunities ............................................................................................................................. 34 LABOUR FORCE ............................................................................................................................................................ 34 ACCESS TO INTERNATIONAL MARKETS .................................................................................................................. 35 LOCATION ..................................................................................................................................................................... 35 3.1 MACROECONOMIC POLICY .......................................................................................................................... 38 3.2 RECENT MACROECONOMIC PERFORMANCE ........................................................................................... 38 3.2.1 REAL SECTOR PERFORMANCE ................................................................................................................ 38 3.2.2 TRENDS IN FISCAL OPERATIONS ........................................................................................................... 40 3.2.3 DEBT SUSTAINABILITY ............................................................................................................................. 44 3.2.4 TRENDS IN EXTERNAL SECTOR ............................................................................................................. 45 3.2.5 TRENDS MONETARY SECTOR ................................................................................................................. 46 3.3 MACROECONOMIC OUTLOOK: ECONOMIC PROJECTIONS FOR THE PLAN PERIOD ........................ 49 4.1 INTRODUCTION .............................................................................................................................................. 56 4.2 GROWTH DIAGNOSTICS ............................................................................................................................... 57 4.3 GROWTH STRATEGY ..................................................................................................................................... 60 4.4 GROWTH & EMPLOYMENT SCENARIOS .................................................................................................... 63 PART II ............................................................................................................................................... 66 STRATEGIC FRAMEWORK ............................................................................................................. 66 5.0 ECONOMIC POLICY DIRECTION ........................................................................................... 66 5.1 NSDP II, VISION 2020 AND INTERNATIONAL DEVELOPMENT FRAMEWORKS ....................................... 67 2 5.2 KEY PRIORITY AREAS, STRATEGIC OBJECTIVES AND KEY POLICY INTERVENTIONS ............................ 68 INVESTMENT CLIMATE REFORMS, MINING AND FINANCIAL SECTOR DEVELOPMENT ............................................................................................................................... 73 ......................................................................................................................................................................................... 73 OUTCOME 1: A CONDUCIVE BUSINESS ENVIRONMENT ............................................................................... 73 6.2 MINING.................................................................................................................................................................... 75 ......................................................................................................................................................................................... 78 OUTCOME 2: MINERAL RESOURCE EFFICIENCY .............................................................................................. 78 6.3 FINANCIAL SECTOR DEVELOPMENT TO SUPPORT PRODUCTIVE SECTORS .............................................. 78 OUTCOME 3: A STABLE AND EFFICIENT FINANCIAL SECTOR ...................................................................... 85 ENHANCING INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH AND PRIVATE SECTOR-LED JOB CREATION ....................................................................................................... 86 7.1 INTRODUCTION ..................................................................................................................................................... 86 (2) IMPROVED CREATIVE ARTS INDUSTRY ............................................ ERROR! BOOKMARK NOT DEFINED. OUTCOME 1: SUSTAINABLE COMMERCIAL AGRICULTURE ........................................................................... 91 OUTCOME 1: DIVERSIFIED PRODUCTS AND EFFECTIVE BUSINESS LINKAGES ...................................... 97 OUTCOME 2: OPERATIONAL INDUSTRIAL CLUSTERS AND INTEGRATED SUPPLY CHAIN .................. 98 7.3.3 Tourism and Creative Industries Sector ............................................................................................................... 98 OUTCOME 1: DIVERSIFIED