NEWS
AND FEATURES ON THE SOLIDARITY 2000 CAMPAIGN IN COPENHAGEN
Lesotho
Political Instability
Unemployment Still A Major Problem
By Candi Ratabane Ramainoane
MASERU, June 2000 (IPS)- After several years of economic adjustment policies Lesotho's economy still cannot absorb more than half of the economically active population, according to some estimates.
Even Finance minister Kelebone Maope, conceded in his budget speech earlier this year that "Unemployment stands between 40 percent and 45 percent" while other observers such as Macaefa Billy, Secretary General of the Lesotho Clothing and Allied Workers Union (the country's largest) insists that things are much worse.
Lesotho is one of the poorest members of the United Nations, to the extent that a forum in the capital Maseru, in the early 1990s , at which its future as a nation was deliberated, the option often mooted is that Lesotho should unite with South Africa.
The debates were won by those who argued for the country to remain sovereign. They argued that at independence, Lesotho was economically viable, in comparison to Botswana.
All that was needed for the kingdom to prosper, they said, was a stable political climate. At the time, the country was nearing the end of the seven year military regime (1986-1993), which had taken over from a 16 year civilian dictatorship (1970-1986).
Since independence from the United Kingdom in 1966, Lesotho has always followed an open market economic policy, despite the fact that in the middle 1970s, the country moved closer to the Eastern Bloc political thinking, to the extend that the Chinese and the (former) Soviet Union opened embassies in Maseru.
The change of government in 1986, led to the closure of the Eastern Bloc embassies and the China was replaced by the Taiwan. The presence of the Taiwanese led to the establishment of the first textile industry in this kingdom.
Also, the government entered into a Highlands Water Treaty with South Africa for the construction of a dam project for more than (US) $1 billion.
The Katse Dam from which South Africa is already getting water was the first of the many to be built and created massive local employment.
The advent of a democratic dispensation in 1993, did not bring any change that would improve on what had been started by the previous regimes. Instead, the new government legislated for the privatisation of all government companies.
Lesotho Airways Corporation, the Milling and Packaging Company, Lesotho Bank and The Government Garage have been the first to go, much to the detriment of the workers. Lesotho Telecommunications Corporation and the Lesotho Tourist Board are next in line.
With the exception of the Milling and Packaging Company which has been bought by a United States corporation, the rest have gone to South African investors.
The exponents of privatisation promised that the programme would stabilise the economy, by bringing in new skills, technology and finances which the government didn't have for the desired growth.
But these promises have not materialised. Lack of organized labour within government and the ineffective political opposition, has enabled the government of Lesotho to privatise without taking into consideration the demands of the workers and the local business community who wanted a stake in the said new companies.
In his budget speech Maope also said: "The economic boom of the Nineties dissipated in 1998" He added growth was fundamentally based on construction of the Lesotho Highlands Water Project, and the then burgeoning manufacturing sector.
"Despite the exceptional growth performance of those years, the incidence of poverty has continued to increase among the lot of our people... only a few benefited from the previous boom," said Maope.
The Central Bank of Lesotho reported in the first quarter of 1999, that the country had returned a budget deficit for the first time in seven years.
Also, net foreign assets declined for the second consecutive quarter while credit demand is growing.
"The experience of 1999 indicates quite clearly that unless decisive actions are taken to address structural economic problems faced by this economy, economic growth cannot realistically be expected to return to its mid-19990s level," said Maope.
He alleged that in the past, the government had taken the lead in promoting economic growth by actually engaging or setting up government-owned enterprises.
"The present government is of the firm opinion that its primary role is to govern and not to engage in business activities."
As part of the government's privatisation scheme, Lesotho Bank, the country's main financial institution, has been bough by South Africa's Standard Bank group. T
his acquisition has created a monopoly in the banking industry. The Agricultural Development Bank was closed in 1998, leaving stranded, the small business operators, street vendors and a majority of workers and junior civil servants.
The government says the privatisation scheme is a concept to improve the economy but to those who have lost jobs to privatisation, the scheme has failed to create much needed employment, to reduce the country's dependency on foreign aid, and brain drain to South Africa.