Sacu-lesotho wt/tpr/S/aaaa Page Annex 2 kingdom of lesotho contents

Annex 2

I. Economic environment 145

(1) Main Features 145

(2) Recent Economic Developments 146

(3) Trade Performance and Investment 148

(i) Trade in goods and services 148

(ii) Investment 151

(4) Outlook 152

II. Trade and Investment regimes 153

(1) General 153

(2) Trade Agreements 155

(3) Investment Framework 156

(4) Trade-related Technical Assistance 157

(i) General 157

(ii) Supply-side constraints 158

III. trade policies and practices by measure 160

(1) Overview 160

(2) Measures Directly Affecting Imports 160

(i) Registration, documentation, import duties, and related measures 160

(ii) Import prohibitions and licensing 162

(iii) Government procurement 162

(iv) Standards and other technical requirements 164

(v) Other measures 165

(3) Measures Directly Affecting Exports 165

(i) Registration and taxes 165

(ii) Export prohibitions, controls, and licensing 165

(iii) Export subsidies and assistance 165

(iv) Other measures 166

(4) Measures Affecting Production and Trade 166

(i) Incentives 166

(ii) State trading, state-owned enterprises, and privatization 166

(iii) Competition policy and price controls 167

(iv) Intellectual property protection 168

IV. trade policies by sector 170

(1) Overview 170

(2) Agriculture and Related Activities 170

(i) Main features 170

(ii) Policy developments 172

(iii) Selected subsectors 175

(3) Mining, Water, and Energy 178

(i) Mining 178

(ii) Water and energy 180

(4) Manufacturing 182

(5) Services 184

(i) Financial services 185

(ii) Telecommunications and postal services 187

(iii) Transport 189

(iv) Tourism 191

REFERENCES 193

APPENDIX TABLES 195


TABLES

Page

I. ECONOMIC ENVIRONMENT

I.1 Sectoral breakdown of GDP, 2003-06 146

I.2 Main economic indicators, 2003-08 148

I.3 Balance of payments, 2003-08 149

I.4 Destination of exports, 2003-08 149

I.5 Structure of exports, by SITC Rev.3 section, 2003-08 150

I.6 Origin of imports, 2003-08 150

I.7 Foreign direct investment, 2003-08 151

II. TRADE AND INVESTMENT REGIMES

II.1 Main trade-related legislation, 2009 154

II.2 Notifications to the WTO, 2003-09 155

IV. TRADE POLICIES BY SECTOR

IV.1 Main crops, 2002-07 176

IV.2 Mining licences, permits, and leases, 2009 180

IV.3 Textile industry, 2007-09 184

IV.4 Selected telecom indicators, 2003-08 187

IV.5 Tourism indicators, 2005-08 192

III. TRADE POLICIES AND PRACTICES BY MEASURE

AIII.1 Privatization methods envisaged, 2009 197

AIII.2 Privatization process, 1995-08 198

1. Economic environment

(1) Main Features

1. 
   The Kingdom of Lesotho is a small, mountainous, landlocked country of 30,355 square km, entirely contained within the geographical territory of South Africa.¹ Lesotho's population, estimated at around 1.9 million, is about three fourths rural and one fourth urban; it grew by 0.6% in 2006. Some 59.7% of the population are between 15 and 64 years old, 35.3% are in the 0-14 age group, and only 5% are 65 years or over. Maseru, the capital and main centre of non-agricultural economic activities, is the most densely populated area and the biggest city (over 225,000 people).² Lesotho ranks 155^th (out of 177 countries) in the UNDP Human Development Index.³
   
2. 
   Lesotho is a least developed country, with a per capita income of US$796 in 2007 (up from US$457 in 2000).⁴ It is also classified as a food deficit country by the World Food Programme, importing 50% of its staple grain needs.⁵ Food insecurity, unemployment (estimated at around 22% of the labour force in 2008)⁶, poverty (56% of the population live with less than US$2 a day)⁷, and HIV are profoundly interrelated.⁸ Several factors have increased food insecurity, including severe droughts in recent years and encroachment of building on the limited arable land (about 60% of the cultivable land is planted).⁹ Water and diamonds are Lesotho's major natural resources (Chapter IV(3)).¹⁰
   
3. 
   Services, led by education¹¹, is the most important sector in terms of contribution to real GDP (41.8% in 2006); Lesotho is a net importer of services. Manufacturing, notably the textiles and clothing subsector, accounted for 16.4% of real GDP in 2006 (18.3% in 2003), and over 80% of the total value of merchandise exports. Agriculture is a key sector of the economy, contributing 14% to real GDP in 2006 (down from 16.4% in 2003), and employing almost 60% of the labour force. The mining and quarrying sector, with a share of 7.6% in 2006, contributed roughly 65% to real GDP growth during 2004-06 due to the re-opening of diamond mines in 2004 (Table I.1).
   

(Constant 1995 prices, per cent)

4. 
   With the aim of, inter alia, accelerating sustainable growth, improving food security, and reducing unemployment/poverty/HIV, the long-term Vision 2020 and the Poverty Reduction Strategy (PRS) are being implemented with the support of international institutions such as the World Bank, UNDP, and the IMF, including through the Diagnostic Trade Integration Study (DTIS) (Chapter II(4)).¹² In addition, the Government is developing a Growth Strategy Paper with the objective of achieving broad-based and sustainable growth. It emphasizes the need to remove legal and regulatory impediments to private-sector growth and public-sector performance, such as enhanced property rights, land reforms, and targeted infrastructure investment.¹³ Moreover, in September 2008, the compact with the Millennium Challenge Corporation (MCC) for US$362.6 million (about 21% of GDP) entered into force. It is to be implemented over five years and covers water, health, and private‑sector development.¹⁴