April 28, 2003

Optimistic outlook for the economy, but HIV/aids threatens land policy reforms

Lesotho is expected to experience relatively good economic growth and falling inflation in 2003-04 in line with its neighbour, South Africa, the Economist Intelligence Unit (EIU) has forecast. In its latest country outlook, the EIU said the electoral dominance of the ruling Lesotho Congress for Democracy was likely to continue despite recent "unrest among the old guard". "The Prime Minister, Pakalitha Mosisili, has re-established control over the party. The likelihood of a split in the party seems remote as such breakaways have typically been unsuccessful," the EIU said.

Political instability in 1998 wrecked Lesotho's economy as violence and a mutiny followed disputed elections. South Africa led a Southern African Development Community (SADC) intervention force into the capital, Maseru, to re-establish law and order. Lesotho has struggled since to rebuild its economy, with the assistance of South Africa. The country has also been in the grip of the food shortages affecting five other SADC countries. "The government will strive to develop the economy and reduce poverty, with varying degrees of success. The IMF [International Monetary Fund] will continue to support Lesotho with its poverty reduction and growth facility, that will seek sustained economic growth and reduced annual average inflation," the EIU said. "In order to achieve these targets and reduce poverty levels, the medium-term strategy will concentrate on increasing export-led growth, prudent fiscal management, cautious monetary policy, and legal and judicial reform," the EIU added.
Lesotho would also benefit from greater economic activity in South Africa, one of Lesotho's major export markets. "Real growth of 3 percent in 2003 is expected in South Africa, increasing to 3.5 percent in 2004. Lesotho has forecast growth of 4.4 percent in 2003-04 and 4.8 percent in 2004-05. However, we believe that this is over-optimistic and retain our forecast of 4 percent GDP growth in 2003-04," the EIU noted.

A few days earlier, a different report was published, which gave a much less optimistic view on the situation in Lesotho. The report, a follow-up of a study carried out by the UN Food and Agriculture Organisation (FAO) and the Southern African Regional Poverty Network (SARPN), said that Lesotho's current land policy reforms have focused on the commercialisation of agriculture to promote economic growth and reduce poverty, but the explosive combination of food insecurity and HIV/AIDS could derail the process.

The report found that young people were dying in "large numbers", leaving agricultural activities in the hands of the elderly. "This was a very big problem. Traditionally in Lesotho, when parents become elderly, they hand over their pieces of land to their children. But now their children cannot support them or work in the fields because they are sick and dying," Matseliso Mphale, the study's principal investigator, told IRIN. In the previous study, land was a highly valued commodity that HIV positive households saw as the ultimate form of security for their children if they died. But two years after the study was conducted, the sale of land by HIV/AIDS affected households was on the increase.

More than 75 percent of the community members interviewed during a feedback workshop revealed that community members were trying to meet medical and funeral expenses by selling off their land. "People are desperate," Mphale noted. Widows interviewed in Ha Poli, a remote village in the Lesotho highlands, were also selling agricultural production equipment to meet burial expenses. Existing land reform policies have revoked ownership of land left fallow for two years.

The study found that people living with HIV/AIDS were now employing sharecroppers, as they were often too sick to work their fields. This arrangement allowed them to avoid the risk of their land being revoked and assured them of continued access to agricultural land and food. But this arrangement was under strain and there was now a "reluctance" to engage in sharecropping, as HIV-positive households were increasingly dishonouring their agreements by abruptly selling land or livestock, sometimes without alerting their contractual partners. The breakdown of these coping strategies left households "even more vulnerable", the report said. According to Mphale, HIV/AIDS affected rural households should be encouraged to produce cash crops like vegetables. Participants complained, however, that produce from their gardens was not enough to support the household's requirements, and would not provide them with essentials such as grain. (IRIN)

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