Taina Christiansen
S. Khan – Economics 213
20th October 2004
Economic Development –A Survey: Data Note:
LESOTHO
Background
Lesotho is a small mountainous country that covers approximately 30,000 sq km
with a population of about 2.14 million. In 2004 Lesotho was ranked 145 on the HDI1 scale and
had a GDP per capita of 2,420 PPP US$ which thus located it amongst the 35 countries classified
as Least Developed Countries (Low Human Development). 2 Lesotho has witnessed a general
decline in its HDI ranking during the years 1999 until 2002 (HDI ranking from 1998-2002:
127,120,137,145)3. Despite the economic boom that took place prior to 1998, Lesotho has failed
to reverse the continuing plunge of the number of population living in poverty (49% living below
the poverty line in 1999).4 Several factors are contributing to this decline in well-being, amongst
some factors includes the food crises from drought all through 2003-04 season, combined with
the third highest HIV/AIDS infection rate with a prevalence rate of 29% (2003) which is
severely affecting the productive sector and ultimately is leaving behind a large population of
orphans and ‘youth headed households’5 (OVCs: 90,000-100,000). The following data represents
several economic and social development indicators of Lesotho, which will help to explain
certain aspects of Lesotho’s overall situation today.
1
Human Development Index
Data: Human Development Report 2004, Development Indicators, Lesotho.
3
Ibid
4
‘UNDP in Lesotho’ – Lesotho Information – www.undp.org
5
Ibid
2
1
Data Analysis
The GDP PC and overall GDP growth US$ has increased between 1999 and 2002 and
also increased significantly more from 1999-20046. This has been directly influenced by the high
increase in the export of goods and services (25.3%-51.4%) experienced in only 4 years. The
main reason for this increase is the American Growth and Opportunity Act (AGOA) 7 program
that has created at least 60,000 jobs in the last three years in the textile industry factories
established by China investment. The US demand for textile products and the investment that has
followed has helped to produce new facilities that will reduce the dependence on raw material
imports and improve a more self-sustainable production method of goods. There is just one new
denim mill being built so far, we shall see whether Lesotho manages to “grow a tail” in terms of
fabric production. In any case, many experts criticize this approach in an ever-globalizing world
economy. Certain South American economies tried a similar ‘reform’ in the 80s, however, failed.
The renewal in June 2004 of Lesotho’s developing country status under the US government’s
AGOA will serve to slightly increase the country’s GDP (AGOA III for Lesotho is the extension
of the third-country fabric provision until 2007). However, one must take note of the expiry in
January 2005 of a WTO agreement 8 (MFA: Multi Fibre Agreement), which will remove the
import quotas on large Asian producers’ exports to developed countries. This will ultimately
serve as a large threat to the current absence of competitiveness among Lesotho producers.
Although agriculture is a small part of the GDP (16.9% of GDP in 2001 9 ), its output will
continue to stagnate due to the recent droughts which caused extreme low levels of agricultural
output. This has also been affected by the spreading HIV/AIDS epidemic (the HIV/AID data is
available in the table below and will be discussed in further detail). Even though agriculture
6
Supplementary data from the Government of Australia, website (Data in bibliography)
US Embassy, Maseru - http://maseru.usembassy.gov/commercial_office.htm
8
Country Report Lesotho, October 2004 by The Economist Intelligence Unit, pg. 9
9
Ibid pg. 4
7
2
represents a low percentage of the overall GDP, the decreasing productivity due to falling health
levels in the rural areas combined with a recent period of drought and floods, has and will
continue to have a destabilising effect on the overall social and economic well being of the
country. This is essentially predominant in the rural areas where there is a clear linkage weather
pattern – food intake.
The HIV/AIDS prevalence rate is currently estimated at 29% (2003) of the population
15-49% years old. In four years, this increase of % HIV prevalence (data from table:
approximately 7%) has decreased the life expectancy at birth by over 10 years. The current
percentage of adults (15-64 years) constitutes 56.8% of the population; it is dramatically affected
by the 31% prevalence in HIV/AIDS cases. This decrease in life expectancy caused by the high
HIV/AIDS prevalence will result in higher numbers of orphans and youth headed households. A
higher number of orphans and youth headed households should in theory negatively affect the
percentage of primary/secondary enrolment numbers. This occurs due to the absence of income
supplied by one or both parents, children are thus subject to seeking alternative methods and
supply of income, hence, a school drop out rate will increase. Examples are: that children need
both to (a) substitute the previous source of income and (b) cut down costs; additionally you
need to take into account: the psychological effects of the loss, the need to care for younger
siblings, the loss of property due to lack of legal arrangements by late parents and/or
dispossession by relatives and the high costs related to funerals. The number of children reaching
grade 5 in Lesotho (67%) is still very high, as a result, you have a counter effect to the drop outs
due to loss of parents and that is the massive enrolment by children that have their parents thanks
to the free primary education. Lesotho has one of the highest adult literacy rates on the continent
(2002: 81.4%) as well as a reasonably high combined primary and secondary enrolment ratio
(65%). Awareness and preventative methods for HIV are usually spread through education and
3
are usually more widespread in countries that have a high literacy rate 10. Hitherto, this is not the
situation in Lesotho. One reason, which may explain why Lesotho has experienced problems
combating the HIV/AIDS problem, despite the literacy rates and school enrolments, is the
widespread stigma attached to HIV/AIDS and throughout Africa. Increasing the awareness of
HIV/AIDS and reducing the stigma attached to the disease is a major reason for the spread of
AIDS. Thus, one goal is to bring down this barrier amongst many for effective HIV prevention.
Behavior change regarding sexuality is also a key for effective HIV prevention: sexual
multipartnership, age-dissymmetry in the couples – “sugar daddies” - , male coercion, and no use
of condoms are all perceived as a proof of love/trust, however, not as a prevention of the disease.
In January 2000, a Free Primary Education Program (FPE) was implemented in Lesotho.
The free primary education that has been rolled out year by year since 2000 is starting to change
the education dynamics of Lesotho’s youth. However, one has to consider that the FPE is never
completely free, e.g. hidden Costs: uniform, books, transport, meals which still act as an
impediment. HIV/AIDS is now being taught in many schools with the help of UNICEF, which
will in the future hopefully serve to curtail the HIV/AIDS epidemic. Ultimately this will also
alleviate the problems associated with economic factors such as productivity, unemployment and
so forth. Ill people yield a low productivity and have a high rate of absenteeism, and very ill
people are not able to work at all. High rates of unemployment and continued poverty can be
challenged through stopping and decreasing the HIV/AIDS epidemic. 11
10
NOTE: the education system in the country is virtually controlled by the different Christian churches; hence we
can discuss the effectiveness of the HIV/AIDS campaigns.
11
Government of Lesotho, www.lesotho.gov.ls/circular/cir-edu-11jan2000.html
4
Indicator
1999
2002
GDP PC (US$)12 13
GDP growth 14
Exports of goods & services
(as a % GDP) 15
Prevalence of HIV/AIDS (as
a % population 15-49 years)
Life expectancy at birth
(years) 18
Net Primary enrolment ratio
(% population)
Children reaching grade 521
Net Secondary enrolment
(% population)
Combined
primary
secondary and tertiary gross
enrollment
ratio
(%
24
population)
Age structure (0-14 years) a
Age structure (15-64 years) a
Age structure (64 year +) a
Adult literacy rate (% age
15 and above)25
580
0.2
25.3%
470
3.8
51.4%
23.57%16
31%17
47.9
36.3 (male: 33 female: 39)
108% (1996) 19
84% (2001)20
31% (1996)22
67%
22% (2001)23
61%
65%
82.9%
37.7%
56.8%
5.5%
81.4%
a www.nationmaster.com
12
GDP PPP is gross domestic product converted to international dollars using Purchasing Power Parity rates and
divided by the population of the country that year. An international dollar has the same purchasing power in a given
country as a US$ in the USA. IN other words it buys an equivalent amount of goods or services in that country.
(Earth Trends, 2003)
13
Data from World Bank Group – Lesotho Data profile, www.worldbank.org
14
Data from World Bank: http://devdata.worldbank.org/external ‘Development Data & Indicators’
15
Ibid
16
Worlds Facts and Figures – www.worldsfactsandfigures.com
17
UNAIDS – www.unaids.org
18
Data from the UNDP: Human Development Reports Development Indicators, 1999 & 2002
19
http://www.iss.co.za/AF/profiles/Lesotho/Table_Population.html
20
Data from the UNDP: Human Development Reports Development Indicators, 1999 & 2002
21
Ibid HDR 2003
22
http://www.iss.co.za/AF/profiles/Lesotho/Table_Population.html
23
Data from the UNDP: Human Development Reports Development Indicators, 1999 & 2002
24
Data from the UNDP: Human Development Reports Development Indicators, 1999 & 2002
25
Ibid
5
Bibliography
UNDP: Human Development Reports Development Indicators, 1999 & 2002
World’s Facts and Figures – www.worldsfactsandfigures.com
World Bank Group – Lesotho Data profile – www.worldbank.org
Earth Trends - www.earthtrends.com
The Economist Intelligence Unit Limited – Country Report Lesotho 2004
UNAIDS – www.unaids.org
Government of Lesotho - www.lesotho.gov.ls/circular/cir-edu-11jan2000.html
US Embassy, Maseru - http://maseru.usembassy.gov/commercial_office.htm
Government of Australia, Supplementary data: (GDP PC: 2000: 884.3, 2001: 794.3, and 2003: 1,107.
6, 2004: 1,278.0)
6