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Lesotho: Africa's best kept secret. (An IC Special Report). Pure Majesty If you haven't been to Lesotho yet, you haven't seen natural beauty. The country of blue mountains and white cars is pure majesty. It does take the breath away. Any tourist worth his salt must see it.

The locals call it "The Mountain Kingdom" "The Roof of Africa" or "The Kingdom in the Sky". All three accolades are well deserved. For in some parts of the 75% of Lesotho dominated by the beautiful rugged mountains, you do actually drive in the clouds, high in the sky, as if you are flying in an aeroplane on the roof of Africa.

You have to see it to believe it. Nothing in your past prepares you for the experience--driving in the clouds, enveloped by the clouds, visibility a mere tens of feet.

It is magical. On the "highest road in Africa" at the Tlaeeng Pass near Mokhotlong in the north, 10,745 feet (3,275 metres) above sea level, thick plumes of white clouds swirl around your car, and for a brief moment you think you are being transported to paradise.

And all around you, beautiful white streams full of water meander their way down the sides of the mountains into the deep valleys below to form great rivers that feed into the riverine system of Southern Africa.

Lesotho is the birthplace of many of the region's rivers. It is a wondrous sight. Absolutely fantastic. You will never see a country so devoid of trees but which has so much water. No wonder, water is the chief natural resource of Lesotho.

Welcome to the land of 2.2 million people mad about their white cars. Over 90% of vehicles in Lesotho are white, the only place in the world you will ever see such a phenomenon. The locals say white cars are cheap to buy and maintain, especially if the paintwork needs re-doing. So where is Lesotho? Forget latitudes and longitudes. Just take your African map. Go down to the very south of the continent, to the country called South Africa. Pan your eye across the eastern districts of South Africa. And there it is! Lesotho is completely surrounded by South Africa, one of the only three countries in the world (the Vatican and San Marino are the other two) to be so surrounded by one country.

Covering an area of 11,716 sq miles (30,344 sq km), landlocked Lesotho is the same size as Belgium or Taiwan. But while Taiwan has over 22 million people, Lesotho has just 2.2 million. You can thus imagine the freedom of space that the people of Lesotho (called the Basotho) enjoy, and how that adds to their quality of life.

In fact, the similarities with Taiwan are striking. Like Taiwan, 75% of Lesotho is mountainous, forcing mach of the population onto the 25% of "lowlands" in the north and west. In Taiwan, the harsh rugged mountains dominating the middle of the island, have similarly

forced the country's 22 million people to live cheek by jowl on the strip of' lowlands along the coast, making land space such a premium commodity.

Small wonder then that Taiwanese companies dominate Lesotho's ho burgeoning clothing and textile industry (the higgest in Africa), employing scores of thousands of mainly Basotho women.

Talking about "lowlands", Lesotho is exceptional. "Low" here means over 4,550 feet (or 1,380 metres) above sea level. It is the only country in the world that has all its territory lying at altitudes higher J than 4,553 feet above sea level the lowest point in Lesotho). It is truly "the roof of Africa", the only country in hot Africa covered by snow from border to border in the winter months (May to July).

Unlike the Africa you know Lesotho has a somewhat "European" climate, with four distinct seasons. Spring starts from August to October, summer from November to January, and autumn from February to April, In winter (May to July) temperatures can get as low as minus 17 degrees. During this time, the cascading waters of the mountain streams are known to freeze. Something new always come from Africa indeed!

The "highlands" that make up 75% of the country consist of high mountains, deep valleys and cool rivers. This is where the

beauty of Lesotho truly lies. As a result, you don't see the beauty of the country if you don't get out of the capital, Maseru, which lies in a shallow valley on the banks of the Caledon River. The majestic blue mountains of the Maloti (meaning the range) run from northeast to southwest of the country. In the north and east, along the border with South Africa's province of KwaZulu Natal, runs the Drakensberg range (or "mountain of the dragon") whose high cliffs and harsh rugged terrain make access to Lesotho in that part of the country extremely difficult.

The highest mountain in Southern Africa, Thabana-Ntlenyana (12,600 feet or 3,482 metres) is found in Lesotho's Drakensberg range. It is here that the sources of two of southern Africa's most important rivers, Caledon and Senqu (or Orange River to the Boers) are found.


Below the Drakensberg range, the rocks (said to be more than 200 million years old) are imprinted with fossilised footprints of dinosaurs dating from the Triassic era, some 208 million years ago. And rock paintings abound -- signs that the San people (now found mainly in South Africa, Namibia and Botswana) were the original inhabitants of the land.

According to historians, the San had dominated the vast interior of Southern Africa (including Lesotho) for over 10,000 years before the arrival of modern-day Southern Africans from somewhere up the African


Historically, the land now called Lesotho stretched all the way north to South Africa's city of gold, Johannesburg. The border was the Vaal River near Johannesburg. But by 1836, much of the Lesotho lowlands from the Vaal River in the north to the Orange River in the south, suitable for agriculture, had been seized by the marauding European (or Boer) settlers in South Africa.

Twelve years earlier, in 1824, Lesotho had emerged as a kingdom through the foresight and diplomacy of a young paramount chief, Moshoeshoe the Great. As war raged all around him, Moshoeshoe gathered the remnants of the Basotho people scattered by the Zulu and Matabele wars and established them at Thaba-Bosiu, an invincible mountain fortress that became known as the "Mountain of the Night".

According to legend, the mountain grew tall as the enemies (including the Boers) tried to climb it at night to attack Moshoeshoe and his people. By daylight, the enemies would still be stranded half way up the mountain, a perfect cannon fodder for the huge boulders that the Basotho rolled down on them.

Thus, Thaba-Bosiu was never taken by the enemy. It is now a national monument where both the Basotho and foreign tourists go to pay homage to Moshoeshoe's greatness. Not far from Thaba Bosiu is Mount Qiloane, the legendary conical mountain, said to have inspired

Lesotho's national headgear (see cover photo).

Although widely acknowledged as a "great military and diplomatic strategist", Moshoeshoe later found that these attributes were not enough to hold back the better-armed Boers who continued to invade and seize his agricultural lands, pushing his people farther and farther into the rugged mountains.

For example, Major Warden, a magistrate based in Bloemfontein, just woke up one day and deprived Moshoeshoe of a huge slice of his land far into the interior to form, what is today, the border between Lesotho and South Africa's Free State province.

By 1865, Moshoeshoe had had enough of the Boers. So he appealed to the British for protection, and his kingdom became a British "protectorate" called Basutoland. Thus, Lesotho was not colonised in the classical sense, and was able to keep much of its culture, traditions and monarchy.

Maseru, the capital and only city in the country, was founded by the British in 1869. It was named after the red sandstone discovered in the area.

But, as usual, the British had other designs. Moshoeshoe died in 1870. A year later, Britain annexed his kingdom to the Cape Colony Initially Sir Philip Woodhouse, governor of the Cape Co1ony governed

Lesotho on behalf of Britain, but from 1884 onwards, resident high commissioners directly under the British government governed Lesotho from Maseru until independence on 4 October 1966.

In fact, Britain did not have its way all the time. In 1910 when the Union of South Africa was formed, the Basotho resisted further British attempts to incorporate their kingdom into the Union. This explains why the country which finally requested and gained its independence from London and renamed Lesotho in 1966, came to be surrounded geographically by South Africa, with no access to the sea. Its original agricultural lowlands in the north, west and south of the territory had long been seized by the Boers.


At independence, with apartheid well grown and thriving in South Africa, the young Lesotho, then under the leadership of King Moshoeshoe II, had little room for manoeuvre. Its overbearing apartheid neighbour had all the cards. The apartheid regime even sent troops from time to time across the border to attack and kill suspected ANC guerrillas based in Lesotho. Many Basotho were killed in those raids.

With the end of apartheid in 1994, Lesotho today has a much more meaningful relationship with South Africa and the wider Southern African region. As a member of the Common Monetary Area (CMA), Lesotho's currency the loti (plural maloti) is pegged to the South African rand (the value is 1:1). In fact the

rand is legal tender throughout Lesotho.

The proximity to South Africa's Gauteng region (which forms the largest concentrated market in sub-Saharan Africa) has helped open up Lesotho's economy in many ways. Lesotho currently exports water to the Gauteng region, bringing in tens of millions of dollars each year to enrich the local economy

Lesotho is also only six hours drive from the South African port of Durban, and it has concessional trade access to the European Union and the US.

"These comparative advantages for investors", says a ministry of trade official, "are enhanced by a package of financial incentives, and the government is keen to promote an investor-friendly image through providing full support on trade and investment issues."

A major bonus is that the political climate is now stable, after so many years of instability and military rule. Now under the able leadership of Prime Minister Prof Pakalitha Mosisili, Lesotho is well on the way to establishing a long-lasting multi-party democracy. There are 10 political parties in parliament.

Lesotho Government Website:

The High Commission of the Kingdom of Lesotho 7 Chesham Place, Belgravia London SW1X 8HN

Tel: 0044 20 7235 5686

Fax: 0044 20 7235 5023



The people

Peace, rain and plenty from the mountain people.

"The uniqueness of Lesotho is not confined to its scenic beauty and tranquillity alone nor to the four seasons that express themselves in different moods in the open nature that surrounds," says the opening paragraph of a Lesotho tourism ministry brochure. "The people of Lesotho," the brochure continues, "will themselves add an inimitable flavour to your experience. Lesotho is a fenceless country, a whole 11,716 square miles of land surface that is unrestricted to discovery."

Very well said. The friendliness of the Basotho is, in fact, one of the chief reasons for considering a holiday in Lesotho. Their motto is "peace, rain and plenty", and they are extremely welcoming and open to foreigners. They are ever ready to give you their traditional open-palm greeting, "Khotso", which means peace.

Over 98% of the country's 2.2 population are native Basotho who speak one language, Sesotho; but there is a sprinkling of Asians and Europeans who have made the country their home. Thus, Sesotho and English are the official languages, although English (the second language in order of importance) is widely spoken in business and commerce, and used in schools.

Because the economy is not very well developed, a large number of the people live and work in neighbouring South Africa, mostly in the mines, and send back home millions of rand each month to keep the local economy alive. Thus, any retrenchment in South Africa is bad news for Lesotho. Locally, the unemployment rate is put as high as 45%.

Basotho culture is largely centred around village life and the four seasons of the year, so most of the people still have strong attachment to their villages and their ancestors' medicine of roots, herbs and barks now being administered by licensed "traditional" chemists.

Even in these modern times, the family is still the dominant unit

in Lesotho, the chiefs still rule the roost, and respect for the elders and older generation is supremely important.

In the olden days, because of the harsh mountainous terrain, commuting from one village to another was a difficult job. But with the introduction of the Basotho pony (a hardy, surefooted horse), commuting in the mountains has become less onerous. The pony has since become the preferred means of transport for those who cannot afford the beloved white cars (the modern pony more or less) of the city and town dwellers.

Driving around the country, you still meet many Basotho on horseback clad in their traditional blankets called "Kobo", with the national headgear, the conical Basotho Hat, atop their heads. The "Khotso" is never far away and freely offered.

The bright lights and perceived "good life" in Maseru, the capital, are attracting more people to the city. Since independence, Maseru has experienced a high annual population growth rate, averaging 7% per annum, with the city's current population estimated at over 176,000. City life, however, has not changed the friendliness of the people.

That said, the other main reason for considering a holiday in Lesotho surely lies beyond the boundaries of Maseru. The fabulous landscape, the clean air, the pleasant simplicity of life in rural areas, and the joys offered by the rugged open spaces are well outside

the capital. Can you imagine the terrain of Switzerland transported to this small corner of Africa? This is Lesotho for you.

Tourism - the magic of untamed vistas

Lesotho gets far fewer tourists than it deserves. Now the government wants to change all that.

Lesotho has 300 days a year of glorious sunshine, one of the most inspiring landscapes on earth, the I ultimate outdoor and eco-tourism destination, one of the most pristine natural environments, and yet the country's tourism figures are a huge disappointment.

The answer is not difficult to find. "Not enough attention was paid in the past to develop the hospitality and tourism infrastructure, and promote it," says the minister of tourism environment and culture, Lebohang Nts'inyi.

As a result, huge opportunities now exist countrywide for investors in the tourism sector. The government is now looking for "smart partnerships between the public and private sectors" to develop and make tourism the largest national employer and revenue earner by the year 2020. It might sound like a tall order, but the government is determined to see it through.

The overall vision is to make the country "a quality tourism

destination". As such, the government's Tourism Act 2002 (published last year) has a range of incentives for investors in tourism, including the creation of tourism development zones to facilitate rapid infrastructural development.

According to the tourism minister, revenue from tourism currently makes up less than 1% of GDP, and the target in two years' time is to increase it to 6% of 0DB Therefore, on 20 March, she announced a new tourism package in parliament, which included the establishment of a new Lesotho Tourism Development Corporation, an autonomous body to spearhead the government's tourism drive and also to look for investment at home and abroad. The Corporation's funding in the first few years will come from the government until it is able to stand on its own feet.

Minister Nts'inyi (a former ambassador to Germany) accepts that the country "will have to put its house in order first" by approaching tourism in a holistic manner, ie, getting all the infrastructure or most of it ready (hotels, resorts, lodges, roads, transportation, the environment, restaurants, hotel management, training of people both inside and outside the hospitality trade, etc) before going out in a big way to woo tourists.

Yet she confidently declared: "Come next year, and you will see a marked difference in tourist arrivals."

One of the packages already underway is the "Maloti

Route" programme with South Africa meant to attract tourists visiting South Africa to extend their tours to Lesotho. At the moment, South Africa is "the fastest growing tourist destination in the world", attracting more than 6.4 million visitors last year, a huge 20% growth. Lesotho hopes to tap into this lucrative market.

The "Maloti Route" is an idyllic meander through picturesque mountains where tourists can visit friendly villages and towns, follow where dinosaurs once prowled and left footprints, or simply enjoy fly-fishing, rock art sites or just soak up the breathtaking scenery. For more adventurous tourists, there are horse and 4x4 trails, hiking, and even ski slopes. The route starts from South Africa's Eastern Cape province, it then passes through Lesotho's awe-inspiring mountains, and finishes off in South Africa's Eastern Free State. Accommodation on the route includes hotels of various grades, luxury lodges, self-catering cottages and small homely Bed-and-Breakfasts.

In partnership with a consortium of foreign investors, the government is building what has been dubbed as "the only proper ski site in Southern Africa" on 500 hectares of mountainous terrain nestled in the heart of the Maloti Range. Situated in the Mashlasela Valley (10,570 feet or 3,222 metres above sea level), the location of the "Mahlasela Ski Slopes" has already been declared a "World Heritage Site" by the UN. It forms part of the Maloti Drakensberg Transfrontier Conservation and Development Project (a joint

nature-based tourism venture launched last year by the Lesotho and South African governments aimed at conservation, community development and sustainable resource use).

Snow-skiing in Africa? You must be joking! But the Mahlasela Ski Slopes are real. And only four-and-a-half hours' drive from Johannesburg.

It is expected, when it opens this winter (May-July), to provide four months of snow skiing on the longest and most advanced ski lifts and slopes in the Southern Hemisphere. Natural snow on the slopes (which occurs mainly in June, July and August) will be augmented by artificial snow-making to make the slopes operational all-year round. The core of the project is a self-sustaining "LifeStyle Village" providing both winter and summer adventures.

A high altitude sports training and recreational centre is also being built in the rugged mountains in the central highlands near the Mohale Dam to provide state-of-the-art accommodation and recreational facilities for both local and international visitors.

The first phase of the project is almost complete. It will include rowing and sport fishing. The second phase, situated on the western side of the Mohale Dam at Ha Rapokolana, will also provide mainly high altitude indoor and outdoor training facilities for top level local and international athletes. An added bonus is that the natural view from the

high mountains, at both locations, will make the study of astronomy possible.

Lesotbo also offers great opportunities for pony-trekking in the mountains, hiking, mountain cycling and climbing, para- and bang-gliding, bird-watching and fishing; and for nature lovers abundant flora and fauna (some of which are exclusive to Lesotho). For example, the red and yellow flowers of the "Red Hot Pokers", and the pink flowers of the Spiral Aloe (Lesotho's national flower) will thrill many an eye.

There is also the Maletsunyane (Lebihana) Falls, the highest single-drop water falls in Southern Africa, at Semonkong village in the southern highlands. Semonkong means "Place of Smoke", named after the "smoke" from the falls that are set in some stunning surrounding cliffs, with the water plummeting down a 630-foot (192-metre) drop. It is a joy to the eye.

And you cannot miss the Katse Dam over the Malibamatso River in the central highlands. Completed only in 1997, the dam and its majestic surroundings are already attracting over 30,000 local and foreign visitors a year. The dam wall (607 feet high and 2,297 feet long; or 185 metres high and 700 metres long) is a striking piece of modern engineering.

Southwest of the Katse Dam, on the Senqunyane River, is the smaller

Mohale Dam (completed this year) and already filling up. The two dams form the central plank of the Lesotho Highlands Water Project that exports water to the Gauteng province of South Africa.

How to get there

The majority of visitors to Lesotho arrive by road from South Africa, through 14 border control posts (two of which are open 24 hours a day). The only "international" flight to Maseru is a one-hour (three-times a day) hop operated by South African Air Link from Johannesburg Airport. The disappointment you are likely to feel by the tiny size of both the 30-seater plane and the Moshoeshoe I International Airport in Maseru is well compensated for by the joys waiting for you outside the city. There are plans by the government to expand the airport as part of its 2020 tourism vision.

Ministry of Tourism

PO Box 52

Maseru 100

Tel: (+266 22) 313 034

(+266 22) 312427

Fax: (+266 22) 5888 3504


White gold is a win-win for all

The largest bi-national construction project in Africa, the Lesotho Highlands Water Project (LHWP), a joint venture between Lesotho and South Africa, is a testament to what mutually beneficial Africa-Africa co-operation can achieve.

It all started in the mid-1950s. Sir Evelyn Baring, the British high commissioner in Basutoland (now Lesotho), realising that the only natural resource Basutoland had in abundance was water, requested a survey to be conducted into the water potential of the protectorate.

The lot fell on the Cape Town-based engineer, Ninham Shand, to do the job. He was chosen by the director of public works, Sir Peter Ballenden, to investigate the viability of Basutoland exporting water to areas in South Africa that needed more water than they could naturally generate.

"Shand came up with the Oxbow Project, a scheme that included a high-altitude dam, a hydroelectric power station, and a tunnel through the Maloti," says a LHWP official. "The water in this system would then find its way to the goldfields of the neighbouring Orange

Free State."

South Africa, then up to its eyes with apartheid, initially rejected Shand's plan, but a mid-1960s drought there saw the apartheid government renewing its interest in the project.

However, political differences between the two countries stymied the project until 1978 when a joint technical committee consisting of experts from both countries did a full feasibility study. Agreement was reached in 1983 on the project layout, leading to more detailed feasibility studies which were completed in April 1986.

The final agreement was signed on 24 October 1986 to tap water from the Lesotho highlands for export to the Gauteng province, South Africa's industrial and financial heartland.

The agreement stipulated that South Africa would pay for everything relating to the transfer of the water, including the implementation, operation and maintenance of all the facilities involved, and compensation to individuals and communities in Lesotho to be displaced by the project.

Lesotho would pay for the hydroelectric power component, while South Africa would pay royalty to Lesotho when the water level in the main darn at Katse reached 6,540 feet or 1993 metres above sea level. This level was reached in September 1996.

The royalties (both fixed and variable) will be paid every month until 2045. By December 2000, the fixed royalties amounted to 439 million rand, and the variable royalties a further 168 million rand. Simply put, the project is a win-win for all. Water from Lesotho augments the supply in South Africa's Vaal River system and generates hydroelectricity in Lesotho to meet the country's needs.

The water is stored in dams and transferred by gravitational flow via underground tunnels into the natural watercourse of the Ash River in South Africa's Eastern Free State, which is part of the Vaal River system.

Water delivery from the Katse Dam to South Africa started in January 1998, and electricity from the Muela Hydropower Project located underground beneath the mountains in northern Lesotho, began in January 1999.

Until this time, Lesotho imported 98% of its electricity needs from South Africa at a cost of US$2.4m a year. Now it generates 100% of its own electricity and exports some to South Africa, bringing in $400,000 a year.

The project -- financed through local and foreign investment -- was undertaken in phases. Phase lA involved the building of the Katse Dam and its associated intake tower and transfer tunnels; and the Muela Dam/Hydro Project and its associated tunnels.

Phase 1B, to be completed next year, involves the building of the Mohale Dam and tunnel, and the Matsoku Weir and tunnel. After this phase, the governments of Lesotho and South Africa will decide which further phases to be implemented, and whether to go ahead at all.

But already Phase 1 has dramatically changed the way of life in Lesotho. Roads, bridges, health services, telecoms facilities, schools and other infrastructure built as p art of Phase 1 have opened up the harsh rugged hinterland. Other spinoffs such asshops and motorised transport have opened the highlands to development, especially tourism.

In South Africa, the Gauteng province, hitherto short of water, is now prospering. A good 40% of South Africa's population live in Gauteng and surrounding areas, and almost 60% of its industrial output and 80% of its mining are generated there.

The Vaal River, Gauteng's only water provider, doesn't have the capacity to meet all the needs of residents and industry, and therefore pure water from Lesotho's highlands brought by finely engineered tunnels (113 km in all, from the Mohale Dam) into Guateng is very much welcome.

Over 39 million cubic metres of water exported per month is rejuvenating the rundown Vaal River system and sustaining economic development in Gauteng and five other provinces in South Africa. Farmers in these regions can now grow more higher income crops for export.

The project is a good showcase for Africa-Africa co-operation. Apart from the royalty payments, the project has brought some 14,000 jobs to Lesotho. And for the first time, thanks to the Muela hydro project, Lesotho is self-sufficient in electricity production.

This good feeling is the more reason why the Lesotho government is keen to stamp out corruption by foreign companies working on the project. Last September, the High Court in Maseru found the Canadian company, Acres International (working on one of the Phase 1B contracts), guilty of bribing the former chief executive of the project, Masupha Sole, to the tune of $431,000. Acres was fined $260,000 by the court, but immediately launched an a p peal. Sole himself had been sentence to 18 ears in jail in June last year, following his conviction on 13 counts of corruption.

Several Western companies working on the project are waiting prosecution on similar corruption charges. The home affairs minister, Motsoahae Thabane, says the government will pursue the cases to their logical conclusion as a proof to the world that an African country can stamp out corruption.

"We want to prove that big companies cannot come here, walk around and bribe people," he added. "We know that the case hasn't gone down well with the mother countries of the companies involved, which is strange because they are the preachers of the highest standards of morality, and we are following their script."

"We're here to make you comfortable"

The Lesotho National Development Corporation (LNDC) is the first port of call for new investors.

Realising that local companies do not have adequate financial capacity to create more jobs for an economy with a 45% unemployment rate, the Lesotho government is rightly looking abroad for mutually beneficial foreign investment.

The job for making new investors welcome has been assigned to the LNDC which was set up in 1967 by an act of parliament. The government owns 90% of the LNDC and the other 10% by the German government's Finance Company for Investments in Developing Countries (DEG).

The LNDC's mandate is to "initiate, promote and facilitate the development of manufacturing and processing industries, mining and commerce in a manner calculated to raise the level of income and employment in Lesotho."

Mrs Sophia Mohapi, the LNDC's chief executive, hastens to add that the remit of the Corporation does not cover investors in the service industry. "We only deal with the manufacturing sector," she said. "So far, our biggest success has been in labour-intensive enterprises such as clothing and textiles, which now employ over 40,000 people, mainly women." The clothing and textile

sector is the largest in Africa, and currently Africa's largest textile exporter to the US.

In the early years of its founding, the LNDC relied on government subvention for its business, but not any longer. It now raises most of its funding from renting out factory shells to new investors, and also from equity participation in manufacturing concerns. The LNDC now holds 51% shares in the Lesotho Brewing Company, the biggest in the country.

In sum, the LNDC provides the following real estate services to help new investors as a way of shortening the investment cycle by eliminating the unnecessary long lead-time between the investment decision and the actual start-up:

* Fully serviced industrial plots.

* General purpose built factories

* Customised factory buildings

* Development of commercial properties for leasing. (You can't buy or sell land in Lesotho, but land can be leased for 30-year periods).

According to Mrs Mohapi: "The LNDC goes out of its way to make investors comfortable. We look after them, and provide them with

after-care services such as residence and work permits."

So far, according to her, the LNDC has been hugely successful in attracting investors from Taiwan and the Far East into the clothing, textile and shoe industries, but "we now want to diversify into the assembly of light electronic goods and clothing accessories such as the manufacture of buttons, zips and cardboard packaging. We also want to create linkages between small and big business so that we can empower our local private sector to take advantage of the markets that are opened up in Canada and Europe."

Lesotho's status as the first African country to qualify in April 2001 for the US Africa Growth and Opportunities Act (AGOA) has greatly enhanced the prospects of its clothing and textile industry. Half of the production of this sector goes to the US market.

RELATED ARTICLE: Lesotho Fact file

Head of state King Letsie III Lesotho is a constitutional monarchy much like Britain

Head of government Prime Minister Professor Pakalitha Mosisili (right)

Land area 11,716 sq miles or 30,344 sq km

Population 2.2 million, about 70% of whom are Catholic and 28%

evangelical and Anglican. The other faiths make up very small percentages

Capital Maseru (176,000 people)

Languages Sesotho and English (the native people speak one language, Sesotho)

Urbanisation 17%

Literacy rate 78%

Climate Very unAfrican.

Summer: 15-33[degrees]C. Winter: minus-3 to minus-17[degrees]C

Currency Loti (plural Maloti) = 100 lisente pegged to the South African rand, exchanging 1:1)

Time GMT + 2 hours

Telephone International code +266 Maseru +266 22 followed by number

GDP per capital US$421

GDP US$0.903 billion

Exports US$0.257 billion

Imports US$0.798 billion

Chief natural resource Water

Other natural resources Diamonds, wildlife, mohair, wool

Principal exports Water, clothing and textiles, live animals, wool and mohair

Principal imports Capital goods, food & beverages, fuel and energy

Main export destinations SADC, USA, EU

Main import origins SADC, Asia, EU

Business hours Monday to Friday 800am - 1.00pm and 2.00pm - 5.00pm Saturday 8.00am 12.00pm

Banking hours Monday to Friday 8.30am-3.00pm Wednesday 8.30am-11.00pm Saturday 8.30am-1.00am

"Now we have peace and stability to develop the country"

Prime Minister Pakalitha Mosisili speaks.

New African: Lesotho is a small country of 2.2 million people, and yet you have 10 political parties in parliament. Isn't that too much?

Mosisili: No, this country has gone through a period of political instability in the past. We've had our fair share of coups and military rule, and we say enough is enough. We now have 10 parties in parliament. Parliament itself has been enlarged from 65 seats at independence to 120 now. Two-thirds or 80 of the seats are contested on first-past-the-post constituency-based system, and 40 on proportional representation.

This has given us a new kind of parliament. The Americans have a saying that if you pitch a tent and the tent is small, some people are left out of the tent. So in order to make you uncomfortable in the tent, they pee into the tent. Now nobody can do that in Lesotho because everybody is in the tent. The 2002 elections have indeed given us the necessary peace and stability to develop the country. We can now goon with the business of governing the country and developing it.

NA: Now that you have political stability, what are the priorities of the government.

Mosisili: The most urgent challenge is socioeconomic development. In that respect, I would say the greatest challenge facing us--in Lesotho and in this region--is HIV-Aids. It is the greatest threat to our survival as a nation. It is a problem that we have to join hands with the other SADC countries to solve To that extent, we are going to host here, jointly with the World Bank, an SADC summit of heads of state in May to discuss the issue of Aids. We are a small country, we have only 2 million people, and unless we stand up and do something about Aids, we will be in serious trouble. Our current infection rate is very high, estimated at 31% of the population.

The other major challenge is poverty reduction. We have to put in place programmes to improve the lives of our people. Thankfully, water is a major national resource and we've started developing and harnessing this resource. We now sell water to South Africa, the revenue from which is now going into our poverty reduction programmes. Over and above that, we have to use our water resources for agriculture and irrigation. We cannot depend on food aid as we've been doing all along.

NA: What about tourism, you have great potential in it?

Mosisili: Precisely. We have a great potential in tourism because of the physical nature of Lesotho, it is a very beautiful mountainous country, and we need to develop tourism and make it a major revenue earner. And that's precisely what we are currently doing. We want

to make tourism user-friendly, to involve the villagers so they can all be part of it and benefit from it.

NA: The government recently took some foreign companies working on the Lesotho Highlands Water Project (LHW) to court for corruption. Some other countries would have ignored the case, but you didn't. Why is Lesotho so determined to prosecute the foreign companies?

Mosisili: We are very clear about this. As a government, we have adopted a zero-tolerance to corruption in whatever form it manifests itself. Whoever gets involved in corruption here, as far as we are concerned nobody is above the law. And to that extent, we are dealing ruthlessly with our own nationals who are involved in corruption. Our former accountant-general and his deputy are in jail for embezzling public funds. Can you imagine, an accountant-general, the man who holds the national purse, being corrupt himself and embezzling public funds? We will not tolerate that.

In bribery cases, there is the one who accepts the bribe and the one who gives it. The two are equally guilty. And we have to hurl them before the courts, and that is how we decided that those foreign companies who corrupted our officials should also face the music.

NA: Has there been any pressure on your government from the mother countries of the companies?

Mosisili: Well, you know, pressure can come in different ways, some of them very subtle. But we tell them: You are the ones who are preaching to us about transparency and good governance; and we have been transparent, so what is the problem?"

We had to go to Switzerland, and fortunately we got the assistance of the Swiss government regarding access to the bank accounts involved in the LHWP case. And you know, those big foreign companies actually opposed that. Some had to go to court in Switzerland to get access to the accounts. Therefore, pressure comes in different ways. Here you find a big country saying to us: If you do this, such and such will be in danger." And we ask but why? We've made all of them to understand that we are doing the right thing.

NA: That's very interesting, because at the end of the day, it is the country that suffers.

Mosisili: That is precisely the point. It is not the company that suffers, because the company will always put the bribe into the price of the project. So in reality the company doesn't lose anything, it is the country that loses. And we are saying no, we can't have that kind of thing.

NA: There is something happening in Africa whereby outsiders decide what goes, or trying to decide what goes. A case in point is Zimbabwe. What are the SADC and the African Union doing about this?

Mosisili: Well, Zimbabwe has presented a very interesting situation, and I must be honest here, it is not so much that the elections in Zimbabwe were fraudulent as it is really the fact that the land issue is the problem.

If indeed we ought to be fair and say let's confront the land issue--in South Africa, Namibia and Zimbabwe--squarely, be honest about it and deal with it legitimately, with no malice, with all fairness, we wouldn't have the problems that Zimbabwe is now going through.

President Mugabe was okay for 20 years. When he didn't tackle that land issue, he was fine. Britain was happy with him all the time. How many elections were held in Zimbabwe since 1980? Many. How come he suddenly conducts fraudulent elections only when he decides to tackle the land issue? So people are not being honest. For us, as SADC, we say we have to be realistic, we have to address the issue equitably and get it over with.

NA: Isn't it time Africa had its own continental media (both TV and print), like the Arabs now have AI-Jazeera, to put the African viewpoint across on some of these issues?

Mosisili: Definitely, definitely. It is dangerous to have one perspective on the news, especially on important matters such as the land issue. Through our culture, it should be easier for us to get together and establish various media houses. But for some reason, we haven't. But I think it is now dawning on us, the current leadership, that we need a strong continental media that will see things from our perspective and through our eyes.

Investment incentives

General Incentives

The following are the current investment incentives offered by the government

* Free repatriation of profits.

* Unimpeded access to foreign exchange.

* A non-repayable skills training grant which covers 50% of the wage bill during the initial training period for a newly established manufacturing company.

* Loan guarantees provided by the Lesotho National Development Corporation (LNDC) by other financial institutions.

* Loans from the LNDC itself to projects that have long-term viability.

* Equity participation (in selected cases) by the LNDC, in the absence of a private investor.

* Manufacturers receive a full rebate on imported raw materials or components for use solely in the processing or manufacturing of goods for export.

* Provision of serviced industrial plots, customised factories, and commercial and residential properties for lease.

* A free enterprise and free market economic system. No withholding tax on dividends distributed by manufacturing companies to local or foreign shareholders.

* General sales tax (GST) exemption on capital equipment for manufacturing industries.

Export Incentives

Lesotho has an export finance scheme, enabling exports to compete better in world markets. The main components of the scheme are:

* Credit Guarantee Scheme -- the exporters' bank applies for export finance or credit on behalf of their clients from the LNDC.

* Pre-shipment Credit Scheme -- a loan which enables the exporter to start a new manufacturing cycle from the day of shipment until payment from the foreign buyer is received, allowing companies to offer favourable credit terms to their customers.

* Refinance Arrangement -- a re-lending facility granted by The Central Bank of Lesotho to commercial banks to provide exporters with concessionary export finance.

* Counter-Guarantee Arrangement -- the Central Bank assumes 95% of the risk associated with guarantees issued by the LNDC.

* Central Export Development Fund -- the "refinance arrangement" and "counter-guarantee arrangement" receive financial backing from the Central Export Development Fund which is organised on a revolving basis, and funded by the Central Bank of Lesotho.

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Lesotho: Africa's best kept secret. (An IC Special Report)....  

Pure MajestyIf you haven't been to Lesotho yet, you haven't seen natural beauty. The country of blue mountains and white cars is pure majest...