The African Development Bank Group has approved a new $209 million Country Strategy Paper (CSP) for Lesotho, outlining a five-year roadmap to boost economic diversification, resilience, and inclusive growth.
The approval comes at a time of significant economic pressure for the landlocked country. Lesotho is grappling with the fallout of a 15 percent U.S. tariff on apparel exports, the cancellation of a $300 million Millennium Challenge Corporation compact, and high dependence on regional economic performance. Nearly half of its population lives in poverty, while youth unemployment hovers at 39 percent.
“Lesotho stands at a critical juncture,” said Moono Mupotola, the Bank’s Deputy Director General for Southern Africa and Country Manager for Lesotho. “This comprehensive strategy leverages the country’s abundant water resources, strategic location, and demographic dividend to unlock new pathways for inclusive growth and economic diversification.”
Key Priorities
The new strategy focuses on two core areas:
- Building sustainable infrastructure to power industrialization, expand renewable energy, and deliver universal electricity access by 2030 under Mission 300.
- Strengthening institutions and human capital to improve competitiveness, modernize tax systems, and enhance public sector efficiency through targeted training.
The CSP also sets goals to reduce broadband costs, foster a thriving digital start-up ecosystem, and expand access to safe drinking water.
Private Sector and Jobs
To spur private sector growth, the Bank will support policy reforms and investments aimed at lowering the cost of doing business, while channeling funding into digital innovation and entrepreneurship. Small businesses, particularly those led by women and youth, will receive targeted support.
Skills development programs under the strategy aim to equip 20,000 young people, 40 percent of them women with digital skills suited to the modern economy.
Climate and Social Resilience
Recognizing Lesotho’s vulnerability to climate shocks, the CSP prioritizes climate-smart agriculture, disaster risk management, and investments in water infrastructure. These measures are also intended to address social challenges, such as child stunting, which affects more than a third of children under five.
Regional Integration
The Bank will also help Lesotho deepen its integration into regional and continental markets. Support will be provided for cross-border infrastructure with South Africa, participation in the African Continental Free Trade Area (AfCFTA), and developing agro-processing value chains to expand trade opportunities beyond national borders.
Alignment with Development Goals
The strategy aligns with Lesotho’s National Strategic Development Plan II (2018–2028), AfDB’s Ten-Year Strategy (2024–2033), the African Union’s Agenda 2063, and the UN Sustainable Development Goals. Financing will draw on concessional funds, regional windows, and the Bank’s Climate Action Window, alongside partnerships with other development institutions.
By combining infrastructure investment with institutional reforms, the AfDB’s $209 million plan aims to turn Lesotho’s vulnerabilities into opportunities, setting the foundation for a more resilient, diversified, and inclusive economy.
