The African Development Bank Group’s Board of Directors has approved a new $209 million Country Strategy Paper (CSP) for Lesotho, outlining a five-year plan to accelerate economic diversification, resilience, and inclusive growth. The strategy comes at a pivotal time, as the country grapples with multiple challenges, including the impact of a 15 percent U.S. tariff on apparel exports, the withdrawal of $300 million in development assistance from the Millennium Challenge Corporation, and heavy reliance on regional economic performance. With nearly half of the population living in poverty and youth unemployment nearing 39 percent, the CSP seeks to unlock private sector-led growth, create sustainable jobs, and strengthen institutions.
According to Moono Mupotola, the Bank’s Deputy Director General for Southern Africa and Country Manager for Lesotho, the strategy leverages the nation’s abundant water resources, geographic position, and youthful population to open new avenues for inclusive development. The CSP focuses on two central priorities: building sustainable infrastructure to drive industrialization and strengthening institutional and human capacities to enhance competitiveness. Notable targets include achieving universal electricity access by 2030 under the Mission 300 program, reducing broadband costs to support a growing technology sector, and expanding safe drinking water access to households nationwide.
The Bank also plans to support water and agricultural infrastructure to raise productivity while modernizing public finance management through improved tax systems and civil service training. In parallel, it will encourage private sector growth by supporting policy reforms, expanding digital innovation funding, and promoting entrepreneurship. Small businesses, particularly those led by women and youth, will benefit from targeted assistance, while skills development programs are expected to equip 20,000 young people—40 percent of them women—with digital competencies critical to the modern economy.
Given Lesotho’s vulnerability to climate shocks, the CSP integrates climate-smart agriculture, disaster risk management, and renewable energy expansion. These measures aim to secure livelihoods, strengthen resilience, and address social challenges such as child stunting, which affects over one-third of children under five.
The strategy also emphasizes regional integration, seeking to connect Lesotho more effectively with larger markets through cross-border infrastructure with South Africa, enhanced trade facilitation under the African Continental Free Trade Area (AfCFTA), and increased participation in regional value chains, especially agro-processing. By reducing isolation, the plan aims to broaden opportunities for Lesotho’s businesses and workforce beyond national borders.
Building on lessons from previous Bank operations, the CSP adopts an integrated, multisectoral approach with an emphasis on implementation capacity and proactive portfolio management. It aligns with Lesotho’s National Strategic Development Plan II, the Bank’s Ten-Year Strategy, the African Union’s Agenda 2063, and the UN Sustainable Development Goals. To ensure effective delivery, financing will come from various sources, including the African Development Fund, the Regional Operations Window, and the Climate Action Window, in collaboration with international development partners.
