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Lesotho adopts a new strategy.

In Africa, only Burundi and Uganda have fewer urban residents than Lesotho (population, 1.8-million, land area almost exactly the same as Belgium), a mountainous kingdom in southern Africa completely surrounded by South Africa. The country's urban population is 13 percent of the total population compared with 9 percent for Burundi and 12 percent for Uganda (and 97 percent for Belgium). According to the CIA's World Factbook, 86 percent of the population is engaged in subsistence farming. A recent government publication put unemployment at 31 percent, but according to a September 21, 2005 Integrated Regional Information Networks (IRIN) report "independent studies" say the total is 70 percent.

In recent years, Lesotho has suffered from political instability and two devastating economic shocks. In the 1980s, the country was heavily dependent on remittances from workers who left Lesotho to work in South Africa's gold mines. As many as 120,000 migrant laborers were employed. Currently, only half that number still have those mining jobs.

But just in time (in 2000) came the African Growth and Opportunity Act, which allowed duty-free access to markets in the United States for 37 Sub-Saharan African countries. Lesotho took advantage of the Act's provisions and a fledgling garment assembly industry sprang up and managed to grow. In fact, Lesotho was one of the countries in Africa to benefit most substantially from the Act.

Then in January 2005, the Multi-Fibre Arrangement, which governed the world's textile trade expired and negatively affected Lesotho's status under the African Growth and Opportunity Act causing a catastrophic shakeout of the textile industry in the country. Factories closed and workers were again left to fend for themselves.

Now Lesotho has developed a unique strategy to stimulate small, medium and micro enterprises (SMMEs). The strategy favors groups and businesses that have limited access to capital and few infrastructure requirements making them less susceptible to economic shocks. If the strategy works, it could begin to upgrade Lesotho's consumer base as well as strengthening the country's macroeconomic statistics.

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Publication:Market Africa Mid-East
Geographic Code:6LESO
Date:Nov 1, 2005
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Next Article:Dilemmas for prosperous Botswana.

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