The Board of Directors of the African Development Bank Group (AfDB) has approved a new $209 million Country Strategy Paper (CSP) for Lesotho, charting a five-year roadmap to accelerate economic diversification, resilience, and private sector-led inclusive growth.
The approval comes at a pivotal moment for the landlocked nation, which faces multiple economic challenges, including a recent 15 percent U.S. tariff on apparel exports, the cancellation of the $300 million Millennium Challenge Corporation compact, and continued reliance on regional economic performance. Nearly half of Lesotho’s population lives in poverty, while youth unemployment hovers around 39 percent.
Unlocking Private Sector Growth
According to Moono Mupotola, AfDB Deputy Director General for Southern Africa and Country Manager for Lesotho:
“Lesotho stands at a critical juncture. 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.”
The CSP focuses on two key priorities:
- Sustainable Infrastructure for Industrialization – Investments in energy, transport, water, and digital infrastructure to expand opportunities for businesses and households.
- Institutional and Human Capacity Building – Strengthening governance, competitiveness, and workforce skills to foster sustainable development.
Specific goals include achieving universal electricity access by 2030 through the Mission 300 program, reducing broadband costs to support a tech start-up ecosystem, and expanding safe drinking water access.
The Bank will also invest in agricultural and water infrastructure to raise productivity, while supporting reforms in tax collection and public sector management. New training initiatives will equip civil servants with modern governance and management skills.
Empowering Entrepreneurs and Youth
To drive private sector growth, AfDB will support policy reforms and infrastructure projects aimed at reducing the cost of doing business. Funding will target digital innovation, entrepreneurship, and small businesses — with a strong emphasis on women- and youth-led enterprises.
Skills development programs will train 20,000 young people (40 percent women) in digital and entrepreneurial skills for the modern economy.
Addressing Climate and Social Challenges
Given Lesotho’s vulnerability to climate shocks, the strategy integrates climate-smart agriculture, disaster risk management, and investments in renewable energy. These measures will protect livelihoods, enhance food security, and address social issues such as child stunting, which affects over one-third of children under five.
Regional Integration and Trade
The CSP also seeks to position Lesotho within regional and continental value chains. AfDB will support cross-border infrastructure with South Africa, promote trade facilitation under AfCFTA, and enhance Lesotho’s participation in agro-processing and manufacturing networks.
By improving connectivity and reducing isolation, the Bank aims to expand opportunities for businesses and workers beyond Lesotho’s borders.
Strategic Alignment and Financing
The new CSP builds on lessons from past AfDB operations and aligns with:
- Lesotho’s National Strategic Development Plan II (2018–2028)
- AfDB’s Ten-Year Strategy (2024–2033)
- African Union Agenda 2063
- UN Sustainable Development Goals
To finance the initiatives, the Bank will draw on multiple funding sources, including the African Development Fund, the Regional Operations Window, and the Climate Action Window, while partnering with other development institutions.
