The Context

Lesotho is a small land-locked country, completely surrounded by South Africa. It has a population of about 2 million and is classified as a low-income country.  

Since 1980, the Government has made considerable progress in developing Lesotho’s economy. Recent economic growth has been attributed to expansion of garment manufacture and mining, and to revenue generated by exporting water to South Africa. But these economic gains have not translated into improved well-being for the people. 

Income inequality and poverty rates remain high, especially in rural areas. The unemployment rate is 28 per cent, and about 30 per cent of rural people live in extreme poverty. Underemployment is widespread, especially in rural areas. 

About 70 to 80 per cent of the country’s population lives in rural areas, and more than three quarters of these people are engaged in agriculture – mostly traditional low-input, low-output rainfed cereal production and extensive animal grazing. An estimated 57 per cent of the population lives below the poverty line, according to a 2010/2011 household budget survey. Poverty has fallen in urban areas and climbed in rural areas. 

Lesotho cannot produce enough food to feed its growing population. The agriculture sector accounts for about 17 per cent of GDP. It is the primary source of income, or an important supplementary source, for more than half the population in rural areas. Only about 10 per cent of the country’s total land area is classified as arable.

In the past, remittances from mine workers were a major source of rural livelihoods, providing cash to purchase agricultural inputs or invest in household assets and housing. However, remittances have declined steadily over the past decade.

Despite the overall economic growth, opportunities to earn income remain limited. They are generally confined to urban areas and wage employment in the industrial sector. The rural economy and agricultural development will therefore continue to play a major role in Lesotho’s development strategy for the foreseeable future.

The Strategy

In Lesotho, IFAD loans support the efforts of smallholder farmers to ensure food security for their families, raise their incomes and improve overall nutrition. 

Increased productivity is a key to achieving these aims and reducing poverty in rural areas. IFAD programmes and projects encourage rural people's participation in planning and developing income-generating activities, including microenterprises.

Our strategy in the country has focused on three main opportunities for reducing rural poverty:

• diversifying and intensifying agriculture and livestock production;
• rehabilitating and reclaiming degraded lands, including rangelands;
• developing rural financial services to support improved agricultural production and create income-generating activities.