Lesotho’s economy under threat

Maseru, Lesotho: Central Bank of Lesotho building - Corner Airport and Moshoeshoe Roads - photo by M.Torres

Revered business expert, Koena Phafane, has warned of the possibility of an adverse impact on Lesotho’s economy, of the violent xenophobic attacks that have engulfed neighbouring South Africa for the past two weeks.

Speaking in an interview with theReporter yesterday, Phafane indicated that any negative impact on the South African economy spills over to Lesotho, whose fragile economy heavily relies on her bigger and more powerful neighbour.

“Business is a sensitive phenomenon. Whenever certain things happen that threaten it, it collapses easily.

“Incidents like this, even though they may not be as extreme as what is happening now in South Africa, would affect any economy. Remember, they are burning cars and shops that happen to be Lesotho’s suppliers of goods; some could even be owned by Basotho. It will surely affect us directly and negatively.


“It is worth noting that the economy of Lesotho has since the beginning of this year been unstable. And with the real possibility of other African countries retaliating, things are not looking good for Lesotho.”

This comes after South African finance minister Tito Mboweni called on all Africans to work together, and promote intercontinental trade amidst violent xenophobic attacks in the country.

Mboweni was speaking at the World Economic Forum held in Cape Town, where he was standing in for President Cyril Ramaphosa.

He said this at a time when South Africa is ravaged by violent xenophobic attacks, which have seen the South African embassy in the Nigerian city of Lagos come under attack.

Mboweni, however, urged South Africans to maintain peace, and charged that SA stands to benefit far more from the Africa Intercontinental Free Trade Agreement.

“The fact that the African leadership has now signed the African Intercontinental Free Trade agreement is a good start, is a good start. I would hope that our leadership lead in popularising this agreement within the different countries. I hope that this will be understood by every business person, trader and particularly by every border post official,” said Mboweni.

The Agreement Establishing the African Continental Free Trade Agreement (AfCFTA) entered into force on 30 May 2019 for the 24 countries that had deposited their instruments of ratification.

However, South Africa has seen in the past two weeks what stands to threaten the implementation of the agreement.

Nigeria said on Wednesday it would boycott the World Economic Forum in Cape Town, intensifying a diplomatic row after a series of deadly attacks on foreigners in South African cities.

The withdrawal of Nigerian Vice President Yemi Osinbajo from the World Economic Forum gathering has cast a cloud over initiatives to boost intra-African trade. He was scheduled to address a panel on universal energy access yesterday.