VZCZCXRO1850
RR RUEHBZ RUEHDU RUEHJO RUEHRN
DE RUEHMR #0633/01 3481028
ZNR UUUUU ZZH
R 141028Z DEC 07
FM AMEMBASSY MASERU
TO RUEHC/SECSTATE WASHDC 3481
INFO RUCNSAD/SADC COLLECTIVE
RUEHMR/AMEMBASSY MASERU 3882

UNCLAS SECTION 01 OF 02 MASERU 000633 
 
SIPDIS 
 
SIPDIS 
 
DEPT ALSO FOR AF/S, AF/EPS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV ECIN EFIN EIND LT
SUBJECT: LESOTHO NOVEMBER 2007 ECONOMIC ROUNDUP: POVERTY, 
PROCUREMENT, AND PONZI 
 
REF: Maseru 619 
 
MASERU 00000633  001.2 OF 002 
 
 
¶1.  In this edition: 
 
-- GOL Reviews Progress on Poverty Reduction Strategy 
-- SACU Develops Common Negotiating Mechanism, Textile Strategy 
-- GOL Promotes Procurement as a Profession 
-- Lesotho's Treasury Stops Payroll Deductions Directed to MKM 
Burial Society 
 
--------------------------------------------- ----- 
GOL Reviews Progress on Poverty Reduction Strategy 
--------------------------------------------- ----- 
 
¶2.  To highlight achievements towards its own development goals, 
in November the Government of Lesotho published a review of its 
2004-2007 Poverty Reduction Strategy (PRS).  The PRS aims to 
provide sustainable, broad-based improvement in the standard of 
living of the Basotho people through economic growth which 
creates employment and income opportunities, grants access to 
basic services by the poor and the vulnerable, deepens 
democracy, and improves public sector performance.  The review 
found that households living below the poverty line fell from 
62.1% in 2002/2003 to 50.2% during the review period.  The 
proportion living below the sustenance poverty line fell from 
37.8% to 29.1%, suggesting a significant "shallowing" of poverty 
due to development gains.  The gini coefficient, a measure of 
income inequality, fell from 0.66 in 2002/2003 to 0.57 during 
the review period. 
 
¶3.  While the PRS's stated target for access to improved water 
resources was set at 85%, the review revealed that only 47% of 
Basotho actually have access to piped potable water.  Due to the 
introduction of free primary education in 2001, public education 
received the highest rating of all government services.  The 
actual primary school enrollment rate in 2006 was 84%, nearly 
reaching the target of 90%.  Secondary school enrolment reached 
26% in 2006, compared to the goal of 30%.  In a shocking 
reversal, life expectancy declined from 50 years to 34 years due 
to the impact of HIV/AIDS. 
 
¶4.  Under the category of "deepening democracy," the PRS's lack 
of clear definitions regarding the roles and responsibilities of 
institutions implementing these goals complicated measurements. 
The review proposed the selection of indicators to make the 
monitoring and evaluation of these goals more practical.  In 
conclusion, the review suggested that Lesotho's next PRS should 
focus in greater depth and detail on kick-starting broad-based, 
sustainable economic growth. 
 
-------------------------------- 
SACU Develops Common Negotiating 
Mechanism, Textile Strategy 
-------------------------------- 
 
¶5.  On November 1, the South African Customs Union's (SACU) 
Technical Liaison Committee met in Maseru to discuss progress on 
trade issues affecting the SACU member states.  Issues discussed 
included a common SACU negotiating mechanism and a long-term 
strategy for the textile and clothing sectors. 
 
¶6.  During their meeting, SACU member states drafted a common 
negotiating mechanism for all future free trade negotiations 
with third countries.  Difficulties during SACU-MERCOSUR and 
SACU-EFTA trade negotiations led to the call for a common 
negotiating mechanism which will enable SACU member states to 
enter into preferential trade agreements with the third parties 
with the concurrence of other member states.  Reports indicate 
that the first draft of the mechanism has already been reviewed 
by the SACU Council of Ministers.  The final draft is expected 
to be complete before year's end, and member state ratification 
will start early next year.  This new mechanism is expected to 
impact forthcoming SACU free trade negotiations, such as 
SACU-India negotiations, discussions on a SACU-U.S. Trade and 
Investment Framework Agreement (TIFA), and the conclusion of a 
SACU-SADC Economic Partnership Agreement (EPA).  [NOTE:  All 
five SACU member states are also Southern African Development 
Community (SADC) member states.  END NOTE.] 
 
¶7.  SACU member states resolved to develop a long-term strategy 
for SACU's textiles and clothing sector in response to global 
competition and the projected end of the African Growth and 
Opportunity Act (AGOA) in 2015.  The Technical Liaison Committee 
discussed a draft of the terms of reference for the creation of 
a long-term strategy for the textile sector, and all states 
agreed that the study should be commenced immediately upon the 
finalization of the terms of reference. 
 
---------------------------------------- 
GOL Promotes Procurement as a Profession 
---------------------------------------- 
 
MASERU 00000633  002.2 OF 002 
 
 
 
¶8.  On November 5, the Government of Lesotho held a one-day 
conference to promote the professional development of 
procurement officials.  The GOL held the conference as part of 
its Public Financial Management Reform Program, facilitated by 
the Chartered Institute of Purchasing and Supply (CIPS).  The 
conference follows the establishment of CIPS earlier this year. 
CIPS currently trains about 120 individuals, drawn primarily 
from the civil service, in its post-graduate diploma program. 
 
¶9.  The GOL commissioned CIPS to help establish key procurement 
institutions mandated by 2007's new procurement regulations. 
Procurement was previously centralized in the Ministry of 
Finance, but the function was decentralized to the line 
ministries earlier this year.  The new system, bolstered by 
improved procurement training, is hoped to meet international 
standards and thus encourage international donors to use the 
GOL's procurement system, thereby increasing the government's 
absorptive capacity for donor funding. 
 
------------------------------------------- 
Lesotho's Treasury Stops Payroll Deductions 
Directed to MKM Burial Society 
------------------------------------------- 
 
¶10.  The Treasury Department of Lesotho's Ministry of Finance 
will cease processing public servants' and pensioners' payroll 
deductions directed to MKM Burial Society (reftel) starting next 
month.  On November 28, Dr. Moeketsi Majoro, Principal Secretary 
of the Ministry of Finance and Development Planning, announced 
that the decision followed the suspension of MKM's investment 
activities pending a judicial investigation into the company's 
operations.  Dr. Majoro noted that civil servants and pensioners 
would not be penalized by MKM because of delayed payments.  He 
appealed to the public to remain calm as the GOL takes measures 
to protect their funds from MKM's illegal activities - 
characterized by many as a ponzi scheme. 
NOLAN