VZCZCXRO7186
RR RUEHBZ RUEHDU RUEHJO RUEHRN
DE RUEHMR #0044/01 0441620
ZNR UUUUU ZZH
R 131620Z FEB 08
FM AMEMBASSY MASERU
TO RUEHC/SECSTATE WASHDC 3548
RUCNSAD/SADC COLLECTIVE
INFO RUEHMR/AMEMBASSY MASERU 3963

UNCLAS SECTION 01 OF 02 MASERU 000044 
 
SIPDIS 
 
SIPDIS 
 
DEPT ALSO FOR AF/S, AF/EPS, AF/EX 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND EINV EAID EAGR PGOV LT
SUBJECT: LESOTHO JANUARY 2008 ECONOMIC ROUNDUP: TOURISM, NUTRITION, 
AND INFLATION 
 
 
MASERU 00000044  001.2 OF 002 
 
 
¶1. In this edition (January 2008): 
 
-- Lesotho's First Annual Tourism Conference 
-- Nutrition Survey Indicates No Major Malnutrition 
-- GOL Promotes Improves Farming Techniques 
-- 2007 Quarter Four in Review (annual inflation tops 10%) 
 
----------------------------------------- 
Lesotho's First Annual Tourism Conference 
----------------------------------------- 
 
¶2.  The parastatal Lesotho Tourist Development Corporation 
(LTDC) held its first annual conference from January 23-24 to 
explore branding Lesotho as a tourist destination.  In his 
opening remarks, LTDC CEO Mthwalo Mthwalo said the conference 
should focus on new methods to exploit Lesotho's tourism 
potential in order make meaningful contributions to economic 
growth.  According to recent figures, Lesotho receives about 
350,000 visitors annually (Note: This figure that likely 
includes a substantial number of commuters, migrant workers, and 
commercial border crossings, leaving few actual tourists.  End 
Note).  Lesotho generates approximately $12 million annually 
through tourism related activities. 
 
¶3.  Various speakers pointed to a number of areas that need 
improvement to increase tourism, including road infrastructure, 
cross-border tourism connections between Lesotho and South 
Africa, community-based tourism destination branding, and a 
focus on opportunities presented by the 2010 FIFA World Cup 
scheduled to take place in neighboring South Africa.  Addressing 
roads, Mr. Ernest Mokganedi of South Africa's Department of 
Environment and Tourism said that no investor would put funding 
into tourists sites such as Sethlabathebe National Park or 
Semonkong Falls because of poor transportation infrastructure 
leading to the sites. 
 
--------------------------------------------- --- 
Nutrition Survey Indicates No Major Malnutrition 
--------------------------------------------- --- 
 
¶4.  The Government of Lesotho's Disaster Management Authority, 
with financial support from donors including the United States 
(via OFDA disaster funds), conducted a National Nutrition Survey 
from November 19 to December 8, 2007.  Preliminary results 
indicate that Lesotho, despite a devastating 2006-2007 drought, 
is not currently experiencing generalized acute malnutrition. 
When comparing the 2007 survey with a similar one conducted in 
2002, the results showed 18% fewer underweight women and 
children, as well as 26% fewer persons showing signs of wasting. 
 In remote Mafeteng and Mokhotlong districts, however, wasting 
increased by 32% and 6% over the same period and there were 
reports of nutrition-related deaths.  Stunting rates still 
remain quite high throughout the country, a sign of poor 
nutrition, but the survey concluded that Lesotho's failed 06/07 
harvest had not led to generalized malnutrition.  This survey 
will serve as the baseline of an ongoing new nutrition 
monitoring system in Lesotho. 
 
---------------------------------------- 
GOL Promotes Improves Farming Techniques 
---------------------------------------- 
 
¶5.  As a method of addressing food insecurity, the Government of 
Lesotho has started to promote "block farming" techniques across 
the commercial, community-led, and subsistence farming sectors. 
The program, implemented in Lesotho's lowland districts, was 
launched in the wake of the severe drought which destroyed the 
2006/2007 harvest.  The commercial and community-led initiatives 
will assist approximately 3,000 hectares per district, while the 
subsistence farming initiative will cover an average of 2,500 
hectors per district.  Standard Bank will finance the commercial 
farm initiative, while the GOL will support the community-led 
and subsistence farming initiatives. 
 
--------------------------------------------- ---- 
2007 Quarter Four in Review: Rising Inflation 
--------------------------------------------- ---- 
 
¶6.  Lesotho's economy exhibited mixed indicators during the last 
quarter of 2007.  The mining sector continued to display sound 
growth due to the continued expansion of diamond mining. 
Electricity consumption rose by 13.4% during the last quarter, 
but water consumption showed a steep decline of 54.8%, even 
after seasonality adjustments.  This decline is likely due to 
the closure of three firms in the textile sector as a result of 
declining overseas orders.  Strong consumer demand led to a 21% 
increase in the total value of retail sales.  The 
telecommunications sector, measured by number of calls, rose by 
2% on quarterly basis. 
 
 
MASERU 00000044  002.2 OF 002 
 
 
¶7.  Employment in the manufacturing sector declined by 1.4% 
during the last quarter due to the closure of three firms.  The 
closure of these firms however did not, however, immediately 
affect overall textile exports, which remained constant (an 
increase in garment purchases from Europe and South Africa 
mitigated a decline in U.S.-based orders).  Employment in the 
civil service and for migrant mineworkers increased by 1.2% and 
0.2% respectively during the quarter. 
 
¶8.  The inflation rate accelerated to 9% in the last quarter, 
bringing the year-to-year inflation rate to 10.5% according to a 
Standard Bank analysis--an increase influenced by rapid price 
hikes in food, non-alcoholic beverages, and transportation.  The 
price of maize meal, a staple in Lesotho, increased by 7.7%.  In 
the financial sector, the money supply grew by 1.1% on a 
quarterly basis and by 37.8% on an annual basis.  Domestic 
credit increased by 9.6% from the previous quarter.  Credit 
extended to the private sector rose by 8.45%, while credit to 
statutory bodies rose by 40.9%.  Net foreign assets of the 
banking system rose by 14% (compared with a 2.7% decline in the 
previous quarter).  The Central Bank's net foreign assets were 
driven upward by the GOL's receipt of customs revenue back 
payments, while the foreign holdings of commercial banks rose 
largely due to private sector foreign currency earnings. 
 
¶9.  The Government of Lesotho registered a surplus in the last 
quarter of 2007 equal to 21.7% of GDP (mainly as a result of 
customs revenue back payments and a decline in foreign interest 
payments).  Lesotho's Balance of Payments (BOP) registered a 
surplus of $124.2 million, which compares very well to the $20.1 
million deficit registered in the previous quarter. 
NOLAN