Lesotho is a small mountainous country covering about 30,000 sq. km. The country is landlocked and completely encircled by South Africa with a population is estimated at 2.14 million. With a per capita income in 1999 of US$ 415 the country is classified as one of 49 Least Developed Countries and is ranked 132 out of 173 countries on the UNDP Human Development Index.

The Government of Lesotho is committed to the fight against poverty and promotion of sustainable human development within the context of the Millennium Development Goals (MDG).  However, progress towards the MDGs has been slow (click here for an overview table of the MDGs in Lesotho) and several goals are likely to be missed if current trends continue. The key target of halving income poverty by 2015 is one. A total of 58 per cent of Lesotho’s population lives below the national poverty line, which is unchanged over the decade for which information is currently available. Income poverty is being driven by high levels of unemployment, estimated between 30 and 40 per cent, and exacerbated by continuous retrenchments of Basotho migrants in the South Africa mining industry since the late 1980s and a rapidly expanding workforce. With the introduction in 2000 of a comprehensive programme for Free Primary Education, primary school enrolment has started to increase after a decade of steady decline and the country still has one of the highest levels of adult literacy on the continent.  In Lesotho, boys have for generations worked as sheppards or "herd-boys" from very young ages (as low as 5 or 6). Therefore Lesotho faces a particular challenge in raising the low rates of educational attainment among males and reversing this traditional practice of child labour. Progress has also been slow in reducing infant and maternal mortality, improving access to safe water especially in the rural areas and reversing the HIV/AIDS pandemic.

UNAIDS estimates that the HIV prevalence rate for the adult population is currently estimated at 31 per cent (the fourth highest in the world) and has already reduced life expectancy by more than 10 years. Young women are particularly hard hit by the pandemic and nearly one in five of Lesotho's children have lost one or both parents due to AIDS. Even if the fight against the pandemic has been met with strong commitment from the highest levels of government, the response has been slow and progress is being impeded by weak capacity in line-ministries and in the Lesotho AIDS Programme Coordinating Authority. Support to the national multi-sectoral effort to combat HIV/AIDS was identified as a key priority in the UNDAF and UN support is being channelled through a series of avenues including; stand alone programmes of UNICEF, UNFPA and WHO and a joint UN programme targeting adolescent youths funded by the Turner Foundation. The UN Theme Group, co-chaired by the UNDP Resident Representative and the US Ambassador, serves as the main national consultative body for the implementation of the National AIDS Strategic Plan. UNAIDS appointed a Country Programme Advisor to Lesotho in 2002.

The vulnerability of the Basotho population has been most recently been manifested in a wide-spread food crisis. Due to a combination of rapidly increasing food prices in the region and reduced agricultural production, as a result of adverse weather conditions and environmental degradation, an estimated that 445,000 people - or one fifth of the population - are currently facing a severe food shortage. Half of these are children and 15 per cent are under 5 years of age. In May 2002, the Prime Minister officially declared the country to be in a state of famine (click here to read the statement). Among the key structural causes of the crisis are unsustainable agricultural practices, widespread poverty and HIV/AIDS. In response, the UN Country Team has prepared a Consolidated Appeal for international assistance to support the Government's famine relief programme. Implementation of the Appeal programme has commenced, however, donor support has been slow; current pledges cover only 28 per cent of the food aid budget.

In the decade prior to 1998 the domestic economy, as measured by GDP, grew at an annual average in excess of 6 per cent driven mainly by the large-scale Lesotho Highlands Water Project (LHWP). However, since the recession of 1998, exacerbated by the civil unrest following the disputed elections that year and the scaling down of LHWP, the economy has only recovered slowly. While domestic economic expansion in the short to medium term is expected to keep pace with population growth, i.e. 2-3 per cent, GNP per capita continues to decline. One of the most disturbing features about the Lesotho economy today, and one of the main impediments to poverty reduction, is the combination of low growth and high inequality. Within the Vision and the PRSP processes, the Government of Lesotho and UN System is actively pursuing the preparation of a pro-poor economic policy framework, which seeks to spur economic expansion while at the same time effectively biasing the benefits towards the poorest and most excluded groups. The main driver of economic growth in Lesotho today is the garment sector; more than 10,000 jobs were created in 2001 alone as a result of the US African Growth and Opportunities Act. However, concerns prevail over working conditions in the sector primarily owned and managed by overseas Taiwanese, and the prospects for continued growth is uncertain because of bottlenecks in the availability of industrial sites and infrastructure, and considering planned relaxation of preferential treatment beginning 2004.

Over the past five years the Government has stepped up its economic reform process with support from the World Bank and the IMF. Liberalisation of financial markets, privatisation of public enterprises and parastals, fiscal restructuring and a continuation of the strong monetary link with South Africa are considered key elements in providing an enabling environment for private sector growth, overseas investments and employment generation. While the Government has embarked on an impressive zero-tolerance campaign against corruption implementation of the remaining elements of the public sector reform programme has been slow. This is a course for concern especially in light of low implementing capacity and the imminent prospects for significantly reduced revenue transfers from the Southern African Customs Union, a source of nearly half of Government revenues. The opportunity for Lesotho to exploit its proximity to South Africa, the largest and most advanced economy on the continent, gained some momentum during a visit by South African President, Thabo Mbeki, in 2001 when the two countries signed an cooperation agreement, which outlines a preliminary process aimed at lifting Lesotho out of LDC status within the context of NEPAD.

On 25 May 2002, general elections gave a new mandate to the incumbent Government of the Lesotho Congress for Democracy party, while providing for an elected opposition for the first time, since Lesotho’s return to democratic rule in 1993, to take seat in the lower house of parliament. A corps of international observers, coordinated by a UN Election Assistance Secretariat declared the elections free and fair, and there is a strong impression that the election process in Lesotho was among the most transparent and best-organised elections that Africa has seen in recent times. Not a single incident of political intimidation, threats or violence was reported before, during or after the election. The Independent Electoral Commission (IEC) has deservedly received a large part of the credit for the successful conduct of the election process, especially in effectively mobilising and training more than 17,000 polling officers. Moreover, after the disputed poll in 1998 a multi-party Interim Political Authority (IPA) was set up to prepare for fresh elections and to drive a national process of consensus building towards elaborate registration process and a new electoral with a mix of constituency and proportional seats. As a result of the more representative model a total of 10 parties gained representation in the National Assembly, with the opposition claiming 41 out of 118 contested seats. During the 1998 elections, held under an exclusively first-past-the-post constituency system, only one candidate was elected from opposition party. Post-election allegations of fraud from some opposition parties are being processed through the legal system, and not considered to pose any threat to the political stability of the country.  The UN served as a neutral broker throughout the election process: supporting conflict resolution processes through all-party fora at critical moments, formation of the IPA, IEC/Donors forum, coordination of the international observers, prompt issuance of results of the electoral observers report to the media, advocacy for the Opposition to take their parliamentary seats and now post-electoral nation-building initiatives. The UN is also stepping up support to Local Government Elections expected in the first half of 2003 and considered the main platform for the Government's decentralisation programme. There is widespread agreement that the recent successful elections process represents a historical opportunity to transcend decades of political uncertainty and instability, and for the country's new government and multi-party parliament to take forward the country's development agenda.

Popularly referred to as the “Mountain Kingdom”, three quarters of the country is made up of highlands, which rise to nearly 3,500 meters in the Drakensberg/Maluti Mountain range. The remaining one-quarter of the country is lowlands with altitudes between 1,500 and 2,000 meters (Lesotho has the highest low-point of any country in the world). The mountainous topography of Lesotho presents difficult terrain, arable land is limited, and less than 10 per cent of the country is presently under cultivation. The rural highlands are less developed and winters are severe with heavy snowfalls that often cut off the population basic health services and food supply. On the other hand, the mountains are repositories of the bulk of natural resources including water, gemstones, and endemic and globally significant biodiversity. Within the context of the International Year of the Mountains (IYM), UNDP supports activities geared to build Lesotho’s capacity to strengthen existing policies, strategies and programs and formulate new ones with a view to creatively addressing the country’s unique position as the most mountainous country in the sub region. UNDP is a full member of the national IYM committee, chaired by the national Environment secretariat to coordinate IYM activities. The last WSSD prepcom in Indonesia decided that its sub-committee on the Mountain Chapter of the Summit declaration would finalize its negotiations in Lesotho.

The UN Country Team has been engaged in a comprehensive reform process, which resulted in the first CCA for Lesotho completed in 2000 followed by an UNDAF in 2001. As a result, UNDP, UNICEF, WFP and WHO have harmonised programme cycles from 2002 while UNFPA will join in 2003.  A joint programme on HIV/AIDS began implementation in 2002, and as a result of a UN Country Team Retreat in 2001 joint programmes on Gender and monitoring the MDGs are being prepared under a newly established Inter-Agency Programme Group. All UN agencies in Lesotho are based in UN House donated by the Government. The foundation stone for UN House was laid in 1995 on the 50th anniversary of the UN.

Since the early 1990's Lesotho has suffered form a severe decrease in Overseas Development Assistance (ODA), and grants currently make up less than 2 per cent of GNP. The country is being adversely affected by the international trend in reduced ODA to developing countries, reinforced by the relocation of many donor agencies from Maseru to Pretoria as a consequence of the democratisation process in South Africa. The largest international donors to Lesotho are the European Commission, UK and Ireland. The UN System contributes about one fifth of total net multilateral ODA to Lesotho.