Lesotho cem pro poor growth and employment strategy
Download
1 / 21

Lesotho CEM : Pro-Poor Growth and Employment Strategy - PowerPoint PPT Presentation


  • 314 Views
  • Uploaded on

Lesotho CEM : Pro-Poor Growth and Employment Strategy. Vandana Chandra, PRMEP Brown Bag Seminar Series September 11, 2003. Outline of presentation. Background – CEM, PRSP Geography and history Why a growth – labor markets focus ? Poverty and employment profile

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Lesotho CEM : Pro-Poor Growth and Employment Strategy' - MartaAdara


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Lesotho cem pro poor growth and employment strategy l.jpg

Lesotho CEM : Pro-Poor Growth and Employment Strategy

Vandana Chandra, PRMEP Brown Bag Seminar Series

September 11, 2003


Outline of presentation l.jpg
Outline of presentation

  • Background – CEM, PRSP

  • Geography and history

  • Why a growth – labor markets focus ?

  • Poverty and employment profile

  • Econometric analysis of the labor market

  • Analysis of real sectors – methodology for growth analysis – SAM-based model

  • Two types of output: (1) identifying a growth and job creation strategy to reduce poverty in Lesotho

  • (2) Growth projections as input for RMSM type macroeconomic framework


Background cem prsp and what else is available on lesotho l.jpg
Background – CEM, PRSP and what else is available on Lesotho

  • Last CEM -17 years ago; no other AAA or informal ESW

  • Govt. request for a Bank input for the PRSP

  • Available reports and data: old PA based on 1986/87 data; 1994/95 HH survey; Labor Force 2000; usual national accounts; agricultural census 2001; garment industry census.

  • HIV/AIDS study; CAE


Geography and history matters in lesotho l.jpg
Geography and history matters in Lesotho Lesotho

  • Small country. 2.1 mln. location within South Africa (RSA) – porous borders

  • Poverty of natural resources – LHWP

  • History: the role of RSA gold mines –remittance as safety nets - historical ties with RSA

  • SADC and SACU membership - implications

  • Basotho share the vision of an independent Lesotho, free of dependence on RSA –merger with RSA is not an option, although extreme import dependence – goods and services remains


Why a growth labor markets focus l.jpg
Why a growth – labor markets focus ? Lesotho

  • Per capita income: $456 in the 1980s; rose to $600 in the 1990s; fallen to $453 today

  • SACU: all macro polices except fiscal are set by RSA which has maintained a prudent and conducive macro climate and stability since 1994

  • Structural problems remain and constrain growth

  • Underemployment rampant in rural areas; official unemployment rates of over 25-35 percent

  • 60% Basotho below poverty line; 35% ultra poor; bulk in rural areas although not an agricultural country; high inequality



3 main structural changes l.jpg
3 main structural changes Lesotho

  • Late 1980s: start of the Lesotho Highlands Water Project – RSA-owned, capital import intensive, enclave-activity; peak in mid-1990s; investment: 22% of GNP; today less than 5%

  • Arrival of the FDI-driven, export-oriented garment industry; 1980s:exports/GNP was 5%; today the share is 40%

  • Decline in miners remittances: over 45% of GNP in 1980s; today less than 18% - loss of livelihoods, rise in domestic unemployment



Nexus between employment and growth to evaluate effect on poverty l.jpg
Nexus between employment and growth to evaluate effect on poverty

  • Analyzed 2000 Labor Force Survey:

    • 14% employed in RSA; external source

    • remaining 590,000 employed in Lesotho of which 69% are in subsistence activity. Focus on domestic sources of employment in CEM

  • Used national accounts, BOP, trade, labor force, HH survey data etc. to analyze sources of growth, linkages etc..

  • Joint recommendations


Slide12 l.jpg

Estimated probability poverty

Location

Gender

Age

Education

Technical training

74 percent

Urban

Male

20-25

8

Yes

64 percent

Urban

Female

20-25

9

Yes

55 percent

Urban

Male

20-25

8

No

44 percent

Urban

Female

20-25

9

No

54 percent

Rural

Male

20-25

5

Yes

41 percent

Rural

Female

20-25

7

Yes

34 percent

Rural

Male

20-25

5

No

24 percent

Rural

Female

20-25

7

No

Estimated probability of employment of young men and women


Slide13 l.jpg

Returns to post-primary education in Lesotho, 2000 poverty

Median income by education

1600

1400

1200

1000

800

600

400

200

0

18

0

12

16

2

4

6

8

10

14

No of years of education


Methodology used to analyze sources of growth and employment and options for gol l.jpg
Methodology used to analyze sources of growth and employment and options for GoL

  • Foreign investment climate assessment from Garments Study

  • Activity analyses to learn about best practice and linkages in sub-sectors – meat, poultry, dairy, fruits, vegetables, sandstone, hair salons, restaurants, trading, construction, IT and business services

  • Social Accounting Matrix (SAM) integrating national accounts, labor force data and HH survey at a very disaggregated level as there is no sub-sector of critical mass in Lesotho

  • Model has 50 activities/commodities/services; 8 labor skills categories; 4 geographic regions where high and low income households reside

  • Multiplier model with fixed coefficients and prices – suitable for economy with plenty of slack and where prices are set by RSA

  • Useful for inter-sectoral linkages between goods/services markets and labor/capital markets


Applications of the model l.jpg
Applications of the model and options for GoL

  • Growth accounting: can the model explain how the structural shocks – decline in miners remittances, increase in LHWP investment and rise in garments exports affected GDP growth, employment and poverty?

  • Policy simulations to examine impact of piecemeal reform –on growth, employment and household incomes as well as human and physical pre-requisites

  • Design of elements of a broad based pro-poor growth strategy for Lesotho – financial costs, physical and human capital pre-requisites

  • Growth and public investment estimates served as input into medium term projections

  • LIMITATIONS: fixed prices; supply response only if plenty of slack;




Slide18 l.jpg
SAM Model Simulations: trade-off between growth, job creation and poverty reduction in Lesotho – few options


Sam model simulations pre requisites for policy options l.jpg
SAM Model Simulations:Pre-requisites for policy options creation and poverty reduction in Lesotho – few options


Sam model simulations pre requisites for policy options20 l.jpg
SAM Model Simulations:Pre-requisites for policy options creation and poverty reduction in Lesotho – few options


Recommendations for a broad based pro poor growth strategy l.jpg
Recommendations for a broad-based creation and poverty reduction in Lesotho – few optionspro-poor growth strategy

  • Land reform, private property rights legislation

  • Infrastructure investment

  • Training, human capital development-higher education

  • Capacity building in government & governance

  • Basotho-private sector development –level playing field – facilitate access to credit etc.

  • Safety nets for unemployable/HIV/AIDS


ad