LESOTHO is set to broaden its tax base and boost government revenues after securing a loan of US$4,25 million (Loti 61,79 million) from the African Development Bank Group (AfDB).
The bank’s board of directors approved the loan for the Lesotho Revenue Authority (LRA) to provide digital tax services, including e-taxation and e-payment.
The funds, to be sourced from the African Development Fund, the Group’s concessional lending window is aimed at supporting the Supplemental Financing of the Lesotho Tax Modernization Project (LTMP) approved in November 2017, and for which the AfDB provided $709 million.
Specifically, financing will be used to procure and install e-taxation, e-payment, and e-invoicing software and hardware and to integrate financial institutions and mobile money providers into e-payment systems.
“The project will allow broadening of the tax base through simplifying and streamlining the tax regime and procedures for the small business and informal sector,” said AfDB Director of Governance and Financial Management Coordination, Abdoulaye Coulibaly.
“A strong revenue base is imperative for Lesotho to finance the spending needs on public services, social support, and infrastructure as set out in the National Strategic Development Plan II,” Coulibaly added.
Sluggish global growth including South Africa, a major trading partner, political instability and the COVID-19 pandemic have impacted Lesotho’s economy during the past two years.
Revenues from the Southern Africa Customs Union, accounts for 50 percent of total revenue, have fallen below their historic average, threatening financial stability and development planning and investment.
The International Monetary Fund (IMF) projects Lesotho’s economy to grow by 3,5 percent in 2021.