Africa-Press – Lesotho. Local Economist, Mr. Lefu Mokaoane says Basotho and Lesotho should be ready for socio-economic meltdown following the closure of Millennium Challenge Account (MCA) Compact II.
MCA Compact II which through its development fund supported health, horticulture and business development in Lesotho was halted due to the executive order that was issued in January 2025 by the U.S President which mandated a temporary pause on all U.S foreign assistance programs. On November 19, Lesotho received final notice of termination while the official closure will be on April 18, this year.
He said the loss of the development fund which invested in above mentioned projects is a huge blow saying it is going to leave a wide gap economically.
He said due to lack or no investment, there is going to be a negative impact on employment and livelihood citing that small contractors engaged under the said projects are going to lose job opportunities.
“The end products of horticulture and health projects are going to be affected as people will lose their jobs. The horticulture project’s aim was to help in the long run in foood security so there is going to be a challenge to establish stable food security within the country,” he said.
He added that in the health sector, the compact was to enhance primary health care infrastructure saying with the closure it would pose a challenge to accessing health services which he said might result in health services declining.
Again, he mentioned that the business development sector which targeted women and youth will have devastating economic impacts.
On the other hand, Mr. Mokaoane highlighted that though the government has committed to continue supporting the projects, it might not be with the magnitude of the MCA.
“The government will not be able to sustain such projects even if they can find a new partner which is very unlikely,” he said.
He indicated that the government might be left with an option of tapping more on tax or loans, however said with more tax other projects would suffer or there could be tax increase somewhere. He added that loans would also increase the country’s debt which he said is not economically wise.
Earlier Deputy Prime Minister Justice Nthomeng Majara had indicated that in collaboration with MCA-Lesotho Compact II, the government has made significant progress in restructuring the project to ensure it continues after closure.
She emphasized that improving health outcomes, supporting business development, and enhancing agricultural productivity remain top priorities for the country.
“We are committed to maintaining transparency throughout this process and will ensure that the nation is regularly updated on its transition to the government of Lesotho in taking over the funding and implementation of the program,” she added, acknowledging that this transition will require time, and urged the nation to be patient and understanding during this period.
The Compact II in Lesotho involved a significant investment, with the U.S. committing around $300 million (M4,963,647,000.00), matched by Lesotho’s pledge of over $22 million (M364,000,780.00), focusing on health, food security (irrigation/horticulture), and small business growth over five years, with operations starting around March 2024.
