Lesotho has entered a new phase of economic opportunity following the African Development Bank Group’s (AfDB) approval of a US $209 million Country Strategy Paper (CSP) designed to drive economic diversification and private sector–led inclusive growth. The strategy, approved in September 2025, marks a significant endorsement of Lesotho’s reform efforts and its commitment to sustainable development. It also reflects a growing international confidence in the country’s institutional stability and investment potential.
The AfDB’s engagement seeks to reposition Lesotho’s economy from its long-standing dependence on the public sector and subsistence agriculture toward a more resilient, competitive, and private sector–driven model. The strategy prioritises infrastructure, energy, agriculture, and enterprise development, aiming to stimulate employment, strengthen governance, and enhance the overall business climate.
Understanding the AfDB’s Country Strategy Paper
A Country Strategy Paper serves as the AfDB’s operational roadmap for its engagement with a member state. It aligns the Bank’s development assistance with the country’s own national priorities. Lesotho’s 2025–2029 CSP is structured around three pillars: private sector development and economic diversification, infrastructure and energy resilience, and governance, gender, and human capital. Together, these pillars seek to unlock the full potential of Lesotho’s economy while promoting inclusive and sustainable growth.
The strategy is also aligned with Lesotho’s Second National Strategic Development Plan (NSDP II) and the African Continental Free Trade Area (AfCFTA), positioning the country to benefit from regional trade and investment flows. This alignment signals a coherent approach between domestic policy and international financing, creating a stable platform for long-term private investment.
Legal and Regulatory Implications
The AfDB’s new funding strategy will have notable legal and regulatory implications. The renewed focus on private sector participation is expected to revitalise Lesotho’s Public–Private Partnership (PPP) framework under the Public Financial Management and Accountability Act. This could lead to the roll-out of new tenders and investment projects in sectors such as energy, transport, telecommunications, and industrial development.
At the same time, companies seeking to participate in AfDB-financed projects will need to comply with the Bank’s Procurement Regulations, which emphasise transparency, accountability, and adherence to environmental, social, and governance (ESG) standards. Local firms should therefore ensure that their governance structures, compliance policies, and internal controls align with these international norms.
The implementation of the CSP may also encourage further coordination between the Lesotho National Development Corporation (LNDC), the Ministry of Trade, Industry and Business Development, and the Lesotho Revenue Authority to streamline investment licensing procedures and strengthen the country’s fiscal incentive framework. Financial regulators, particularly the Central Bank of Lesotho, may issue new prudential and sustainable-finance guidelines to facilitate the flow of credit into priority sectors such as renewable energy, agri-business, and manufacturing.
Opportunities for the Private Sector
The US $209 million investment will create a wide range of commercial opportunities for Lesotho’s private sector. Infrastructure and energy projects will generate demand for construction services, logistics, and professional consulting. In manufacturing, the focus on diversification is expected to support value addition in textiles, packaging, food processing, and renewable technologies.
The financial sector will also play a central role, as local banks and microfinance institutions may be enlisted to manage development funds, provide SME credit lines, or administer donor-backed investment vehicles. Moreover, the implementation of large-scale AfDB projects will generate demand for professional advisory services, including legal, audit, and compliance expertise, to ensure adherence to governance and reporting standards.
Adapting to a Changing Economic Environment
For businesses, this new strategy represents both an opportunity and a challenge. Firms must be proactive in positioning themselves to benefit from the upcoming development programmes. This means closely monitoring government and AfDB announcements for funding calls or tender opportunities, maintaining compliance readiness, and ensuring their tax and corporate governance frameworks meet international best practice standards.
It is also critical for local companies to explore strategic partnerships with regional and international counterparts who can bring technical capacity, capital, or expertise to large-scale projects. In doing so, Lesotho’s private sector can transform itself into a credible partner in the country’s long-term growth trajectory.
At Mayet & Associates, we assist clients in structuring partnerships, drafting PPP and joint-venture agreements, securing regulatory approvals, and ensuring compliance with donor and development-finance standards. Our cross-border experience allows us to guide businesses through the intricate legal landscape that accompanies multilateral investment.
A New Chapter for Lesotho’s Investment Climate
The African Development Bank’s renewed commitment to Lesotho signals more than just financial support. It represents a vote of confidence in the country’s governance, policy reforms, and private sector potential. If effectively implemented, the strategy could redefine Lesotho’s economic narrative, shifting it from dependency to dynamism, from aid-based growth to investment-led development.
For the business community, this is the moment to align operations with the national diversification agenda, embrace transparent corporate governance, and prepare to participate in a new wave of internationally financed projects. The legal and commercial landscape is evolving, and those who adapt early will gain the greatest advantage.
About Mayet & Associates Attorneys
Mayet & Associates Attorneys is a cross-border commercial law firm with offices in Maseru and Bloemfontein, advising on corporate governance, infrastructure projects, investment structuring, and regulatory compliance across Lesotho and South Africa. The firm supports clients in navigating donor-funded projects and aligning business models with international investment frameworks.