In recent years, Lesotho has taken critical steps toward establishing a culture of good corporate governance. While the concept has gained global traction, in Lesotho it remained underdeveloped for decades despite mounting pressure from external institutions and internal governance failures. The development of a national corporate governance framework has been a long and often fragmented journey, shaped by political, institutional, and economic factors.
It wasn’t until the early 2000s that the conversation around governance standards gained real momentum in Lesotho. Although privatisation initiatives were already underway in the 1990s, driven largely by pressure from the IMF and World Bank, these reforms failed to adequately integrate governance principles. At the time, the focus was squarely on improving financial performance and relieving the government of the burden of non-performing state-owned enterprises (SOEs). The root issues, particularly around transparency, accountability, and institutional capacity, were left unaddressed.
The African Peer Review Mechanism, which Lesotho joined in the mid-2000s, marked a turning point. For the first time, corporate governance was evaluated against international standards, and key weaknesses in the legal and regulatory landscape were identified. These assessments highlighted the absence of a national corporate code, the outdated Companies Act, limited board oversight in SOEs, and poor financial disclosure practices. In many instances, SOEs were found to be operating without boards or proper reporting systems, reflecting a broader lack of accountability and direction.
Despite being among the early signatories of the APRM, Lesotho was slow to respond to the governance gaps identified. A series of symposiums and high-level discussions were held, but there was little action. Eventually, renewed interest came after further scandals involving SOEs such as the Lesotho Electricity Company and Water and Sewerage Company. These incidents prompted a formal request for technical assistance from the World Bank, which produced a policy note recommending reforms anchored in global governance standards, particularly those of the OECD.
It took the intervention of the African Development Bank and renewed political will to put the development of a national corporate governance code back on track. In 2021, Lesotho finally launched its own code, named after the historical figure Chief Mohlomi, a move intended to reflect indigenous values and signal a new era in local governance. The Mohlomi Corporate Governance Code was established to provide guidance for both public and private entities and to create a unified framework for ethical and effective corporate conduct. It officially became operational in April 2022.
The code’s launch, though significant, followed a process riddled with delays and fragmentation. It took over a decade and the repeated intervention of multiple external actors to bring Lesotho to a point of consensus. This prolonged development period highlighted several structural issues, including weak institutional memory, the absence of continuity between reform projects, and inadequate capacity within government to coordinate complex policy implementation. In several cases, past initiatives such as the APRM recommendations were disregarded or poorly aligned with subsequent efforts by institutions like the World Bank. This lack of linkage between different reform processes meant that valuable insights were often lost or underutilised.
A deeper challenge was the state’s own relationship with SOEs. Political interference, unstable leadership, and a lack of qualified professionals severely hampered efforts to build strong corporate structures. Even basic elements such as regular financial reporting and board governance were missing in some enterprises. Where boards did exist, their independence and competency were often questioned. Without clear lines of accountability or performance monitoring, the sector stagnated.
This case also underscores the dangers of external donor dependency. Much of the policy momentum and financial support came from international development partners. While this assistance was essential, it also raises concerns about ownership and sustainability. International standards were often adopted wholesale, without adequate adaptation to local realities. Furthermore, the slow progress in implementation suggests that funding and technical support alone are insufficient in the absence of domestic leadership and investment in skills development.
Education and human resource development have been central to the governance problem in Lesotho. A lack of formal training and technical expertise among public officials and board members has constrained the country’s ability to manage SOEs effectively. Even as corporate governance became a national talking point, institutions continued to be staffed with underqualified personnel, hindering decision-making and long-term strategic planning. Without a significant shift toward professionalisation, the governance infrastructure remains fragile.
Resource allocation has also emerged as a major limiting factor. In the absence of a strategic framework for distributing financial and intellectual capital, several SOEs have collapsed under the weight of mismanagement and underfunding. Best practice in governance cannot thrive without integrated thinking around how capital, be it human, financial, or relational, is mobilised and aligned with institutional mandates.
The recent progress, while encouraging, still faces an uphill battle. Political will remains inconsistent, and implementation has historically been poor. The legacy of years of governance neglect cannot be erased with a single policy document. What Lesotho must now demonstrate is that it can embed these new standards into daily practice, and that institutions responsible for oversight are not only empowered but also held accountable.
The development of the Mohlomi Corporate Governance Code represents a symbolic and substantive milestone for Lesotho. But symbols alone are not enough. To fulfil its potential, the code must be operationalised through education, investment, monitoring, and most importantly, genuine political and institutional commitment. It is only through this sustained effort that Lesotho can move from governance theory to real-world outcomes.