Closed Compact Report: Lesotho Compact | October 2015

Private Sector Development Project

  • $36,105,000Original Compact Project Amount
  • $24,162,433Total Disbursed

Estimated Benefits

Estimated Benefits for the Private Sector Development Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 14.9 percent 368,319 $18,266,000

Estimated benefits corresponds to $20.95 million of project funds, where cost-benefit analysis was conducted.

Project Description

Over the last two decades Lesotho’s economic growth has been insufficient to significantly reduce poverty. Its sluggish growth was due in large part to external factors, including a decrease in remittances from citizens working abroad. The Private Sector Development Project aimed to stimulate private sector activity within the country by improving access to credit, reducing financial transaction costs, and increasing the participation of women in the economy. The activities included:

  • improving the administration of land titles;
  • modernizing the commercial legal system;
  • strengthening payment and settlement systems;
  • supporting provision of credit bureau services, including implementation of a national ID scheme; and
  • training and outreach to support gender equality in economic rights.

By the end of the compact, MCC funds contributed to Lesotho’s increase from a baseline of 27 commercial cases resolved in 2008 to 158 cases resolved in the final year of the compact. More than $537 million in loans were provided by the country’s financial institutions, and the time to process a loan application was reduced from seven days to three during the compact. The government reported that they are continuing to regularize and register parcels post compact, and the number of cases filed at the commercial court increased from 149 in the year before the compact to 297 in the year following the compact.

As Lesotho was developing its MCC compact in 2005, MCC worked with the parliament to draft legislation to give married women the same legal status as men. The legislation passed parliament and was signed into law in 2006. The MCC compact program in Lesotho included funds for teams to conduct training targeted at women entrepreneurs, and involved a country-wide outreach program to inform women in rural areas of their new rights. As part of the Gender Equality in Economic Rights Activity, 6,200 people received training on gender equality advocacy. In addition, more than 21,000 women now hold joint land titles compared to 3,200 at the start of the compact.

Evaluation Findings

There are two evaluation components of the Private Sector Development Project’s Land Administration Reform Activity. This includes an impact evaluation of the systematic regularization work in Maseru and a performance evaluation of the Land Administration Reform Activity’s Legislative Reform and Modernization and Institutional Strengthening Sub-Activities, which established a new Lesotho Land Administration Authority, revised related land legislation and streamlined and strengthened procedures related to land administration.

The performance evaluation will measure impacts on 1) the change in time to conduct a formal land transaction, including primary application for a formal lease and secondary formal land transactions; 2) the change in volume of formal land transactions; and 3) the change in number and amount of land related bonds/ mortgages. Initial monitoring of administrative data provided by the Lesotho Land Administration Authority showed improvements in volume of land transactions, mortgages, time to conduct a land transaction, and the number of women with land with leases held individually in their name or held jointly. The evaluator will review this data and collect additional data in 2018, with final analysis and results expected mid-2020.

The impact evaluation of the effects of the Land Leasing sub-activity will capture changes in perceptions of land tenure, land investments, and land values. The evaluator provided the baseline report in 2016 and follow-up data collection is expected in late 2018 with final results expected to be available mid-2020.

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Dec 2013) Percent Compact Target Satisfied (as of Dec 2013)
Civil Legal Reform Activity Cases filed at the commercial court 149 1,200 297 14%
Time required to resolve commercial disputes (days) 129 350 275 66%
Gender Equality Activity People trained 0 6,000 6,192 103%
Women holding titles to land 3,214 6,000 26,342 830%
Land Reform Activity Bonds registered 161 500 353 57%
Change in time for property transactions (%) 0 -71 -93 131%
Stakeholders trained 0 243 575 237%
Urban land parcels regularized 0 55,000 23,928 44%