Alternative sources of employment include small-scale clothing, footwear, textiles, food processing, construction, and mining. Work opportunities in textile and clothing manufacturing have declined as some shops have closed. In 2023, work opportunities in construction will be supported by Phase II of the Lesotho Highlands Water Project (LHWP-II), which includes the construction of a water transfer tunnel, the Senqu River bridge, and the Polihali dam. Since Lesotho has close trade ties with South Africa, many economic shocks experienced by the latter are transmitted to the former. In the first quarter of 2023, economic activity in South Africa contracted due to declining mining output and decreased manufacturing capacity due to prolonged power outages. Increasing unemployment in South Africa is expected to continue and will negatively affect labor opportunities for Lesotho migrants, reducing income and remittances during this outlook period.
Decreasing global maize, wheat, and edible oil prices have lowered South African export prices. Still, this trend has not translated to lower food prices in Lesotho because of increasing production costs. Maize meal prices were stable between March and April, with a year-on-year increase of about 18 percent (Figure 1). Prices of other food items, including wheat flour, split peas, beans, and vegetable oil, were stable month-on-month but elevated year-on-year. Maize meal prices are expected to remain stable but above year-on-year and the five-year average (Figure 2). Since Lesotho imports most of its food commodities from South Africa, persistently high regional prices for fuel, fertilizer, and energy products are expected to lead to increased transportation costs and a rise in landed prices of imported goods.
Lesotho is food self-insufficient and imports 70 percent of its food commodities from South Africa. In MY 2022/23, (May 2022 – April 2023), over 66,000MT of mostly white maize was imported solely from South Africa compared with shipments of over 46,000 MT in MY 2021/22 (May 2021 – April 2022). Import volumes in MY 2023/24 (May 2023 – April 2024) are expected to exceed 66,000 MT because of improved availability and lower South African export prices. Current import prices are slightly higher than in 2022 and 2021 due to additional handling and transport costs and the depreciation of the Loti.
The inflation rate fell to 6.7 percent in April 2023, down from 6.8 percent in the previous month. Although the slowdown observed in recent months, inflation is expected to remain high in the medium term due to increased transportation costs, higher landed prices for imported goods and the weakening of the Loti. Inflation is expected to have peaked and will decrease gradually over the outlook period as global food and energy prices ease. However, given the deteriorating economic environment in South Africa, there is a chance for higher inflation attributable to adverse exchange rate changes in response to the worsening economic climate in South Africa.
With access to near-normal staple food harvests and average casual labor income during the post-harvest period, poor households are expected to face Minimal (IPC Phase 1) outcomes from June to August in low-lying deficit-producing areas and through September in highland surplus areas. Poor households in deficit production areas will transition to Stressed (IPC Phase 2) from September to November as maize and sorghum stocks are depleted and food access reduced due to above average food prices. By late 2023, poor households are expected to transition into Crisis (IPC Phase 3) as market reliance on food purchases increases and purchasing power continues to decline due to rising food prices. Based on current forecast probabilities and models, El Niño conditions during the 2023/24 will exacerbate the food security situation in late 2023, further reducing poor household food access in early 2024.
Source link : https://fews.net/southern-africa/lesotho/remote-monitoring-report/june-2023
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Publish date : 2023-07-06 14:50:31
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