ADF Loan for Greater Transparency and Accountability of Public Sector Spending in Lesotho

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The African Development Fund (ADF) – the soft loan arm of the African Development Bank Group – approved a grant of USD 3.99 million for an institutional support project for the enhancement of public financial management in Lesotho. 

The project aims at establishing more efficient and transparent public procurement systems as well as enhancing accountability in the use of public funds. The various activities of the project will contribute to ensuring greater value for money in procurements and establishing a system of checks and balances to ensure that the public resources are spent effectively and efficiently in line with strategic priorities of Lesotho’s National Strategic Development Plan.

The beneficiaries of the project include the Ministry of Finance, the Office of the Auditor General, the Parliament’s Public Accounts Committee and the Directorate on Corruption and Economic Offences. The project will strengthen institutions by building capacity in the areas of public procurement, oversight in public expenditure, and audit, as well as monitoring and evaluation. 

A well-functioning and transparent public procurement function has the potential to generate significant business and growth opportunities through the participation of small and medium enterprises. It prevents opportunities for corruption, and through greater competitiveness, ensures greater value for money for the taxpayer. 

Improving accountability functions is also critical to enable citizens to hold governments account, and ensure public resources are allocated for enhanced service delivery in line with the commitments made by the government in its National Strategic Development Plan 2012-2016.  

The Kingdom of Lesotho ranks highly across the Southern Africa Development Community region across a number of international governance indicators, ranking 9th out of 52 African countries in the Mo Ibrahim Index. Steady progress has been achieved towards improving public financial management, in particular towards ensuring the required regulatory and institutional frameworks are in place. The challenge is now to ensure that capacity is built towards full implementation.  

The government recently launched a Public Financial Management Reform Action Plan 2013-2017. Development partners, including the ADF, the European Commission, the International Monetary Fund and the World Bank, have committed to funding its implementation.

The African Development Bank Group, in its assistance strategy for Lesotho has given priority to supporting institutional capacity building, focusing on strengthening public financial management institutions. The Bank has been engaged in Lesotho since 1974. 

Strengthening Governance and accountability on the continent is a strategic priority of the African Development Bank Group, as stated in its Ten Year Strategy 2013-2022. The African Development Bank is now in the process of preparing its Governance Sector Strategy, which gives particular attention to the need to further public financial management on the continent.