…As Lesotho debt distress rises
Mohloai Mpesi
THE Directorate on Corruption and Economic Offences (DCEO) is struggling to curb the rampant illicit financial flows (IFFs) due to weak and compromised systems.
DCEO’s Chief Anti-Corruption Prosecutor, Advocate Mponeng Ranthithi, told the Lesotho Times this week that the Directorate was battling to tackle growing illicit financial flows effectively.
Although Adv Ranthithi could not provide exact statistics, she said they faced major challenges in combating cross-border financial crimes, citing porous border gates and systemic inefficiencies.
“Illicit financial flows are rampant in Lesotho, although we are unable to quantify the extent of the problem. Studies are yet to be conducted, so we can’t say whether murder, money laundering, or illicit financial flows top the list of crimes,” Adv Ranthithi said.
“There’s a lot of money leaving the country without being declared. It becomes difficult to verify undeclared funds, especially when our systems cannot detect or trace them.”
She said the DCEO needed full independence to effectively investigate and prosecute financial crimes without political interference.
“Criminals are always a step ahead. Our systems are not robust enough to combat illicit financial flows.
“The DCEO must operate independently to tackle money laundering and IFFs without fear of biting the hand that feeds us—since it’s the very government that approves our budget in parliament. Political will and stronger laws are essential.”
Adv Ranthithi also alleged that law enforcement and civil servants at border posts were sometimes bribed, allowing perpetrators to smuggle large sums of undeclared money across borders.
“In some cases, officers at the border are bribed, and perpetrators cross with undeclared millions. Our systems are simply not strong enough to detect these activities.
“In South Africa, for example, you can’t just deposit M5 million; banks will alert the police. But in Lesotho, anything is possible. The weakness of our systems makes it hard to fight these crimes.”
According to Adv Ranthithi, those involved in IFFs are usually politically connected individuals, either by proximity or power, who manipulate tender processes and conceal funds.
“The people who commit these financial crimes are not ordinary citizens. They are those close to politicians or the politicians themselves—people who have influence over how money is spent. You won’t find a poor boy from a rural village laundering money. These crimes are committed by elites who buy properties in South Africa using undeclared cash to avoid creating a paper trail.”
She also mentioned that while there had been IFF-related cases, most involve ordinary criminals rather than high-profile figures.
These illicit flows, according to African Forum Network on Debt and Development (AFRODAD) Executive Director, Jason Rosario Braganza, contribute significantly to the worsening public debt across Africa, with the continent losing between US$80 billion and US$90 billion annually to IFFs.
Mr Braganza, during an AFRODAD press briefing on the sidelines of the 11th session of the Africa Regional Forum on Sustainable Development in Kampala, Uganda, last week, explained how IFFs exacerbated debt burdens across Africa.
“Illicit financial flows cause deficits, prompting countries to borrow more, deepening their external debt and harming economic stability,” Mr Braganza said.
“This loss of US$80 to US$90 billion annually occurs through both illicit and illegal business activities on the continent. The burden falls on governments to recover lost funds through regressive taxation.”
The press briefing was held under the theme “Unlocking Africa’s Sustainable Development through Innovative Financing and Debt Reform”.
While there’s no official data on Lesotho’s annual losses, the country’s public debt has spiked dramatically. According to the Lesotho Economic Update released by the World Bank last week, Lesotho’s debt stock has grown despite running fiscal surpluses, leaving little fiscal space to absorb economic shocks.
The World Bank report highlights Lesotho’s current debt distress of M23.1 billion, with 83 percent attributed to external debt and 17 percent to domestic borrowing.
The World Bank report also stated that Lesotho’s external debt—while largely concessional—is vulnerable to exchange rate fluctuations. China is Lesotho’s primary non-Paris Club bilateral creditor, accounting for 70 percent of bilateral debt.
Furthermore, the report flagged the rapidly increasing domestic debt stock and the heavy toll that high debt levels place on the national budget. The government currently spends 2.4 percent of GDP on debt service, representing over 5 percent of recurrent expenditures.
In her February 2025 budget presentation, Minister of Finance and Development Planning, Retšelisitsoe Matlanyane, said “the total government debt stands at M23.1 billion as of January 2025”.
“Lesotho’s debt distress risk remains moderate, and the government is committed to reducing the debt burden through fiscal rules,” Dr Matlanyane said.
She confirmed that 83 percent of the total debt is external and 17 percent domestic.
“The government plans to issue M600 million in treasury bonds for infrastructure projects—up from M500 million in the current financial year. Debt repayments are projected at M667.3 million for 2024/25, and M1.04 billion for the 2025/26 fiscal year.”
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