The Lesotho National Development Corporation reported a net loss of M54.4 million for the 2023/24 financial year, a sharp reversal from the M75.2 million profit recorded the previous year, as worsening operational performance and a major contraction in current assets raise questions about the corporation’s financial sustainability and efficiency.
A closer examination of the recently published annual report for 2023/2024 shows that the corporation’s operating loss stood at M107.1 million, worsening from the M87.8 million operating loss recorded in 2022/23.
While the corporation generated revenue of M150.8 million during the year, expenditure rose to M204.3 million, according to the report’s financial performance trends. This means the corporation continued spending significantly more than it generated from operations.
The corporation’s overall loss was partially cushioned by investment and non-operational income, though the report also indicates that revenue declined sharply compared to the previous year.
The balance sheet presents a mixed picture. Total assets increased by just over nine percent to M3.212 billion, largely due to the capitalisation of government-funded infrastructure projects at the Belo and Tikoe industrial estates, according to Board Chairperson Mrs. Palesa Matobako.
However, the report also shows a significant decline in current assets, which include cash, receivables and short-term investments. These fell from approximately M2.58 billion to M906 million during the financial year.
While such movements can result from infrastructure investment, reclassification of assets, project expenditure or other accounting adjustments, the summary report does not provide detailed explanations for the sharp contraction in current assets.
Property, plant and equipment also recorded a substantial decline during the year. Although the report references ongoing infrastructure projects and capital works, it provides limited detail on the underlying movements in industrial assets.
The corporation’s equity position increased to M2.77 billion, supported largely by government grants and infrastructure investments. The report notes that the Government of Lesotho continued to support major industrial estate projects during the financial year.
At the same time, retained earnings declined by 9.2 percent to M529.6 million, indicating pressure on internally generated reserves.
On its core mandate of employment creation and industrial development, the corporation reported retaining 34,151 jobs in the manufacturing sector. However, only 683 additional jobs were created during the year, while six companies closed and only two new companies commenced operations.
The report further shows that employment in LNDC-assisted industries has declined from more than 51,000 jobs in 2020 to 34,151 in 2024, representing a decline of approximately 33 percent over four years.
The corporation did report several positive developments. It engaged 251 suppliers during the year, with 96 percent of procurement spending benefiting local enterprises. The Partial Credit Guarantee Scheme also facilitated M207.8 million in supported loans for Basotho businesses cumulatively since its establishment in 2011.
A new Board of Directors assumed office during the reporting period and completed governance training through the Institute of Directors South Africa. The corporation also adopted its first Environmental, Social and Governance (ESG) policy.
At the same time, the report acknowledges continuing gaps in environmental policies and procedures and describes the adoption of integrated reporting standards as “work in progress.”
The corporation additionally identified several strategic risks facing the institution, including funding challenges for capital projects, concentration risk, high rental arrears, cyber threats, litigation risk and undue political influence.
Then Interim Chief Executive Officer Molise Ramaili highlighted several institutional reforms during the year, including the implementation of a Performance Management System, strategy execution tracking software and supply chain finance initiatives. Ramaili has since been replaced by Thabo Khasipe.
The report suggests that while LNDC continues to play a central role in Lesotho’s industrial development agenda, its operating model remains under pressure from rising expenditure, declining revenues, weakening retained earnings and continued dependence on government support.
The financial statements were internally compiled by Mrs. Rethabile Tšilo-Liphalana and audited by CGT and Associates on behalf of the Office of the Auditor General.
Summary
- 2 million profit recorded the previous year, as worsening operational performance and a major contraction in current assets raise questions about the corporation’s financial sustainability and efficiency.
- The report further shows that employment in LNDC-assisted industries has declined from more than 51,000 jobs in 2020 to 34,151 in 2024, representing a decline of approximately 33 percent over four years.
- At the same time, the report acknowledges continuing gaps in environmental policies and procedures and describes the adoption of integrated reporting standards as “work in progress.
Thoboloko Ntšonyane is a dedicated journalist who has contributed to various publications. He focuses on parliament, climate change, human rights, sexual and reproductive health rights (SRHR), health, business and court reports. His work inspires change, triggers dialogue and also promote transparency in a society.
