Housing Finance in Lesotho


This profile is also available in French here.

To download a pdf version of the full 2021 Lesotho country profile, click here.

Lesotho is a high-altitude, landlocked kingdom covering 30 355 km with an estimated population of 2 161 829. The unemployment rate is 27%, about 58% of the population is trapped under the international poverty line of US$1.25 a day. Lesotho is primarily rural, with around 70% of the population living in the mountainous countryside. In 2020, 29.3% of the total population lived in urban areas, mainly in the capital city of Maseru and its surrounds. The housing deficit in Lesotho is estimated at 98 711 dwellings, mainly in urbanised zones. This number is expected to increase if national housing deliveries are not successful in delivering housing to meet escalating demand. The biggest challenge in Lesotho is that financial institutions lack the capacity and technical knowledge in delivering microfinance products geared to the housing market. This is a disadvantage to those in the population who cannot afford housing mortgages. The Majority of formal financial institutions in Lesotho are risk-averse and lack long-term capital for housing. This is mostly because private property in Lesotho is still in its infancy. The state owns most of the land before land reform measures were introduced in 2010.

The Covid 19 pandemic has worsened the countries resilience and economic sustainability. Lockdown measures have impacted the domestic economy and resulted in weaker global trade, particularly with South Africa, Lesotho’s main trade partner. Economic growth was forecast to decline to 5.3% in 2020 owing to lockdown restrictions but later recover to 3.5% in 2021 amid improving global economic conditions. According to the Southern African Customs Union (SACU), although Lesotho’s revenue shares for 2018/19 and 2019/20 declined the unemployment rate is forecast to decline from 24.7% to 23.8% in 2022. The inflation rate dropped from 5.5% to 5%, and the interest rate may rise from 3.5% to 3.75%.

Lockdown restrictions negatively affected the housing and construction sector. Many developments were delayed and funds earmarked for construction were reprioritised to address immediate social and health issues. To mitigate the severe impact of COVID-19 on the wellbeing of residents, the government of Lesotho through the Central Bank, undertook to support the economy during this difficult time. Among immediate relief, measures were the provision of monthly cash transfers to the most disadvantaged households to mitigate livelihood loss.

[1] FitchRatings (2020). Fitch Revises Lesotho’s Outlook to Negative; Affirms at ‘B’. 13 August 2020.

Find out more information on the housing finance sector of Lesotho, including key stakeholders, important policies and housing affordability:

Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2021 edition, which has up-to-date profiles for 55 African countries.

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