Lesotho - Supplemental Financing of the Lesotho Tax Modernization Project (LTMP) (AFDB-P-LS-KF0-004)

  • Lesotho
Where the impacts of the investment may be experienced.
Financial Institutions
  • African Development Bank (AFDB)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Bank Risk Rating
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Jun 30, 2021
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
The Kingdom of Lesotho
The holder of the loan, grant, or other investment.
  • Finance
  • Law and Government
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Investment Type(s)
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 4.33 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Primary Source

Original disclosure @ AFDB website

Updated in EWS Jul 20, 2021

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Project Description

According to bank provided information, the overarching development objective of the Project is to promote economic growth and poverty reduction by improving effectiveness of tax administration to create fiscal space (i.e. increased tax revenues) to finance the country's development plan. The specific objective is to strengthen tax administration capacity by expanding the tax base, modernizing collection and compliance procedures, amending, and consolidating the legal framework, and strengthening the institutional framework.

The proposed intervention is an ADF Loan of UA 3 million to the Kingdom of Lesotho for the supplementary financing to the Lesotho Tax Modernisation Project (LTMP) approved in 2017 for an original estimated cost of UA 5.0 million. The Project is aligned to (a) Lesotho's long-term development agenda as laid out in the National Strategic Development Plan II (NSDP II, 2018/19-2022/23), which places renewed emphasis on addressing the challenges of unemployment and poverty through promoting an inclusive and sustainable economic growth. The LTMP activities are advancing well with several contracts having been signed. Notwithstanding the progress, the Project is faced with a financing gap due to cost overrun. Some activities, especially e-taxation, VAT compliance solution, and data analytic capacity were under budgeted and during project implementation, the actual costs for the such activities (both for goods and consulting services) have been determined. The supplementary financing proposal seeks to enhance the realization of the Project development objective. These additional resources are provided to finance existing shortfalls under e-Taxation and VAT compliance which are the backbone of the project. The Project components remain the same as approved under the on-going LMTP and are as follows: (i) Enhancing tax modernization, (ii) Institutional strengthening, and (iii) Project Management Support. It is anticipated that all the activities will be completed by 30th June 2023.

Investment Description

Contact Information

Email k.gebre-selassie@afdb.org 


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