In 2019, Lesotho had obtained an 8% increase to 10% in royalties on diamond sales from Letšeng, with the support of the African Legal Support Facility (ALSF). The kingdom has just signed a three-year agreement to expand this cooperation to energy, infrastructure, and public finances.
On September 21, 2026, Lesotho signed a strategic partnership agreement with the African Legal Support Facility (ALSF), an institution created in 2008 at the initiative of the African Development Bank. This southern African kingdom, landlocked in South Africa, seeks to strengthen its capacity to structure and negotiate transactions with international investors.
The agreement covers four sectors: natural resources, energy, infrastructure, and sovereign finances. The two partners must identify the projects to support and define their priorities.
For the Minister of Finance and Development Planning of Lesotho, Dr. Retšelisitsoe Matlanyane, this new framework should allow the country to more easily mobilize specialized expertise: “Lesotho welcomes the signing of this Strategic Partnership Agreement with the African Legal Support Facility. The Agreement establishes a concrete framework that will facilitate access to specialized legal and technical support for priority projects of national interest.”
Results already achieved in the mines
This cooperation has already produced results. In 2019, during the renewal of the Letšeng concession, the government obtained, with ALSF legal assistance, an 8% to 10% increase in royalties on diamond sales. Gem Diamonds, the operator, confirmed this increase, as well as a ten-year extension of the concession, renewable once.
Negotiations also focused on shareholder rights, governance, and the participation of local companies. In a country where mining activities accounted for 7.3% of GDP in 2024, according to the US Geological Survey, and where diamonds represented nearly 24% of merchandise exports, two percentage points of royalties are not a trivial matter.
For Olivier Pognon, Director General of the ALSF, the interest of the new mechanism is precisely to evolve this cooperation towards a more structured framework: “This Agreement illustrates the interest of a long-term cooperation with our regional member countries. It allows the ALSF and the Government of Lesotho to better plan their support, target priority needs, and deploy specialized legal and technical assistance where it produces concrete effects.”
Electricity, one of the next challenges
In 2024, nearly half of the electricity purchased by the national company LEC came from South Africa and Mozambique, according to the World Bank. In a document published in January 2026, the institution estimated the electricity access rate at 53%. A national strategy project evaluates at over $400 million the investments needed to achieve universal coverage by 2030.
Attracting private investors requires clear rules on tariffs, public guarantees, and risk sharing. The ALSF has already supported the contractual preparation of the NEO 1 solar project, with a planned capacity of 20 megawatts, which reached financial close in November 2021. In August 2026, it also trained public officials in Maseru on the structuring and negotiation of energy projects, including power purchase agreements.
The Minister of Finance and Development Planning also emphasizes the importance of the quality of project preparation and negotiation: “We are pleased to collaborate with the ALSF so that complex transactions are rigorously prepared, negotiated with care, and aligned with the Government’s development priorities.”
Its expertise can also help improve the legal environment for investments. As part of the Desert to Power initiative, carried out in other African countries, the ALSF supported the development of common contractual tools to facilitate the participation of private electricity producers.
Infrastructure presents similar challenges. The second phase of the Lesotho Highlands Water Project, aimed at increasing water transfers to South Africa, was estimated at 53 billion rand by South African authorities in 2025.
Budgetary balances to be preserved
The agreement comes in a constrained budgetary context. According to the IMF, public debt reached 56.8% of GDP in March 2025. Customs transfers from the Southern African Customs Union accounted for 26.1% of GDP in 2024-2025, with a decline expected in the following years. In this context, guarantees granted to investors and contractual commitments can have a lasting impact on public finances.
The ALSF assists states in negotiating their contracts, as well as in training their administrations and strengthening their legal capacities. In July 2026, it indicated that it had provided over $140 million in legal assistance to 53 African countries.
“ALSF remains committed to supporting African governments in strengthening their legal capacities, improving the results of their transactions, and promoting sustainable development,” emphasizes Olivier Pognon.
After the results achieved in the mining sector, this new agreement should expand the cooperation between the ALSF and Lesotho to other strategic sectors. The goal is to sustainably strengthen the country’s capacity to prepare, structure, and negotiate its major projects, while improving the conditions for securing investments and implementing its development priorities.
