Lesotho - Tax Modernisation Project (LTMP)

Project Summary

Approval Date 22 Nov 2017
Signature Date 01 Feb 2018
Planned Completion Date 30 Jun 2022
Sovereign / Non-Sovereign Sovereign
Sector Multi-Sector
DAC Sector Code 15124
Commitment U.A 5,000,000
Status Implementation

Project General Description

The Tax Modernisation Project (LTMP) is an Institutional Support designed to address weaknesses and targets areas for improvement that are linked to the main causes of weak tax administration in Lesotho. The Project is focusing on improving efficiency and services delivery, increasing Value Added Tax (VAT) compliance, and broadening tax base. Further, it will support LRA to consolidate and deepen reform by focusing on (a) redesigning and upgrading business process, (b) developing an enabling legal and institutional framework, (c) introduction of modern information and communication technology to increase tax compliance and efficiency in tax administration, and (d) promoting peer learning and experience sharing with similar national revenue authorities in the region. The operation will complement the effectiveness of the Bank’s ongoing projects by strengthening Government capacity to raise domestic revenue and providing fiscal space for priority public expenditures including counterpart funding for ongoing operations. The Project has three components: (i) Enhancing tax modernisation, (ii) Institutional strengthening, and (iii) Project Management Support. Reflecting the lessons of past support, more emphasis will be given to strengthening national capacity and ownership of the Project as well as adopting innovative approaches to capacity building through peer learning and partnering with other Revenue Authorities in the continent. The estimated total cost is UA 5.56 million (including 10% Government of Lesotho’s contribution).

Project Objectives

The overall development objective 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, modernising collection and compliance procedures, amending and consolidating the legal framework, and strengthening the institutional framework.


The direct project beneficiaries are the Lesotho Revenue Authority (LRA), and the Ministry of Finance through institutional capacity building support and technical assistance to improve revenue collection capacity. The indirect beneficiaries are the private sector (taxpayers) through a simplified tax regime and streamlined tax procedures for small business taxpayers. To the extent that the increased tax revenues are channelled to social and economic expenditure that will directly benefits the poor segments of the society.

Participating Organization

African Development Fund


IATI identifier 46002-P-LS-KF0-003
Last Update 29 Sep 2020


Contact Details

Email k.gebre-selassie@afdb.org

Geographic Location

Country Lesotho