This report shows that while moreinclusive growth is the ultimate solution to poverty inLesotho, the country can and should use selective socialtransfers to reduce poverty more rapidly among the extremepoor. But because the majority of the transfers are receivedby people who are not among the extreme poor there is roomfor increasing the efficiency and effectiveness of spendingon safety nets which. These programs should be productiveand concentrate on the extreme poor Basotho. In the longrun, Lesotho should move towards a more consolidated safetynet and strengthen existing programs, such as the ChildGrants Program, that already provide some important andpositive outcomes and enjoy strong popular and political support.