ECONOMY
Lesotho's economy is based on water and electricity sold to South Africa, manufacturing, earnings from the Southern African Customs Union (SACU), agriculture, livestock, and to some extent earnings of laborers employed in South Africa. Lesotho also exports diamonds, wool, and mohair. Lesotho is geographically surrounded by South Africa and economically integrated with it as well. The majority of households subsist on farming or migrant labor. The western lowlands form the main agricultural zone. Almost 50% of the population earns some income through crop cultivation or animal husbandry, with over half the country's income coming from the agricultural sector.
Water is Lesotho's only significant natural resource. It is being exploited through the 30-year, multi-billion-dollar Lesotho Highlands Water Project (LHWP), which was initiated in 1986. The LHWP is designed to capture, store, and transfer water from the Orange River system and send it to South Africa's Free State and greater Johannesburg area, which features a large concentration of South African industry, population, and agriculture. Completion of the first phase of the project has made Lesotho almost completely self-sufficient in the production of electricity and generated approximately $24 million annually from the sale of electricity and water to South Africa. The World Bank, African Development Bank, European Investment Bank, and many other bilateral donors financed the project. Lesotho has taken advantage of the African Growth and Opportunity Act (AGOA) to become the largest exporter of garments to the U.S. from sub-Saharan Africa. Exports totaled $437 million in 2007. Employment reached 40,000. Asian investors own most factories.
Lesotho has received economic aid from a variety of sources, including the United States, the World Bank, Ireland, the United Kingdom, the European Union, Germany, and the People's Republic of China.
Lesotho has nearly 6,000 kilometers of unpaved and modern all-weather roads. There is a short rail line (freight) linking the capital city of Maseru with Bloemfontein, South Africa that is owned and operated by South Africa (the half-mile trunk inside Lesotho is operated by Lesotho Flour Mills, Ltd.). Lesotho is a member of the Southern African Customs Union (SACU) in which tariffs have been eliminated on the trade of goods with other member countries, which include Botswana, Namibia, South Africa, and Swaziland. With the exception of Botswana, these countries also form a common currency and exchange control area known as the Common Monetary Area (CMA). The South African rand can be used interchangeably with the loti, the Lesotho currency (plural: maloti). One hundred lisente equal one loti. The loti is at par with the rand.
GDP (2003): $1.43 billion.
Annual growth rate (2007): 7.2%.
Per capita GDP (2007): $850.
Average inflation rate (2008): 12%.
Natural resources: Water, agricultural and grazing land, some diamonds and other minerals. Lesotho is an exporter of excess labor.
Agriculture (2007 est.): 17% of GDP. Products--corn, wheat, sorghum, barley, peas, beans, asparagus, wool, mohair, livestock. Arable land--11%.
Industry (2007 est.): 47% of GDP. Types--apparel, food, beverages, handicrafts, construction, tourism.
Trade (2007): Exports--$437 million; clothing, furniture, footwear and wool. Partners--South Africa, United States, Botswana, Swaziland, Namibia, EU. Imports--$661 million; corn, clothing, building materials, vehicles, machinery, medicines, petroleum products. Partners--South Africa, Asia, EU.
Fiscal year: April 1 - March 31.
Economic aid received (2007): $350 million. Primary donors--U.S., World Bank, IMF, EU, UN, U.K., and Ireland.
