About Lesotho Economics
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The following represents a summary of the Economy of Lesotho. A portal such as this is not meant to be the main source of Economic data for investors and the likes, but rather to give prospective visitors an indication of the country they are about to visit. It is strongly advised that those wishing to learn more about Lesotho for commercial reasons consult the relevant government departments, state enterprises, embassies and official authorities. Whilst this portal is not meant to supply definitive economic information on Lesotho, we welcome any input from visitors to this site who may wish to add to, update or correct information we may have included here. Those contributors will be acknowledged for their contributions. The Economy of Lesotho was largely based on agriculture, livestock, and the earnings of laborers employed in South Africa, but has moved towards manufacturing in the last 20 years. Lesotho is geographically surrounded by South Africa and economically integrated with it as well. The majority of households subsist on farming or migrant labor, primarily miners in South Africa for 3 to 9 months. The western lowlands form the main agricultural zone. Almost 50% of the population earns some income through crop cultivation or animal husbandry with nearly two-thirds of 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. At the completion of the project, Lesotho should be almost completely self-sufficient in the production of electricity and also gain income from the sale of electricity to South Africa. The World Bank, African Development Bank, European Investment Bank, and many other bilateral donors are financing the project. Lesotho’s development of its manufacturing sector (and especially the textile industry) arose primarily as a result of favourable trade agreements including the African Growth and Opportunity Act (AGOA), which in turn gave rise to an increase in exports. This resulted in an increase in the country’s Foreign Direct Investment. Whilst continuing to promote textiles, the government has adopted an approach of promoting other manufacturing sectors, along with other industries such as Tourism, mining and agriculture. To facilitate this, it has also seen the need therefore to strengthen its skills base, improve its infrastructure and support services and remove obstacles to Foreign investments. This has also necessitated the review and amendment of the country’s laws and regulations, ensuring an increased ease to doing business in the country. Until the political insecurity in September 1998, Lesotho's economy had grown steadily since 1992. The riots, however, destroyed nearly 80% of commercial infrastructure in Maseru and two other major towns in the country, having a disastrous effect on the country's economy. Nonetheless, the country has completed several IMF Structural Adjustment Programs, and inflation declined substantially over the course of the 1990s. Lesotho's trade deficit, however, is quite large, with exports representing only a small fraction of imports. Lesotho has received economic aid from a variety of sources, including the United States, the World Bank, the United Kingdom, the European Union, and Germany. In 2007, it signed the United States Millennium Challenge Corporation agreement, earning it a grant of some US$360 million (M2.5 billion) to be spent over 5 years. Furthermore it has seen its Indicative Aid allocation from the European Union increased by 25% to some Euro 135 million. Both of these have been as a result of its improving Corporate Governance. Additional aid has also been received from the Middle East and the People’s Republic of China for varying developmental projects around the country. Lesotho is also a recipient of aid from various other sources and has recently undertaken various initiatives to strengthen its economy. Lesotho has nearly 6,000 kilometers of unpaved and modern all-weather roads. There is a short rail line (freight) linking Lesotho with South Africa that is totally owned and operated by South Africa. Lesotho, is a member of the Southern African Customs Union (SACU) in which tariffs have been eliminated on the trade of goods between other member countries, which also include Botswana, Namibia, South Africa, and Swaziland. Lesotho, Swaziland, Namibia, and South Africa also form a common currency and exchange control area known as the Rand Monetary Area that uses the South African rand as the common currency. In 1980, Lesotho introduced its own currency, the loti (plural: maloti). One hundred lisente equal one loti. The Loti is at par with the rand. GDP (purchasing power parity):
GDP (official exchange rate):
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Labour force:
Labour force - by occupation: Industry and services: 14% (2002 est.)
Unemployment rate:
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Investment (gross fixed):
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Industries:
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Oil - production:
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Current account balance:
Exports:
Manufactures 75% (clothing, footwear, road vehicles), wool and mohair, food and live animals (2000)
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NOTE: The information regarding Lesotho on this page is re-published from the 2009 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Lesotho Economy 2009 information contained here. All suggestions for corrections of any errors about Lesotho Economy 2009 should be addressed to the CIA. Sources: Wikipedia (www.wikipedia.com); Lesotho Review – An Overview of the Kingdom of Lesotho’s Economy; http://www.theodora.com/wfbcurrent/lesotho/lesotho_economy.html |