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, 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 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 $466.9 million in 2004. 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 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 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 (2004): 3.4%.
Per capita GDP (2003): $550.
Average inflation rate (2003): 10%.
Natural resources: Water, agricultural and grazing
land, some diamonds and other minerals. Lesotho is an exporter
of excess labor.
Agriculture (2003 est.): 16.8% of GDP. Products--corn,
wheat, sorghum, barley, peas, beans, asparagus, wool, mohair,
livestock. Arable land--11%.
Industry (2003 est.): 43.1% of GDP. Types--apparel,
food, beverages, handicrafts, construction, tourism.
Trade (2003): Exports--$450 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: 1 April - 31 March.
Economic aid received (2002): $972.6 million.
Primary donors--World Bank, IMF, EU, UN, U.K., Ireland, U.S.
