Lesotha Economy  

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LESOTHO
GDP (2003): $1.43 billion.
Annual growth rate (2003): 3.8%.
Per capita GDP (2003): $550.
Average inflation rate (2003): 10%.

Budget: Income .............. $56 Billion
Expenditure ... $60 Billion

Main Crops:
Wheat, corn, sorghum, soybean, sugar beets.

Natural Resources:
Lead, Zinc, Tin, Copper, Iron, Petroleum.

Major Industries:
Food Processing, Motor Vehicles, Consumer Durables.

NATIONAL GNP

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 over $320 million in 2002. Employment reached over 50,000, marking the first time that manufacturing sector workers outnumbered government employees. 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, and Germany.

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