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Economy of Lesotho

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Title: Economy of Lesotho  
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Subject: Economy of Togo, Economy of Tanzania, Economy of Gabon, Economy of Nigeria, Economy of Mauritius
Collection: African Union Member Economies, Economy of Lesotho, World Trade Organization Member Economies
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Economy of Lesotho

Economy of Lesotho
Currency Lesotho Loti
1 April - 31 March
Trade organisations
GDP $2.13 billion nominal (2010 est.)
GDP growth
3.3% (2010 est.)
GDP per capita
$1,670 Purchasing Power Parity (PPP) (2011 est.)
3.1% (2010 est.)
Population below poverty line
58% using national poverty line (2002/03), 37 percent using World Bank $1 a day (2002/03)[1]
Labour force
855,000 (2007)
Labour force by occupation
agriculture: About 80% of the resident population are engaged in subsistence agriculture; roughly 20% of the formal wage earners (about 200,000) work (mainly males) in South Africa, 20% of the workers (mainly females) are in the apparel industry in Lesotho, and 20% are employed by the Government of Lesotho. The others are employed in services and other manufacturing (2008).
Unemployment 45% including hidden unemployment (2002).
Main industries
food, beverages, textiles and apparel, handicrafts, construction, tourism, mining
Exports $1,043 million f.o.b. (2010 est.)
Export goods
Garments 53% , other including diamonds 47% (2008)
Main export partners
US 60%, Europe 17%, SACU 19% (2007)
Imports $1,766 million c.i.f. (2010 est.)
Import goods
food, building materials, vehicles, machinery, medicines, petroleum products, inputs to the apparel industry (2010)
Main import partners
SACU 85%,Taiwan, Hong Kong and China 14% (2007)
Public finances
$647 million (33% of GDP) (31 December 2010 est.)
Revenues $1,232 million (57% of GDP) (2009/10)
Expenses $1,168 million (2009/10)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Lesotho is geographically surrounded by South Africa and economically integrated with it as well. The economy of Lesotho is based on agriculture, livestock, manufacturing, mining, and depends heavily on inflows of workers’ remittances and receipts from the Southern African Customs Union (SACU).[3] and [4] The majority of households subsist on farming. The formal sector employment consist of mainly the female workers in the apparel sector, the male migrant labor, primarily miners in South Africa for 3 to 9 months and employment in the Government of Lesotho (GOL) . The western lowlands form the main agricultural zone. Almost 50% of the population earn income through informal crop cultivation or animal husbandry with nearly two-thirds of the country's income coming from the agricultural sector.

Water and diamonds are Lesotho's only significant natural resources. Water 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. Diamonds are produced in Letšeng, Mothae, Liqhobong and Kao mines. The sector suffered a set back in 2008 as the result of the world recession but rebounded in 2010 and 2011. It is a major contributor to the exports of Lesotho.[5]

Lesotho has taken advantage of the African Growth and Opportunity Act (AGOA) to become the largest exporter of garments to the US from sub-Saharan Africa.[6] American Brands and retailers sourcing from Lesotho include: Foot Locker, Gap, Gloria Vanderbilt, JCPenny, Levi Strauss, Saks, Sears, Timberland and Wal-Mart.[7] In mid-2004 its employment reached over 50,000 mainly female workers, marking the first time that manufacturing sector workers outnumbered government employees. In 2008 it exported 487 million dollars mainly to the U.S.A. Since 2004 employment in the sector was somehow reduced to about 45,000, in mid-2011, due to intense international competition in the garment sector. It was the largest formal sector employer in Lesotho in 2011.[8] The sector initiated a major program to fight HIV/AIDS called Apparel Lesotho Alliance to Fight AIDS (ALAFA). It is an industry-wide program providing prevention and treatment for the workers.[9]

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’s progress in moving from a predominantly subsistence-oriented economy to a lower middle income, diversified economy exporting natural resources and manufacturing goods has brought higher, more secure incomes to a significant portion of the population. The percentage of the population living below USD PPP US$1.25/day fell from 48 percent to 44 percent between 1995 and 2003.[3] The country is still among the "Low Human Development" countries (rank 155 of 192) as classified by the UNDP, with 42.3 years of life expectancy at birth. However, adult literacy is very high - 82% and children under weight aged under 5 is only 20%.[10]

The global economic crisis hit the Lesotho economy hard through loss of textile exports and jobs in the sector due largely to the economic slowdown in the United States which is a major export destination, reduced diamond mining and exports, including weak prices for diamonds; drop in SACU revenues due to the economic slowdown in the South African economy, and reduction in worker remittances due to weakening of the South African economy and contraction of the mining sector and related job losses in South Africa. In 2009, GDP growth slowed to 0.9 percent.[3]

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.

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.


  • Other statistics 1
  • See also 2
  • References 3
  • External links 4

Other statistics

Household income or consumption by percentage share:
lowest 10%: 0.9%
highest 10%: 43.4% (1986–87)

Industrial production growth rate: 3% (2010)

Electricity - consumption: 626 GWh (2010/11)

Agriculture - products: barley; livestock

Currency: 1 loti (L) = 100 lisente; note - maloti (M) is the plural form of loti

Exchange rates: maloti (M) per US$1 – 7.32 (2010), 6.10948 (1999), 3.62709 (1995); note - the Basotho loti is at par with the South African rand

See also


  1. ^ "LESOTHO Sharing Growth by Reducing Inequality and Vulnerability: A Poverty, Gender, and Social Assessment".  
  2. ^ "Doing Business in Lesotho 2012".  
  3. ^ a b c "World bank Lesotho: Country Brief". Retrieved 2012-03-03. 
  4. ^ "CIA Lesotho Economy 2011". Retrieved 2012-03-03. 
  5. ^ "Central Bank of Lesotho - QUARTERLY REVIEW - June 2011" (PDF). Retrieved 2012-03-06. 
  6. ^ "Central Bank of Lesotho - Africa Growth and Opportunities Act (AGOA): Economic Impact and Future Prospects" (PDF). Retrieved 2012-02-04. 
  7. ^ "Purchase for Africa: An appeal for American apparel buys". Retrieved 2009-10-28. 
  8. ^ "World Bank - IFC - Africa Can Compete! The Miracle of Tiny Lesotho—Sub-Saharan Africa’s Largest Garment Exporter". Retrieved 2012-02-04. 
  9. ^ "Apparel Lesotho Alliance to Fight AIDS (ALAFA)". Retrieved 2012-02-04. 
  10. ^ Human Development Report 2009. The United Nations. Retrieved 07 March 2012.

External links

  • Economy of Lesotho at DMOZ
  • MBendi Lesotho overview
  • Lesotho latest trade data on ITC Trade Map
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