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Country Info: Lesotho

Economic Background

Small, mountainous, and completely landlocked by South Africa, Lesotho is a least developed country in which about three-fourths of the people live in rural areas and engage in subsistence agriculture. Lesotho produces less than 20% of the nation's demand for food. Lesotho relies on South Africa for much of its economic activity. Lesotho imports 90% of the goods it consumes from South Africa, including most agricultural inputs.

Households depend heavily on remittances from family members working in South Africa, in mines, on farms and as domestic workers, though mining employment has declined substantially since the 1990s.

Government revenue depends heavily on transfers from South Africa. Customs duties from the Southern Africa Customs Union accounted for 44% of government revenue in 2012. The South African Government also pays royalties for water tranfered to South Africa from a dam and reservoir system in Lesotho.

However, the government continues to strengthen its tax system to reduce dependency on customs duties and other transfers. Access to credit remains a problem for the private sector. The government maintains a large presence in the economy - public expenditures accounted for 55% of GDP in 2010 and the government remains Lesotho's largest employer. Lesotho's largest private employer is the textile and garment industry - approximately 36,000 Basotho, mainly women, work in factories producing garments for export to South Africa and the US.

Diamond mining in Lesotho has grown in recent years and may contribute 8.5% to GDP by 2015, according to current forecasts. Lesotho's $362.5 million Millennium Challenge Account Compact, which focused on strengthening the healthcare system, developing the private sector, and providing access to improved water supplies and sanitation facilities, will end in September 2013. Despite the 2008/09 global economic crisis, the economy has recovered strongly with growth averaging nearly 5% per year since 2010. (Source: World Factbook, 2013)

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Lesotho - National AGOA Strategy

Lesotho - National AGOA Strategy

The Government of Lesotho (GoL) has decided to prepare a National AGOA Response Strategy with the overarching objective of improving and up-scaling the implementation of AGOA and establishing a diversified manufacturing sector in response to the anticipated extension of the existing AGOA agreement. After 13 years of implementation of AGOA, Lesotho has managed to establish one of the largest textile and garment manufacturing industry in...

Author Peete Molapo
Organisation UNECA / Ministry of Trade
Publish Date 01 June 2016
View details D Size: 2 MB

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