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Sub Saharan Africa
Lesotho |
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Country information
ECONOMY
Basic economic facts
GDP: US$1.7 billion (2008 est.)
Annual growth: 6.8% (2008 est.) Inflation: 10.7% (2008 est.)
Major industries: Diamonds, textiles, wool, mohair, water infrastructure
Major trading partners: South Africa, US
Exchange rate: The Loti is pegged at par to the South African rand. £1 = 13.4 loti (June 2009).
Lesotho is a low-income country with an economy that is inseparably linked to South Africa. Its main natural resource is water which it exports to South Africa. Lesotho is self-sufficient in electrical power for two-thirds of the year, but imports electricity from South Africa during the winter. There is potential to further develop tourism in the Highlands. The re-opened Letseng diamond mine produced a 603 carat white diamond, the Lesotho Promise, in 2006, and an as yet unnamed 478 carat diamond, likely to produce the largest ever cut round diamond (150 carat), in September 2008. Letseng has the capacity to provide up to 20% of Lesotho’s GDP. However, the reduction in demand for diamonds caused by the global economic downturn has led to a temporary closure of diamond mines. Lesotho has taken a strong stand against corruption, prosecuting several international contracting firms involved in the Lesotho Highlands Water Project (LHWP) for alleged bribery.
Traditionally, Basotho men work in the South African gold and coal mining industries, but this source of employment has all but dried up, with the consequent loss of remittances impacting on the economy. The sale of water, receipts from SACU and the manufacture of textiles provide much of Lesotho’s income. Recently, the Chinese have developed an industry growing exotic mushrooms that are sold to Chinese communities throughout Africa. Even these receipts have declined in recent years due to changes in the SACU agreement and liberalisation of trade between Southern Africa and Europe. Unemployment remains high (estimated to be over 50%).
The garment industry is a significant employer and revenue earner. Lesotho remains the largest sub-Saharan exporter of garments to the US under the Africa Growth and Opportunity Act (AGOA).
International Monetary Fund (IMF)
