Economy of Lesotho
Encyclopedia
The Economy of Lesotho is based on agriculture
, livestock
, manufacturing
, and the earnings of laborers employed in South Africa. 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 earn some income through crop cultivation or animal husbandry
with nearly two-thirds of 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. 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.
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 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.
lowest 10%:
0.9%
highest 10%:
43.4% (1986-87)
Industrial production growth rate:
19.7% (1995)
Electricity - production:
0 kWh (1998)
Electricity - production by source:
fossil fuel:
0%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
209 GWh (1998)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
209 GWh (1998)
Agriculture - products:
maize
, wheat
, pulses, sorghum
, barley
; livestock
Currency:
1 loti (L) = 100 lisente; note - maloti (M) is the plural form of loti
Exchange rates:
maloti (M) per US$1 - 6.12439 (January 2000), 6.10948 (1999), 5.52828 (1998), 4.60796 (1997), 4.29935 (1996), 3.62709 (1995); note - the Basotho loti is at par with the South African rand
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
, manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
, and the earnings of laborers employed in South Africa. Lesotho
Lesotho
Lesotho , officially the Kingdom of Lesotho, is a landlocked country and enclave, surrounded by the Republic of South Africa. It is just over in size with a population of approximately 2,067,000. Its capital and largest city is Maseru. Lesotho is a member of the Commonwealth of Nations. The name...
is geographically surrounded by South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
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 earn some income through crop cultivation or animal husbandry
Animal husbandry
Animal husbandry is the agricultural practice of breeding and raising livestock.- History :Animal husbandry has been practiced for thousands of years, since the first domestication of animals....
with nearly two-thirds of the country's income coming from the agricultural sector.
Water is Lesotho's only significant natural resource
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
. It is being exploited through the 30-year, multi-billion dollar Lesotho Highlands Water Project
Lesotho Highlands Water Project
The Lesotho Highlands Water Project is an ongoing water supply project with a hydropower component, developed in partnership between the governments of Lesotho and South Africa. It comprises a system of several large dams and tunnels throughout Lesotho and South Africa. In Lesotho, it involves the...
(LHWP), which was initiated in 1986. The LHWP is designed to capture, store, and transfer water from the Orange River
Orange River
The Orange River , Gariep River, Groote River or Senqu River is the longest river in South Africa. It rises in the Drakensberg mountains in Lesotho, flowing westwards through South Africa to the Atlantic Ocean...
system and send it to South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
's Free State and greater Johannesburg
Johannesburg
Johannesburg also known as Jozi, Jo'burg or Egoli, is the largest city in South Africa, by population. Johannesburg is the provincial capital of Gauteng, the wealthiest province in South Africa, having the largest economy of any metropolitan region in Sub-Saharan Africa...
area, which features a large concentration of South African industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
, population and agriculture. At the completion of the project, Lesotho should be almost completely self-sufficient in the production of electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
and also gain income from the sale of electricity to South Africa. The World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, African Development Bank
African Development Bank
The African Development Bank Group is a development bank established in 1964 with the intention of promoting economic and social development in Africa...
, European Investment Bank
European Investment Bank
The European Investment Bank is the European Union's long-term lending institution established in 1958 under the Treaty of Rome. A policy-driven bank, the EIB supports the EU’s priority objectives, especially European integration and the development of economically weak regions...
, and many other bilateral
Bilateral trade
Bilateral trade or clearing trade is trade exclusively between two states, particularly, barter trade based on bilateral deals between governments, and without using hard currency for payment...
donors are financing the project.
Until the political insecurity in September 1998, Lesotho's economy had grown steadily since 1992. The riots, however, destroyed nearly 80% of commercial infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
in Maseru
Maseru
Maseru is the capital of Lesotho. It is also the capital of the Maseru District. Located on the Caledon River, bordering South Africa, Maseru is Lesotho's only sizable city, with a population of approximately 227,880 . The city was established as a police camp and assigned as the capital after the...
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
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
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 has received economic aid from a variety of sources, including the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, and Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
.
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
Southern African Customs Union
The Southern African Customs Union is a customs union among five countries of Southern Africa: Botswana, Lesotho, Namibia, South Africa and Swaziland.-History:SACU is the oldest still existing customs union in the world...
(SACU) in which tariffs have been eliminated on the trade of goods between other member countries, which also include Botswana
Botswana
Botswana, officially the Republic of Botswana , is a landlocked country located in Southern Africa. The citizens are referred to as "Batswana" . Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent within the Commonwealth on 30 September 1966...
, Namibia
Namibia
Namibia, officially the Republic of Namibia , is a country in southern Africa whose western border is the Atlantic Ocean. It shares land borders with Angola and Zambia to the north, Botswana to the east and South Africa to the south and east. It gained independence from South Africa on 21 March...
, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
, and Swaziland
Swaziland
Swaziland, officially the Kingdom of Swaziland , and sometimes called Ngwane or Swatini, is a landlocked country in Southern Africa, bordered to the north, south and west by South Africa, and to the east by Mozambique...
. 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
South African rand
The rand is the currency of South Africa. It takes its name from the Witwatersrand , the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c"...
as the common currency. In 1980, Lesotho introduced its own currency, the loti
Lesotho loti
The loti is the currency of the Kingdom of Lesotho. It is subdivided into 100 lisente . It is pegged to the South African rand on a 1:1 basis through the Common Monetary Area, and both are accepted as legal tender within Lesotho. The loti was first issued in 1966, albeit as a non-circulating...
(plural: maloti). One hundred lisente equal one loti. The Loti is at par with the rand.
Other statistics
Household income or consumption by percentage share:lowest 10%:
0.9%
highest 10%:
43.4% (1986-87)
Industrial production growth rate:
19.7% (1995)
Electricity - production:
0 kWh (1998)
Electricity - production by source:
fossil fuel:
0%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
209 GWh (1998)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
209 GWh (1998)
Agriculture - products:
maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, pulses, sorghum
Sorghum
Sorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
, barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
; livestock
Currency:
1 loti (L) = 100 lisente; note - maloti (M) is the plural form of loti
Exchange rates:
maloti (M) per US$1 - 6.12439 (January 2000), 6.10948 (1999), 5.52828 (1998), 4.60796 (1997), 4.29935 (1996), 3.62709 (1995); note - the Basotho loti is at par with the South African rand
See also
- Economy of AfricaEconomy of AfricaThe economy of Africa consists of the trade, industry, and resources of the people of Africa. , approximately 922 million people were living in 54 different countries. Africa is by far the world's poorest inhabited continent...
- LesothoLesothoLesotho , officially the Kingdom of Lesotho, is a landlocked country and enclave, surrounded by the Republic of South Africa. It is just over in size with a population of approximately 2,067,000. Its capital and largest city is Maseru. Lesotho is a member of the Commonwealth of Nations. The name...
- List of Basotho companies
- List of South African companies