Lesotho is a poor country; besides water, its few natural resources are insufficient even for the current population. Lesotho’s economy cannot be sustainable without the benefits it provides South Africa, with which it is part of a customs union and has a common integrated communications system, and with which it shares the Lesotho Highlands Water Project, a large-scale water transfer scheme that exports water to South Africa and generates hydropower for Lesotho. He also depended heavily on South Africa for employment for most of the working-age population. Remittances from this population group accounted for about two-thirds of the gross national product in 1990, but by the mid-1990s this share had dropped to one-third as employment opportunities became much more restrictive. At the beginning of the 21st century, the speed hovered around a quarter. Official estimates of unemployment among the labor force in Lesotho range from about one-third to one-half, with some observers putting the rate closer to three-quarters.
Finance and trade
Lesotho’s currency, Loti (plural: maloti), is issued by the Central Bank of Lesotho. The currency was introduced in 1980 as a way to establish monetary independence from South Africa. Lesotho is a member of the Common Monetary Area, which includes Lesotho, Swaziland, South Africa, and (since 1990) Namibia. This organization gives Lesotho the freedom to set the exchange rate for its currency, although in the early 21st century the loti was assigned to the South African rand. Lesotho has several commercial and development banks.
Lesotho, South Africa, Botswana, Namibia, and Swaziland are members of the South African Customs Union (SACU), which ensures the free exchange of goods between member countries. Payments have been made to member countries of South Africa since 1969 to compensate for their lack of freedom to pursue economic policies completely independent of South Africa. Lesotho is also a member of the Southern African Development Community (SADC), a regional organization dedicated to economic cooperation and integration.
Lesotho’s main exports are clothing, furniture, and footwear, while its main imports are manufactured goods, food, machinery, and transport equipment. The country has maintained a trade deficit in the 21st century. Most of the trade takes place with countries in Africa and North America. The large deficit is partially offset by remittances from migrant workers from Lesotho, external aid, and receipts from SACU.
Labor, taxation, and services
Many Sotho are looking for work in South Africa. In the mid-1990s, about a quarter of all male Sotho workers were employed in South Africa; by the early 2000s, that number had dropped to about one-fifth. The vast majority of temporary migrant workers are men under the age of 40, but more and more young women are now looking for work – legal and illegal – in South Africa.
The government is the country’s largest non-agricultural employer, with a large proportion of the government’s annual budget paid to civil servants. In the 1990s, more than half of government revenue came from SACU; at the beginning of the 21st century, this figure ranged from two-fifths to half. The government sought to reduce dependence on SACU revenues by improving income and sales tax collection. Lesotho has several trade unions and associations.
More and more visitors are attracted by the mountainous landscapes of Lesotho, and the country has done a lot to develop a tourist base. Roads and trails for ponies were developed, trout streams were fueled, and hotels and a ski resort were built.
