Economy

The official currency of Lesotho is the loti (plural: maloti), which can be used interchangeably with the South African rand. Lesotho, Swaziland, Namibia and South Africa also form a common currency and exchange control area known as the Common Monetary Area (CMA).

Lesotho's economy is based on exports of water and electricity sold to South Africa, manufacturing, agriculture, livestock, and to some extent the earnings of labourers employed in South Africa. Lesotho also exports diamonds, wool, mohair, clothing and footwear. 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 Botswana, Namibia, South Africa and Swaziland.

Agriculture

The western lowlands form the main agricultural zone. Almost 50% of the population earns some income through crop cultivation or animal husbandry, with over half the country's income coming from the agricultural sector.

Water and Electricity

Water is Lesotho's only significant natural resource. It is exploited through the 20-year, multi-billion-dollar Lesotho Highlands Water Project (LHWP), which began in 1986. The LHWP is designed to capture, store, and transfer water from the Orange River system to South Africa's Free State and greater Johannesburg area, which features a large concentration of South African industry, population and agriculture. Completion of the first phase of the project has made Lesotho almost completely self-sufficient in the production of electricity and generated approximately $24 million annually from the sale of electricity and water to South Africa. The World Bank, African Development Bank, European Investment Bank, and many other bilateral donors financed the project.

Clothing

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. Exports totaled over $320 million in 2002. Employment reached over 50,000, marking the first time that manufacturing sector workers outnumbered government employees. Asian investors own most factories.

Tourism

Tourism is a slowly growing industry in Lesotho. A ski resort recently opened in the high Maluti mountains is drawing tourists from South Africa.