Country Information - Lesotho

ECONOMIC BACKGROUND Small, landlocked, and mountainous, Lesotho's primary natural resource is water. Its economy is based on subsistence agriculture, livestock, remittances from miners employed in South Africa, and a rapidly growing apparel-assembly sector. The number of mineworkers has declined steadily over the past several years. A small manufacturing base depends largely on farm products that support the milling, canning, leather, and jute industries. Agricultural products are exported primarily to South Africa. Proceeds from membership in a common customs union with South Africa form the majority of government revenue. Although drought has decreased agricultural activity over the past few years, completion of a major hydropower facility in January 1998 now permits the sale of water to South Africa, generating royalties for Lesotho. The pace of privatisation has increased in recent years. In December 1999, the government embarked on a nine-month IMF staff-monitored program aimed at structural adjustment and stabilization of macroeconomic fundamentals. The government is in the process of applying for a three-year successor program with the IMF under its Poverty Reduction and Growth Facility. Lesotho has a marked inequality in income distribution and serious unemployment/underemployment problems that will not yield to short-run solutions. (World Factbook, 2002) Click here for Country Map [23kB]

BI-LATERAL TRADE OVERVIEW Bi-lateral trade between the United States and Lesotho is characterised by the latter country's rapid expansion of its exports to the US. In 2001, Lesotho recorded a $ 215 million trade surplus with the U.S., double that of two years previously. By the end of 2002, this had risen further to $ 319 million. Lesotho imports only a very small amount of goods from the U.S. The U.S. has traditionally provided a ready market for Lesotho's exports of apparel, which have been strongly bolstered by the advent of the AGOA. In 2001 and 2002, 99% of Lesotho's exports fell into the 'textiles and apparel' category, of which 98% were AGOA-eligible, a feat achieved by no other AGOA-eligible country (see link to Country Trade Profile below). Due to the highly concentrated nature of Lesotho's exports, the country has the distinction of having virtually 100% of its exports falling under AGOA. However, Lesotho's classified status as a 'Lesser Developed Country' provides the country with a window of opportunity (until September 30, 2004) to utilise third country textile inputs for its AGOA-eligible exports. The country currently has limited textile production capacity (its production and exports consisting almost exclusively of ready-made garments), which means that in the absence of a major expansion of textile production capacity prior to September 2004, it will have to rely on sourcing its textiles from its regional trade partners, such as South Africa. This in all likelihood will provide a major boost to the South African textile industry. Detailed bilateral trade data for this country, disaggregated by industry sector, can be accessed by following the link below. Aggregate data featuring all AGOA-eligible countries is updated on this website as soon as new data is published, including ranked AGOA / non-AGOA trade, aggregate trade by industry sector as well as the latest apparel trade data. Visit Lesotho's new apparel export website at this link. Click here for Detailed Trade Profile