Lesotho's major natural resource is water, often referred to as 'white gold' by the Basotho people. During 1995 and 1997, with intense construction activities involving the multi-million Lesotho Highlands Water Project, Lesotho registered an impressive economic performance – the real GDP growth rate made Lesotho one of the top ten performers in Africa at this time. Completion of a major hydropower facility in January 1998 now permits the sale of water to South Africa, generating royalties that will be an important source of income for Lesotho. The positive impact of the water project (refer to separate section for further details) and the small but rapidly growing manufacturing sector contributed to the spurt in economic growth. The lessening economic contribution of the project as it nears completion will be more than offset by royalty payments from South Africa.

The economy of Lesotho is based on subsistence farming and animal husbandry, as well as small-scale industries that include clothing, footwear, textiles, food processing and construction. The small manufacturing base depends largely on farm products to support the milling, canning, leather and jute industries. The great majority of households gain their livelihoods from subsistence farming and migrant labour, with a large portion of the adult male workforce employed in South African mines (although the number of such mine workers has declined steadily over the past years). In the past financial year, Lesotho's economy slowed down substantially because of major political conflicts causing temporary disruption in business activities. Unemployment remains high and is one of the most serious problems facing Lesotho, with poverty still severe.

Please visit our Ministry of Finance and Development Planning and the Ministry of Trade and Industry for more information.