Surrounded entirely by South Africa, Lesotho's economy is heavily dependent on its neighbor. The main industries are agriculture (including livestock farming), manufacturing, and mining. Farming is concentrated in the western lowlands, but because most of the country is mountainous, arable land is scarce and much of it is subsistence-level. Manufacturing centers on the textile industry, which is an important source of employment. Because the private sector creates relatively few jobs, the government employs a large share of the population as civil servants — a higher proportion than in many neighboring countries. In addition, many Basotho work as migrant laborers in South Africa, and their remittances are a vital source of income.

A shopping mall in Maseru. Many of its tenants are South African companies.

Water and diamonds are Lesotho's most important natural resources. Water drawn from the headwaters of the Orange (Senqu) River in the eastern highlands is piped to South Africa's Free State province and the greater Johannesburg area. Hydroelectric dams have also been built, making Lesotho largely self-sufficient in electricity, with surplus power sold to South Africa.

The Mohale Dam in northwestern Lesotho
Lesotho is home to several diamond mines, producing more than 200,000 carats per year worth several hundred million dollars in total. With an average value of around US$2,172 per carat, these are considered among the world's highest-quality diamond deposits.

Lesotho's currency, the loti (plural: maloti), is pegged 1:1 to the South African rand.
The rand circulates alongside the loti within Lesotho and can be used without any need for currency exchange — the same is true in neighboring Eswatini and Namibia. Together with Botswana, these countries form a customs union with tariff-free trade between them.

A 200-maloti banknote (equivalent to 200 rand)

A side note

The front design of every Lesotho banknote is the same. The portraits, from left to right, are King Moshoeshoe II (king at independence), the current king Letsie III, and the founding king Moshoeshoe I.