Lesotho

As a least-developed country (LDC), Lesotho is a beneficiary of the EU's "Everything but Arms" (EBA) arrangement. The World Bank classifies Lesotho as a lower middle-income economy with a per-capita income of $916 in 2023. Total EU imports from Lesotho amounted to about €310 million in 2023. Lesotho also trades with the EU under the Economic Partnership Agreement with six countries of the Southern African Development Community (SADC). Therefore, EBA preferential imports only constitute a small share of its total exports to the EU and in 2023 stood at €2.7 million.

What is the EBA?

The EBA arrangement covers all LDCs as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products originating in LDCs except for arms and ammunition. Unlike beneficiaries of the Standard GSP and GSP+, LDCs are not excluded from the scheme if they benefit from other preferential arrangements or agreements with the EU.

Lesotho flag

At a glance: EU preferential imports from EBA beneficiary countries (2023, € million)

group

2.3M (2023)

Population

account_balance
Parliamentary Constitutional Monarchy

Government

trending_up

1.8% (2023)

GDP Growth

equalizer

6.3% (2023)

Inflation

money

$ 2.1B (2023)

GDP

Facts about Lesotho's economy

Enclave Economy

Lesotho is a small, landlocked, and mountainous economy, which is entirely surrounded by South Africa. This geographic particularity has an important impact on Lesotho’s economy.

Export Products

Lesotho's top export products are diamonds, articles of apparel and clothing (including trousers, pullovers, and t-shirts) and water.

Trade Partners

Neighbouring South Africa is the most important trade partner for Lesotho, accounting for a share of about 63% (2023), and in particular is the largest supplier to Lesotho (80% of Lesotho's imports in 2023 came from South Africa). The EU is the most important export market with a share of 45% in 2023, followed by South Africa (33%) and the US (20%).

Economic Structure

Lesotho’s economy is highly intertwined with South Africa with which is shares a number of infrastructure systems. The main industries include diamond mining, food, beverages, textiles, and handicrafts. The government is Lesotho's largest employer and public expenditure accounts for more than a third of the country's GDP. In 2023, agriculture contributed around 7% to the GDP, the service sector contributed 51%, and industry 29%.

Remittances

Remittances are highly important to Lesotho and contributed almost 23% to the country's GDP in 2023. Remittances mostly originate in South Africa, where a large share of Lesotho’s workforce is employed.

Trade with the EU

Total trade with the EU summed up to €408 million in 2023. The EU is Lesotho's second most important trading partner with a share of 16.5%. About 45% of Lesotho's exports go to the EU, making it the most important export market.

Lesotho and the EU

Imports from Lesotho by product section (2023, € million)

Imports from Lesotho over time (€ million)

LESOTHO AND THE EU GSP

Economic Impact

1%

Only a small fraction of Lesotho's exports to the EU were eligible for EBA preferences in 2023.

73%

Lesotho's preference utilisation rate in 2023.

100%

Share of zero-duty imports from Lesotho. Most imports are duty-free under normal EU tariffs.

Preference utilisation and export diversification

EU imports from Lesotho (€ million)

Preference utilisation (%) vs. total eligible imports (in € million)

With the vast share of EU imports from Lesotho being diamonds, which do not attract any duty, the share of EBA-eligible imports is small. Nevertheless, eligible imports increased almost steadily from 2013 to 2020, but since then decreased again by more than half. Lesotho's use of EBA preferences is relatively high, considering that the country also benefits from preferential access to the EU under the EU-SADC Economic Partnership Agreement. The preference utilisation rate in 2023 was 73%. The most important export good from Lesotho, diamonds, does not attract any duty in the EU. Eligible exports are concentrated in four product groups - fruit and vegetables, cereals and oil seeds, apparel, and machinery. The first three of these had utilisation rates of 87% and above (up to 100%), whereas machinery did not use preferences at all in 2023.

The largest product sections under EBA (€ million, 2023)

Lesotho’s export sector is dominated by the export of diamonds. Under the EBA, exports are concentrated in three sectors: fruit and vegetables, garments, and cereals and oil seeds. All of these have relatively high preference utilisation rates. In absolute terms, any of these exports are small (€1.2 million for fruit and vegetables, in 2023).

SUSTAINABLE DEVELOPMENT

As a beneficiary of the EBA, Lesotho is not required to ratify any conventions to be able to benefit from preferential access to the EU market. Nonetheless, the country has ratified all 27 international conventions listed in the GSP Regulation on human and labour rights, environmental protection and good governance.

Core international conventions on human rights and labour standards

Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)
  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
  • Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning the Abolition of Forced Labour, No 105 (1957)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on Persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Lesotho Bilateral Development Cooperation

DG INTPA

Access all info about EU-Lesotho relations on the International Partnerships website.

Contact points