Why has Lesotho's economy depended heavily on South Africa?

Lesotho’s economy is heavily dependent on South Africa due to limited domestic natural resources and deep regional integration. This reliance is structured through several key mechanisms:1

• Employment and Remittances: Historically, a significant portion of Lesotho’s working population has sought employment in South Africa. Remittances from these migrant workers have served as a vital source of income, historically contributing up to two-thirds of the country's gross national product.12
• Customs and Trade: Lesotho is a member of the Southern African Customs Union (SACU), which facilitates the free exchange of goods. A substantial portion of the Lesotho government's revenue has traditionally been derived from SACU receipts.32
• Water and Energy: The Lesotho Highlands Water Project is a critical infrastructure partnership that exports water to South Africa while generating hydroelectric power for Lesotho.14
• Monetary Integration: As a member of the Common Monetary Area, Lesotho maintains a currency, the loti, which is fixed to the South African rand, linking its monetary stability to its neighbor.3