ABSTRACT
This chapter analyzes the economic problems of Lesotho and the changing nature and magnitude of external dependence for the period after 1966. It discusses some of the problems of political dependence on South Africa that have confronted Lesotho from independence until the present time. The new customs union agreement, signed in 1969, focused on the issues of economic dependence and the lack of development facing Lesotho at the time of political independence. The new customs union agreement with South Africa in 1969 meant that common customs and excise revenues increased consistently at a pace which exceeded expectations. The Lesotho Highlands Water Scheme, the purpose of which is to export large quantities of water to South Africa and to generate hydropower for local use, may provide a stimulus for the industrial sector and reduce the dependence on imported energy. The virtually complete dependence on expatriate traders has been reduced, at least in the internal market.
