On the import side, South Africa is by far the largest supplier. Imports from South Africa, however, include goods from other sources coming through South Africa to land-locked Botswana. The report notes that manufacturing activity has expanded strongly, principally in the textiles and motor vehicles assembly sector. In regard to services, the telecommunications sector has grown rapidly. Banking services are open to new competition and tourism is a potential major source of foreign exchange.
Subsistence agriculture is the main occupation for the majority of rural households.
The WTO report notes that the bulk of rural household incomes in Lesotho comes from wage remittances from migrant labour in South Africa. Outward processing in clothing and footwear account for around one-third of earnings from merchandise exports. Lesotho also has preferential access under the Lom Convention to the European Union. The clothing industry was, until recently, the main beneficiary of Lom preferences, but its export possibilities have become limited because of rules of origin requirements. Most clothing and textile exports to the US are free from quota limitations.