Water is Lesotho's only significant natural resource. It is being exploited through the 30-year, multi-billion-dollar Lesotho Highlands Water Project (LHWP), which was initiated in 1986. The LHWP is designed to capture, store, and transfer water from the Orange River system and send it to South Africa's Free State and greater Johannesburg area, which features a large concentration of South African industry, population, and agriculture. Completion of the first phase of the project has made Lesotho almost completely self-sufficient in the production of electricity and generated approximately $24 million annually from the sale of electricity and water to South Africa. The World Bank, African Development Bank, European Investment Bank, and many other bilateral donors financed the project. Lesotho has taken advantage of the African Growth and Opportunity Act (AGOA) to become the largest exporter of garments to the U.S. from sub-Saharan Africa. Exports totaled $466.9 million in 2004. Employment reached 40,000. Asian investors own most factories.

Lesotho has received economic aid from a variety of sources, including the United States, the World Bank, Ireland, the United Kingdom, the European Union, Germany, and the People's Republic of China.

Lesotho has nearly 6,000 kilometers of unpaved and modern all-weather roads. There is a short rail line (freight) linking Lesotho with South Africa that is totally owned and operated by South Africa. Lesotho is a member of the Southern African Customs Union (SACU) in which tariffs have been eliminated on the trade of goods with other member countries, which include Botswana, Namibia, South Africa, and Swaziland. With the exception of Botswana, these countries also form a common currency and exchange control area known as the Common Monetary Area (CMA). The South African rand can be used interchangeably with the loti, the Lesotho currency (plural: maloti). One hundred lisente equal one loti. The loti is at par with the rand.

The government of Lesotho was initially slow to recognize the scale of the HIV/AIDS crisis, and its efforts to date in combating the spread of the disease have met with limited success. In 1999, the government finalized its Strategic Plan on HIV/AIDS, a diagram for addressing the education, prevention, counseling, and treatment needs of the populace. In late 2003, the government announced that it was forming a new National AIDS Commission to coordinate society-wide anti-AIDS activities. Also in 2003 the Government of Lesotho hosted a SADC Extraordinary Summit on HIV/AIDS. In July 2005 legislation was passed to create the National AIDS Commission.