Maseru

Maseru is Lesotho's capital district and the nation's only major urban center—located on the Caledon River directly across from the South African town of Ladybrand. The city's economy rests on three pillars: government services (as capital of the constitutional monarchy), textile manufacturing under AGOA preferences, and remittances from the diaspora in South Africa. In June 2025, the Central Bank reported 5.3% economic contraction as US tariff uncertainty froze American buyer orders—threatening the 30,000 apparel jobs that AGOA had created. Industry leaders warn the textile sector 'is standing on the edge of a cliff' with AGOA expiring September 2025. GDP growth of 2.6% in FY24/25 (up from 2.0%) reflects LHWP-II construction spillovers rather than textile recovery. Maseru's position—on the Caledon River, entirely surrounded by South Africa—makes it function essentially as a South African border town with different sovereignty. SACU transfers and water royalties provide fiscal stability, but projected deficit of 3.3% of GDP by 2025 from LHWP-II expenditures indicates the Kingdom's development bet: exporting water while hoping infrastructure investment can replace the textile jobs that preferential trade once created.