PERSPECTIVE OF BUSINESS IN LESOTHO Trade & Investment Promotion Seminar and Expo organised by...
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PERSPECTIVE OF BUSINESSIN LESOTHO
Trade & Investment Promotion Seminar and Expo organised by Mangaung Chamber of
Commerce and Industry at Bains Game Lodge
29th - 31th OCTOBER 2013
Thabo Qhesi – CEO
Private Sector Foundation of Lesotho
E-mail: [email protected]
Tel: +266 62001975
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* Background of Lesotho
* Current investment
* Investment climate
* Investment opportunities
* Starting a business
* Conclusion
STRUCTURE OF PRESENTATION
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* LESOTHO IS SMALL COUNTRY, WITH LDC STATUS, SITUATED IN SOUTHERN AFRICAN
REGION AND IS HAVING A POPULATION OF 1,8 MILLION.
* TEN DISTRICTS (Lowlands, foothills, and highlands)
* MEMBERSHIP: - SACU
- SADC
- AU
- UN
- WTO
BACKGROUND OF LESOTHO
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Sacu 5 member states map
BACKGROUND OF LESOTHO (cont)
Angola
Zambia
Botswana
Tanzania
RSA
Namibia
Zimbabwe
Swaziland
Kenya
Lesotho
DRC
SACU
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ABOUT PSFL
* Apex body of Private Sector Business Associations
* Launched in October 2009
* Promote and sustained dialogue with Government
through the Business Council
* Business Council chaired by the Prime Minister
BACKGROUND OF LESOTHO (CONT)
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* MEMBERSHIP STRUCTURE
- Corporate Category
- Affiliate Category
- Associate Category
* COUNCIL MEMBERS
- 21 MEMBERS (7 Members of each category)
BACKGROUND OF LESOTHO (CONT)
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MEMBERSHIP SERVICES- Networking - Capacity development - Access to information - Secretarial services to associations- Consultancy development - Constitution registration- Company registration- Consortium and joint venture agreements - Training- Business counselling
BACKGROUND OF LESOTHO (CONT)
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* ClOTHING, TEXTILE, FOOTWEAR SECTOR
* ASSEMBLY OF CONSUMER ELECTRICAL AND ELECTRONIC APPLIANCE
* FOOD PROCESSING
* PLASCTIC PRODUCTS
* RESOURCES – BASED PROJECTS: - Ceramic ware- Brick – making- Sandtone- Mining of minerals
CURRENT INVESTMENT
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Company Taxation
* The government of Lesotho has introduced:
- 0% tax on income tax generated from exporting manufactured goods outside of SACU;
- A permanent maximum manufacturing tax rate of 10% on profits.
- No withholding tax on dividends distributed by manufacturing companies to local or foreign shareholders.
- Free repatriation of profits derived from manufacturing companies
INVESTMENT CLIMATE
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Banking Infrastructure
* Lesotho is a member of the South African Common Monetary Area (CMA) and the Loti (plural Maloti) is pegged to the Rand.
* It is therefore a convertible currency
* Lesotho has a sophisticated banking infrastructure with four (4) full service banking networks operated by:
- Standard Lesotho Bank - Nedbank - First National Bank- Lesotho post bank
INVESTMENT CLIMATE (CONT)
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Investment Protection
* Lesotho is also a signatory to the Convention on the Settlement of Investment Disputes between states and nationals of other states and is a member of the Multilateral Investment Guarantee Agency (MIGA).
* MIGA promotes the flow of foreign direct investments to developing countries by providing investment guarantees to investors to mitigate against specified non-commercial risks associated with a project, such as: - political risks;- transfer restrictions; - expropriation;- breach of contract; and - war and civil disturbances in the host
INVESTMENT CLIMATE (CONT)
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Market support
* Government procurement: - 10 per cent price preference on Lesotho goods; - 7.5 per cent preference for contracts performed at least 50
per cent in Lesotho or sub-contracted at least 50 per cent to Basotho business; and
- All contracts over LSL500,000 which entail sub-contracting must sub-contract at least 25 per cent of the work to Basotho businesses.
*Exclusivity: - Under the Industrial Licensing Act, a manufacturer may be
granted an exclusive industrial licence
INVESTMENT CLIMATE (CONT)
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POTENTIAL MARKET
* SACU – 54 million consumers
* EU – 456 million consumers
* USA– 295 million consumers
* SADC – 170 million consumers
* Japan, Turkey, Canada, Australia and New Zealand operate GSP schemes under which tariff reductions are granted to specified lists of agricultural and industrial products for Least Developed Countries.
INVESTMENT CLIMATE (CONT)
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Sector opportunities* Agriculture:
- Poultry and piggery abattoirs - Hatchery - Mushroom farming - horticulture - Wool and mohair processing plants
- Fish farming * Infrastructure development: - commercial property - industrial property - residential property
* Retailing: wholesale
INVESTMENT OPPORTUNITIES
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Sector opportunities* Transport: - Bus - Trucking * Mining: - Diamonds - Gold - Quarrying/ crasher plant
* Tourism: - Entertainment - Hospitality
* Service industry: - Insurance - Education - Legal * ICT and Telecommunication
INVESTMENT OPPORTUNITIES (CONT)
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Sector opportunities* manufacturing:
- food processing (mushroom soup & sauces) - packaging and labeling - tv and radio production - spare parts - solid waste processing
- stone cutting * water sector: - water bottling - water treatment - water sport
* financial services: banking
INVESTMENT OPPORTUNITIES (CONT)
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Barriers
* Cross border trade
* Export permits
* Brain drain
* Unclear coordination to effect decisions
CHALLENGES
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One Stop Facilitation Centre
* Established in 2009
* Agencies: - Registrar General
- Ministry of Trade and Industry
- Ministry of Labour and Employment
- Ministry of Home Affairs
- Lesotho Revenue Authority
STARTING A BUSINESS
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One Stop Facilitation Centre- Export Permits
STARTING A BUSINESS (CONT)
Export Permits Import Permits
Rebates Work permits
Residence Permits Company Registration
Tax Registration Investment information
Advocacy for regulatory reform
Business statistics
Tariff investigation and Trade remedies
Utilities payment
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STARTING A BUSINESS (CONT)World Economic Report
Country Lesotho Swaziland
Botswana Namibia South Africa
2013/14 123 124 74 90 53
2012/13 137 135 79 92 52
2011/12 135 134 80 93 50
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LNDC* It is the principal point of contact for prospective foreign investors and can provide serviced land and low-cost factory shells.
LTDC* It promotes tourism investment by foreign and national investors.
BEDCO
* It promotes investment by smaller nationally-owned businesses
STARTING A BUSINESS (CONT)
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CONTACTS OF KEY ROLE PLAYERS
- OBFC: www.obfc.org.ls
- LNDC: www.lndc.org.ls
- LTDC: www.ltdc.org.ls
- BEDCO: www.bedco.org.ls*
STARTING A BUSINESS (CONT)
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BUSINESS COMMUNITY OF LESOTHO AND FREE STATE PROVINCE SHOULD REALLY JOIN HANDS IN TERMS OF DOING TRADE. THE END RESULTS:
- INCREASED EMPLOYMENT ;- REDUCED PORVERY AND CRIME; AND- CURBING BRAIN DRAIN.
CONCLUSION
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Thank you