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PERSPECTIVE OF BUSINESS IN LESOTHO Trade & Investment Promotion Seminar and Expo organised by Mangaung Chamber of Commerce and Industry at Bains Game Lodge.

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Presentation on theme: "PERSPECTIVE OF BUSINESS IN LESOTHO Trade & Investment Promotion Seminar and Expo organised by Mangaung Chamber of Commerce and Industry at Bains Game Lodge."— Presentation transcript:

1 PERSPECTIVE OF BUSINESS IN LESOTHO Trade & Investment Promotion Seminar and Expo organised by Mangaung Chamber of Commerce and Industry at Bains Game Lodge PERSPECTIVE OF BUSINESS IN 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: thabo.qhesi@gmail.com Tel: +266 62001975

2 STRUCTURE OF PRESENTATION

3 * 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

4 Sacu 5 member states map BACKGROUND OF LESOTHO (cont)

5 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)

6 * MEMBERSHIP STRUCTURE - Corporate Category - Affiliate Category - Associate Category * COUNCIL MEMBERS - 21 MEMBERS (7 Members of each category) BACKGROUND OF LESOTHO (CONT)

7 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)

8 * 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

9 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

10 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)

11 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)

12 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)

13 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.

14 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

15 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)

16 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)

17 Barriers * Cross border trade * Export permits * Brain drain * Unclear coordination to effect decisions CHALLENGES

18 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

19 One Stop Facilitation Centre - Export Permits STARTING A BUSINESS (CONT) Export PermitsImport Permits RebatesWork permits Residence PermitsCompany Registration Tax RegistrationInvestment information Advocacy for regulatory reform Business statistics Tariff investigation and Trade remedies Utilities payment

20 STARTING A BUSINESS (CONT) World Economic Report CountryLesothoSwazilandBotswanaNamibiaSouth Africa 2013/14 123124749053 2012/13 137135799252 2011/12 135134809350

21 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)

22 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)

23 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

24 Thank you


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