Trade & Investment Background
Lesotho's small domestic market obliges her to adopt an export-led growth and expanded international trade, particularly in the globalised marketplace of the 21st century. An essential element of this strategy is to increase Foreign Direct Investment, which will bring the established international trade links and superior technological and business needed to augment the capacity of local producers and help diversify the economy.
Lesotho has a substantial consumer market on its doorstep, as well as being in close proximity to the port of Durban on South Africa's east coast. This gives it access to South Africa's first class infrastructure and communications networks, and through this the wider international community, making it suitable for export-orientated manufacturing industries. Foreign trade benefits from regional integration within SADC and SACU, while Lesotho's status as an LDC gives it duty-free access to the markets of industrialised countries.
Lesotho's political and regulatory environment is stable and investor friendly, with its free market economic system forming the basis for sustained development and growth. The legal framework is solid and based upon the rule of law, as demonstrated by anti-corruption cases upheld by the best judges in the world. The country's labour force is young, predominately English-speaking, highly versatile and trainable. Serviced industrial sites and factory shells are available for rental at competitive rates, with a subsidy provided to investors who erect their own factories at designated sites. Investment is protected through the Multilateral Investment Guarantee Agency (MIGA).
A favourable fiscal and financial environment has been created to promote an attractive investment climate in Lesotho. This includes:
- Tax Incentives - 0% tax on income generated from exporting manufactured goods outside of the Southern African Customs Union (SACU)
- Financial & Export incentives - these include an export finance facility, long term loans and/or equity participation and zero rated exports under the Lesotho VAT system.
- Lesotho Duty Credit (DCC) scheme - conditions for participating in the scheme are that a company must manufacture within SACU and export its textile or clothing products outside the area. The DCC scheme gives a rebate on import duty based on the value of goods exported
For further information on 'Doing Business in Lesotho', please log onto the following websites
or call the Embassy for a copy of the 'Practical Guide to Doing Business in Lesotho'.