Trade and investment
INVESTMENT OPPORTUNITIES IN LESOTHO INCLUDE
Knitted fabric mill, accessories & packaging materials — With the garment industry requiring local access to raw materials and accessories, there are opportunities for investment in knitted fabric mills, trims and finishing facilities.
Leather & footwear — With shoes qualifying for all the benefits under AGOA, opportunities exist in tanning and finishing, footwear and footwear components, leather garments and leather goods and accessories.
Assembly of consumer electrical & electronic appliance – Sector of the labour market have the requisite knowledge and skills to work on subassemblies or the final assembly of an array of finished electrical and electronic products or components, including engines, computers, radio or test equipment and machine – tool control.
Food processing — Efforts are being stepped up to enlarge the production base of the fruit and vegetable processing industry for the export of a wider range of products of international quality. At present, the country’s sole cannery processes peaces, apricots, asparagus and beans. Increased productivity level will require additional canneries to absorb and process all the available raw materials.
Water bottling — Lesotho’s water is considered to be one of the most pure in the world with very little microbiological and chemical contamination. Consider a food products internationally, investment in water bottling is seen as having a positive impact on public health in the region by providing safe drinking water and soft drinks in areas with poor water supply quality.
Plastic products — Currently all the packaging materials required for Lesotho’s manufacturing sector are imported from South Africa and Asia. Thus opportunities exist in the manufacture of plastic ware to different customer specifications, especially in providing a complete range of packaging products for the local export market.
Resources-based projects ( ceramics, bricks & sandstone) — The demand for sandstone slabs and tiles as well as veneering stones has been the increase, and Lesotho ‘s abundant sandstone deposits can be exported in different forms and thicknesses. Sandstone is currently used extensively in residential and commercial construction, with artefacts made of sandstone also gaining popularity. A degree of mechanisation will be required for large-scale production. With proper marketing and additional capital brought in by joint venture partners, it may be possible to expand the upset market.
Environmental project. (Waste recycling) — Water use and wastewater discharge set elements in the textiles industry and investment opportunities exist in process measurement and control, water recycling, chemical substitution and reduction, energy efficiency, and new product development using waste materials.
Development of infrastructure — There is a pressing need for the development of industrial and commercial sites and buildings, as well as commercial properties, with foreign direct investment required for the development of industrial estates as well as modern shopping complexes.
WHY INVEST IN LESOTHO
Lesotho has a stable social and political environment which is investor friendly, and a free enterprise and free market economic system which form the basis for sustained development and growth.
Young, abundant, predominantly English speaking, literate, and well motivated labour force, with a tradition of manual dexterity at competitive wage rates.
- Tax incentives - Zero percent (0%) corporate tax on profits earned by manufacturing companies exporting outside SACU, ten percent (10%) preferential corporate tax on profits earned on exports within SACU, and a normal corporate tax rate of twenty-five percent (25%). There is no withholding tax on dividends distributed by manufacturing companies to local or foreign shareholders. Double taxation agreements have been concluded with the Republic of South Africa and the United Kingdom.
- Financial & export incentives - These include an export finance facility; long-term loans and/or equity participation; unimpeded access to foreign exchange; free repatriation of profits; input credit for all capital equipment and raw material inputs; and zero-rated exports under the Lesotho VAT system. Furthermore, manufacturing exporters are able to run bank administered foreign currency accounts at any of the banks in Lesotho. Training costs are allowable at 125 percent for tax purposes.
- Lesotho Duty Credit Certificate (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. A firm may use the duty credit for not paying duty on the next shipment of imported raw materials or sell it through a broker to another importer. For information contact the LDCC Administrator: tel (+266) 22 312 269, fax (+266) 22 310 167;
Lesotho is signatory to a variety of trade agreements, which afford expanded access to regional and International markets. As a member of the World Trade Organisation (WTO), Lesotho is committed to the implementation of WTO agreements, including the progressive liberalisation of trade.
Marginalization in international trade and to improve their participation in the multilateral trading system. Lesotho took over coordination of LDCs in the WTO in July 2007.
Negotiations have been concluded for the MERCOSUR – SACU FTA. The agreement accords specified goods from SACU countries preferential access into the MERCOSUR market, which comprises South America countries Brazil, Argentina, Paraguay and Uruguay.
In July 2006 a SACU – European Free Trade Area (EFTA) Agreement was signed, which will result in the free trade between SACU and EFTA, consisting of Iceland, Liechtenstein, Norway and Switzerland.
Lesotho has preferential access to 260 million consumers in the Southern African Development Community (SADC) market.
The United States has traditionally provided a ready market for Lesotho’s exports of apparel, and this trend was significantly enhanced with the inception of the African Growth and Opportunity Act (AGOA), which provides eligible African countries duty and quota free access to US markets.
Lesotho is a signatory to the Cotonou Agreement, which is being renegotiated with the aim of creating FTAs between the African, Caribbean and Pacific (ACP) and the EU.
Lesotho already enjoys non-reciprocal duty free access to the EU under the Everything But Arms (EBA) initiative. The EU Intergration Support Programme for Lesotho is aimed at creating capacity to utilize the benefits of trade liberalisation, with a grant to Lesotho covering the period 2002 to 2007.
Lesotho also has preferential access ( quota and duty free) to the lucrative Canadian market for all eligible goods manufactured in the country, as well as the highly concessionary Generalised System of preferences, (GSP) to Japan, Nordic and other developed markets.
For more information contact:
Ministry of Trade and Industry, Co-operatives and Marketing
P. O. Box 747, Maseru 100
Tel: (+266) 22317454
Fax: (+266) 22310644
Lesotho national Development Corporation (LNDC)
Private Bag A96, Maseru 100
Tel: (+266) 22312012/ 52000214/ 52312012
Fax: (+266) 22310038