Lesotho counts foreign-owned businesses, says SA retailers must find local partners

Lesotho Trade and Industry Minister Mokhethi Shelile. (@UNLesotho/X)

• Lesotho has rekindled moves to implement localisation rules for certain types of businesses dominated by foreigners.
• Indians, Chinese and South Africans dominate the 47 reserved businesses.
• SA firms will be under pressure to use local distributors, and not contract Basotho labour via SA-based agents.

Lesotho has restarted a plan to act against foreign-owned businesses, and to pressure South African companies to work via Basotho-owned distributors.

The kingdom created new regulations in 2021 that could see foreign-owned businesses kicked out, but has been moving slowly on implementation for fear of paralysing the smallest economy in the region.

A list of 47 business types, from general dealers to barbers, are reserved for locals under those rules.

On Friday, Trade and Industry Minister Mokhethi Shelile told the National Assembly that an inspection in Maseru in June found that the overwhelming majority of businesses in areas reserved for locals were in the hands of foreigners.

“A total of 106 businesses were inspected and 80 belonged to foreigners. The foreign-owned businesses account for 90% of the jobs in this sector,” he said.

In Maseru, Chinese and Indian owners dominated.

Their businesses were also far more likely to employ foreigners; foreign-owned businesses employed 119 expatriates, while Basotho-owned businesses employed only four foreigners between them, Shelile said.

The government said it was seeing people from countries other than China and India move into sectors such as retail, and that it was seeing an increase in newly naturalised owners.

“There are 13 businesses whose owners were naturalised,” Shelile said, adding that there was a likelihood the figure would increase because others claimed they were naturalised and said they would bring their documentation.

Shelile said the government had urged South African firms, mostly in the retail sector, to enlist local distributors.

The government wants to see about 800 SA businesses do such deals, covering 80% of imported goods.

The government also wants to end the practice of locals being employed by third-party agents in South Africa, who then provide their services to South African companies required to employ Basotho people.

That system means taxes go to South Africa rather than Lesotho, Shelile explained.

“Sales commissions that are paid to these sales representatives and foreign agents attract tax in South Africa, not Lesotho. Youth unemployment is very high and government debt is very high,” he said.

A similar inspection was done in Leribe in mid-August, and another is due in Mafeteng this month.

The News24 Africa Desk is supported by the Hanns Seidel Foundation. The stories produced through the Africa Desk and the opinions and statements that may be contained herein do not reflect those of the Hanns Seidel Foundation.