Thabo Qhesi – CEO Private Sector Foundation of Lesotho E-mail: thabo.qhesi@gmail

1. PERSPECTIVE OF BUSINESSIN LESOTHOTrade & Investment Promotion Seminar and Expo organised by Mangaung Chamber of Commerce and Industry at Bains Game Lodge29th - 31th OCTOBER 2013 Thabo Qhesi – CEO Private Sector Foundation of Lesotho E-mail: thabo.qhesi@gmail.com Tel: +266 62001975

2. * Background of Lesotho * Current investment* Investment climate* Investment opportunities* Starting a business * Conclusion STRUCTURE OF PRESENTATION

3. BACKGROUND OF LESOTHO * 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

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

5. BACKGROUND OF LESOTHO (CONT) 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

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

7. BACKGROUND OF LESOTHO (CONT) 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

8. CURRENT INVESTMENT * 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

9. INVESTMENT CLIMATE 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

10. INVESTMENT CLIMATE (CONT) 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

11. INVESTMENT CLIMATE (CONT) 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

12. INVESTMENT CLIMATE (CONT) 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

13. INVESTMENT CLIMATE (CONT) 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. INVESTMENT OPPORTUNITIES 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

15. INVESTMENT OPPORTUNITIES (CONT) Sector opportunities* Transport: - Bus - Trucking* Mining: - Diamonds - Gold - Quarrying/ crasher plant* Tourism: - Entertainment - Hospitality* Service industry: - Insurance - Education - Legal* ICT and Telecommunication

16. INVESTMENT OPPORTUNITIES (CONT) 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

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

18. STARTING A BUSINESS 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

19. One Stop Facilitation Centre- Export PermitsSTARTING A BUSINESS (CONT)

20. STARTING A BUSINESS (CONT)World Economic Report

21. STARTING A BUSINESS (CONT) 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* Itpromotes investment by smaller nationally-owned businesses

22. STARTING A BUSINESS (CONT) 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*

23. CONCLUSION 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.

24. Thank you