Export-led growth and increased private sector investment are essential components of Lesotho's quest to attain high, broad-based and sustainable economic growth, job creation and poverty eradication, particularly in view of the country's limited domestic market.

Lesotho's success in developing the manufacturing sector – in particular textile and clothing- arose largely as a result of favourable trade components such as the African Growth and Opportunity Act (AGOA). Growth in exports, which went hand in hand with increased infrastructural developments, saw Foreign Direct Investment (FDI) in the country rising significantly. However, Basotho firms are facing intensifying international competition in an environment characterised by increasing trade liberalisation as well as the introduction of traditional productive technologies and improved operating procedures.

To meet those challenges, it is necessary to diversify export products and markets as well as build up, capacity to trade and take advantage of Lesotho's trade preferences as a Least Developed Country (LDC). It is important that Lesotho' productive based is strengthened by removing investment impediments, providing skills and investing in infrastructure and support services, thereby creating a Minimum Infrastructure Platform (MIP). Increased FDI brings with it the established international trade links and superior technology and business expertise needed to diversify the economy and augment the capacity of local producers.

In making investment decisions, private firms and individuals compare investment climates, costs and risks across countries and regions, based on the following five pre-conditions:

•  Political and social stability

•  Sound macro-economic management

•  Conducive and enabling investment climate

•  Public investment in complimentary physical infrastructure and support services

•  A sound financial system

Lesotho's Private Sector Strategy entails retaining and expanding the existing investor base, creating industrial cluster and attracting new investors as well as supporting indigenous private sector firms by creating linkage with South Africa and providing a platform of infrastructure, credit, institutional support and skills development.

Bold steps have already been taken to make Lesotho more investor- friendly, as evidenced by the substantial tax cuts for exporters introduced in 2006. However, with Lesotho current ranked 114 out of 175 countries by the International Finance Corporation and the World Bank in terms of the ease of doing business, more is needed . Government is therefore overhauling Lesotho's laws, regulations and procedures in order to improve the investment climate and reduce the costs and risks of doing business. Other programmes focus on human resources development to raise the productivity and quality of the labour force, and further infrastructure investment as well as speeding up transit trade with South Africa in order to improve supply and export chains. For its part, the private sector must be increasingly innovative, efficient and outward focused to compete in the global trade arena.

While continuing to promote textiles, government is also intent on diversifying the manufacturing and export base. Key sectors include tourism, agro-industries and agri-business, services, and quarrying and mining. Furthermore, it is hoped that current trade negotiations will secure permanent access to major international markets.

ECONOMIC INTEGRATION

Boarder economic integration in the region is expected to have positive implications for the economy of Lesotho. Firstly, it could lead to greater access of Lesotho's product to international markets, which is in line with the ongoing government's initiative for local firms to diversify their markets, and would also help to reduce Lesotho's current dependence on South Africa. Secondly, region integration could attract additional FDI, leading to better employment prospects and hence poverty alleviation. Thirdly, Lesotho's export earnings could increase and hence the Balance of Payments(BOP) position would improve.

Lesotho actively participates in the activities of regional organisations, including the Southern African Customs Union(SACU), the Common Monetary Area (CMA) and the Southern African Development Community(SADC), which work to address common issues through region integration, cooperation and coordination. Membership of these groups puts Lesotho in a better position to exploit the opportunities inherent in the globalisation process.

The continent-wide process of political and economic integration is taking place within the framework of the New Partnership for Africa's Development(NEPAD). NEPAD's campaign to encourage macroeconomic convergence on the continent and harmonise policy, thereby making Africa more predictable for investment, has focused on implementing double taxation avoiding treaties along with regularising the varying import and export taxes and tariffs throughout the continent.

The African Union (AU), too is accelerating the processes for regional economic integration and rationalisation, as well as the consolidation of regional economic communities which are the building blocks for a fully integrated continent. It is also pursuing the idea of a union government for the United States of America.

The common monetary area (CMA) arrangement, to which Lesotho, Swaziland, Namibia and South Africa are signatories , provides for circulation of a single currency, the rand, throughout the entire area, while also allowing for the parallel issue of national currencies by the three smaller members. In addition, there is unrestricted transfer of funds within the monetary area and a substantially uniform exchange control regime. A joint resolution has been adapted by the CMA governors to investigate ways of strengthening monetary policy coordination in the region, possibility through the establishment of a Common Central Bank (CCB).

For more information on trade and investment opportunities in Lesotho, kindly visit the following web sites:

TRADE AND INVESTMENT IN LESOTHO

CENTRAL BANK OF LESOTHO

MINISTRY OF TRADE, INDUSTRY AND MARKETING

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The Consular
The Consular Department is located at the High Commission:

7 Chesham Place, Belgravia,
London SW1X 8HN

We are open from Monday to Friday - 09h00 to 12h30 and 14h00 to 15h30 for VISA and passport enquiries and general applications.

We are closed during the UK and Lesotho Public Holidays.