Financial Data
Updated 25 Apr 2017


Lesotho

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Business opportunities and risks

Opportunities for you to do business in Lesotho

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The agriculture, mining and technology sectors remain underdeveloped, affording foreign investors and expanding businesses several opportunities.

Additionally, the country’s population is in need of low-cost products and services due to the high level of poverty. If you are able to provide low-cost solutions, you could tap into an overlooked market of consumers.

The diamond, clothing and textile industries in Lesotho continue to thrive, however the country is looking to diversify its economy. Investment in social, health, retail and technology sectors is required in order to improve the country’s economic activity.

Due to its Southern African Customs Union (SACU) membership, Lesotho’s clothing and textile sectors receive a variety of rebates that drive profits. If you’re looking to become involved in clothing and textiles, Lesotho presents and ideal destination to set up low-cost manufacturing for exporting to other African countries or the rest of the world.

Business opportunities
  • As a member of the Southern African Customs Union (SACU), Lesotho’s textiles and garment firms can get almost the entire range of SACU rebates.
  • Its close proximity to South Africa means Lesotho companies can access South Africa's consumers, infrastructure and financial sector.
  • Key exports such as diamond and water exports have remained resilient despite recent political instability.
Operational risks to consider

While there are several opportunities worth tapping into in Lesotho, the country is not without its challenges, and smart investors and businesses should carefully consider and plan for these encounters before establishing a presence in the country.

These challenges include:

  • Due to the slow-paced development of its foreign business relations, establishing a presence in Lesotho can be time consuming;
  • Foreign investment is additionally subject to a number of taxes, while slow customs processes add to the challenge of breaking ground;
  • Infrastructure development is sluggish, across a variety of sectors, which can make it difficult for foreign businesses to penetrate the market.
  • Disease (HIV/ AIDS) and poverty play a major role in securing dependable labour forces. While the population is willing to work, and literate, lack of healthcare facilities and limited access to transport makes it difficult to retain workers.
  • Obtaining permits, licences and permissions from government can be a challenge if you’re involved in construction.
  • Electricity shortages can place added cost on your business, particularly if you’re involved in energy intensive operations;
  • The Internet isn’t utilised by the country’s population, which means growing your business’ reach will have to rely on traditional, perhaps costlier, marketing methods.
Business challenges
  • Lesotho is ranked 128 out of 189 countries in ease of doing business. This shows that the business environment needs substantial development.
  • In addition, Lesotho is ranked 151 out of 201 countries in terms of trade and investment risk, indicating a high risk to trade and investment.
  • The main challenges to doing business in Lesotho include: a lack of infrastructure;  a  small  domestic  market, given  the  small  population; difficulty  in obtaining construction permits;  difficulty  in  obtaining  access to  land  and electricity; trading across borders and a high HIV/AIDS prevalence rate, which could negatively impact labour productivity.
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