MINISTER of Trade, Industry and Business Development, Mokhethi Shelile’s reluctance for wholesale implementation of the controversial Business Licensing Regulations, 2020, is not only admirable, it demonstrates his deep knowledge and understanding of business and how the world works in the 21st century.
The Regulations which seek to preserve certain economic sectors for Basotho are not only deplorable, they are insane and counterproductive.
A fortnight ago, bodies like the Maseru Chamber of Commerce and Industry (MCCI), representing native Basotho businesspeople, came out guns blazing, accusing Mr Shelile’s ministry of refusing to implement the Business Licensing Regulations, 2020, which emanate from the Business Licensing and Registration Act, 2019.
If operationalised, the regulations will effectively disqualify foreigners from operating in areas that will have been legally preserved for Basotho.
The Business Licensing and Registration Act, 2019, reserves about 47 business sectors for native Basotho only, slamming the door to foreigners operating in these sectors.
Among the sectors reserved for Basotho are international road freight transport logistics, motor dealerships, clearing agents, warehousing activities, retail sale of household fuel, bottled gas, coal, fast food activities, hair dressing and beauty treatments.
Also reserved are the maintenance of motor vehicles and motorcycles, photocopying, document preparation and other specialized office support work, wholesale and retail sale of meat and meat products, including poultry etc.
Minister Shelile crisply asserted in an interview with the Lesotho Times, that the law is not only controversial, but also has the potential to spoil Lesotho’s relations with other countries. He was right.
If the law is to be implemented, Mr Shelile said, government will do it gradually cognisant of its ramifications.
“Basotho must exercise patience. It’s a controversial law whose implementation must be gradual. Lesotho must also tread carefully lest we spoil relations with other nations,” Mr Shelile said.
We urge that the law not be implemented at all. It will kill any prospects of attracting foreign investment into the country.
It is in fact ironic that a country that is so desperate for foreign investment to create jobs can even think of banning the same foreigners from operating in such a wide array of sectors. When investors pour money into any country, they usually do so on the basis they will enjoy the freedom to trade. Think of an investor who considers coming to build an industrial factory in Maputsoe, but is then told he cannot set up a retail business to keep his wife and children busy because the retail sector is reserved for Basotho? That investor will simply stay away.
We know of no obstacles that have ever stood in the way of Basotho who wanted to establish businesses in the 47 listed sectors. Before the foreigners established in those sectors, any Mosotho could have set up shop. Why did they not? If those clamouring for the banning of foreign investors can attempt to answer that question, they will soon learn that a country can never succeed by foisting the spirit of entrepreneurship down the throats of its citizens. Entrepreneurs are born or developed. They are not created by patently xenophobic laws. You can go to a very remote part of Lesotho and see an enterprising Chinese having set up a spaza shop there? The question is, what stopped Basotho in that remote area from establishing before that Chinese came?
Many countries got destroyed by trying to enforce entrepreneurship. Robert Mugabe of Zimbabwe created similar laws restricting many areas of that country’s economy to locals. The result was economic collapse as investors voted with their feet.
The United Arab Emirates – which had restrictions on foreign ownership of enterprises – is now allowing 100 percent foreign ownership of any businesses. That is a country far richer than Lesotho. It is so rich that it is not desperate for foreign investment. Yet it has realised the folly of trying to restrict business in a highly globalised world. The UAE’s progressive leaders are thinking of the future and the negative ramifications of economic xenophobia.
Xenophobic, nationalistic economic laws always attract unintended consequences. There is fierce competition for foreign investment out in the world. No investor has the time to bother themselves perusing through regulatory texts to try and establish whether or not they are allowed to participate in any economic sector. They simply take their money to where it is wanted and to where there are no restrictions on business.
These controversial regulations originated from the 10th Parliament when Thomas Thabane was Prime Minister.
His successor, Moeketsi Majoro, inherited the law.
Majoro tried to operationalise the regulations but was beaten by time when the 10th Parliament was dissolved in July 2022 in time for that year’s October general elections.
We urge the Matekane government to dump these regulations into the dustbin where they rightfully belong.
This is not to say there isn’t need to empower indigenous Basotho into owning businesses and becoming effective entrepreneurs. The need has always been there. It starts with deliberate and conscious steps to develop entrepreneurs through tailor-made education which begins as early as possible in the learning cycle. Those emerging from the school system with obvious entrepreneurial skills must of necessity be put through mentorship schemes, some of which require the very experienced foreigners being targeted for elimination.
Lack of finance is often cited as a reason retarding the development and growth of indigenous entrepreneurs. It is the government’s responsibility to ensure viable financing schemes for the entrepreneurs identified as being fit for purpose.
In other words, developing entrepreneurs is a process not an event. You cannot simply wake up on a whim and substitute business operators in a sector with locals. That is a recipe for disaster.
We urge the government to scrap this retrogressive law altogether. It serves no other purpose than to deter foreign investment.
The world has become a global village where possibilities should be endless for all citizens of mother earth.
