Controversial indigenisation law kicks in
- 47 business sectors reserved for “indigenous” Basotho,
- foreign investors given a year to wind operations.
A CONTROVERSIAL law reserving certain businesses for “indigenous” Basotho will come into effect on 1 August 2022.
In an interview this week, the Ministry of Trade and Industry’s public relations officer, Lihaelo Nkaota, said they will begin implementing the Businesses Licensing and Registration Regulations, 2020, next month. The regulations operationalise the Business Licensing and Registration Act of 2019.
The regulations list 47 business activities that can only be conducted by indigenous Basotho. According to the regulations, an indigenous citizen is a person whose ancestry can be traced back to at least three generations in Lesotho.
Naturalised citizens and foreigners can only participate in the 47 activities as minority shareholders with a maximum 49 percent stake in the companies, the regulations state.
However, Ms Nkaota and other ministry officials were not emphasising this particular provision. Rather, they were all saying that naturalised citizens and foreigners will be given a year to wind up their operations before all businesses in the reserved sectors are taken over by indigenous Basotho.
Among the 47 activities reserved for indigenous Basotho are transport; cleaning; repairing and retail motors sales; growing and selling fruits and vegetables; pharmaceutical wholesaling and retailing; real estate; retail of animal feeds; supply of fuel and retail of hardware.
Raising horses, sheep and goats, piggery and poultry are some of the other businesses reserved for Basotho. (See the full list of businesses reserved for indigenous Basotho below).
Speaking on the issue this week, Ms Nkaota said her ministry had conducted a countrywide sensitisation tour to raise awareness about the new regulations ahead of their implementation.
She said the awareness campaign, from April to June 2022, was done in collaboration with the Lesotho Chamber of Commerce and Industry (LCCI).
“The Ministry of Trade and Industry wishes to inform the business community and the public, that the new Business Licensing and Registration Act will be implemented with effect from 1 August 2022,” Ms Nkaota said.
“The implementation of the Act follows a national roadshow where the ministry raised public awareness about the changes that are coming with the law. Among the changes to be enforced under the act is the reserving of certain businesses for indigenous Basotho. An indigenous citizen is a person whose ancestry can be traced to at least three generations as citizens of Lesotho.”
She said naturalised citizens and foreigners who were currently operating in the reserved sectors had a year to wind their operations as their licences would not be renewed with effect from 1 August 2023.
“Under the act, a licence issued to a naturalised citizen of Lesotho, or an enterprise whose proprietor, shareholder, partner or director is not a Lesotho citizen, shall remain in force until the expiry of the licence next year.
“Thereafter, their licences will not be renewed and they will be expected to exit such businesses. Anyone who will be found to have transferred their licenses to non-citizens for the reserved business will be fined up to M100 000,” she said.
Her sentiments were echoed by the director of the One Stop Business Facilitation Centre (OBFC), Monaheng Monaheng, at a press conference in Maseru yesterday.
He said the ministry would no longer accept new applications by foreigners and no-indigenous citizens to register companies in the reserved categories.
“We will also engage non-indigenous citizens to prepare to exit the reserved businesses, and they will have 12 months to do so,” Mr Monaheng said.
He said the Basotho entrepreneurs had already indicated their readiness to take over the reserved sectors.
“Transport and logistics operators have informed the ministry that they are ready to take over the business of ferrying goods between South Africa and Lesotho,” he said.
LCCI secretary general, Fako Hakane, welcomed moves to implement the law, saying it would help to localise the economy.
He said some sectors of the economy were in the hands of foreign nationals, who were in the habit of repatriating profits to their home countries.
“We welcome the provisions reserving certain businesses for locals. This is long overdue because the Trading Enterprises Act, 1993 as well as the Trading Enterprises Regulations, 1999 had a list of reserved businesses for locals. But these were never enforced.
“Enforcing the Business Licensing and Registration Act will ensure that Basotho wrestle some economic power from foreign players. What is now left for the authorities is to ensure full compliance with this law to achieve its intended purpose,” Mr Hakane said.
He said proper enforcement of the law would also prime locals to exploit business opportunities and even export to other countries under the African Continental Free Trade Area.
By implanting the regulations, Lesotho will be treading on a path that has been trodden by some countries before, albeit unsuccessfully.
The late Ugandan dictator, Idi Amin, attempted to indigenise the Ugandan economy by expelling over 80 000 people of Asian descent in 1972.
Besides drawing international condemnation, Amin’s decrees impoverished Uganda. Some countries, including Britain, withdrew much-needed development aid. Closer to Lesotho, indigenisation was attempted without any success by the previous Robert Mugabe administration. The Mugabe regime decreed a 49 -51 percent shareholding in all entities in favour of locals. Investors voted with their feet and that country has since been on a free fall.
List of business activities reserved for Basotho
- International road freight transport and logistics
- Road transport and logistics
- Motor dealer
- Real estate agency
- Clearing agent
- Warehousing activities
- Retail sale of household fuel, bottled gas and coal
- Fast food activities without full restaurant services
- Hairdressing and beauty treatment
- Repairs and maintenance of motor vehicle and motorcycle
- Activities of households as employers of domestic personnel.
- Cleaning of Motor vehicles
- Raising of horses
- Raising of sheep and goats
- Raising of swine and pigs
- Raising of poultry
- Sale of livestock and livestock products
- Tour Operator activities
- Cleaning activities
- Landscape care and maintenance service activities
- Retail sale via stalls and market of food, beverages and tobacco products,
- Retail sale via stall and market of textiles, clothing and footwear
- Retail sale of cultural and recreation goods in specialised stores
- Activities on business agents and brokers activities in specialised stores including wholesale and retail sale of health-related articles or products
- Retail sale of animal feeds, including animal crops, medical goods and chemicals
- Retail sale of bread and confectionary products
- Retails sale of motor vehicle parts and accessories
- Repairs of motor vehicle parts including vehicle tyres and motor cycle parts
- Retail sale, maintenance and repair of motorcycles and related parts and accessories
- Wholesale and retail sale of alcoholic beverages whether or not consumed on the spot (off sale, shebeen and public bar)
- Wholesale and retail sale of meat and meat products including poultry
- Retail sale of fruits and vegetables
- Growing of fruits and vegetables
- Retail sale of prepared meat and meat dishes whether consumed on the spot (Chesa Nyama) without full restaurant services
- Supply of liquefied petroleum gas and petroleum products
- Retail sale in no specialised stores
- Retail sale of hardware, paints and glass products
- Retail sale of second-hand goods
- Retail sale not in store, stalls or markets
- Wholesale and retail sale of pharmaceutical and medical goods, cosmetics and toilet articles in specialised store including wholesale and retail sale of health-related articles or products
- Mobile foods services and other food services
- Printing and business support services
- Photocopying document preparation and other specialised office support services
- Electrical plumbing and other construction installation activities
- Welding services
- Repair of footwear and clothing
- Metal waste or scraps