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Lesotho slips in doing business log

by Lesotho Times
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basotho hatBy Letuka Chafotsa and ’Mathabana Kotelo

MASERU — Globally, Lesotho stands at 136 in the rankings of 189 economies on the general ease of doing business.

Requirements for doing business in Lesotho are generally still relatively stringent according to a study by the World Bank.

Lesotho ranks 136 out of 189 economies, up three places from ranking 139 last year.

A total of 189 economies were assessed in the study, 47 of which are in the sub Saharan Africa.

The Doing Business Report measures the ease of doing business, with particular focus on the processes a local entrepreneur undergoes to start up a small to medium sized business in Lesotho.

Key indicators considered in the study were starting a business, getting electricity, dealing with construction permits, getting credit, paying taxes, registering property, trading across borders, resolving insolvency, protecting investors enforcing contracts and employing workers which was not inclusive in this year business doing.

Rankings on the ease of starting business were based on the four components indicators being procedures, time, cost and paid-in minimum capital requirement.

Regulation of construction is critical to protect the public. But it needs to be efficient, to avoid excessive constraints on a sector that plays an important part in every economy.

Lesotho is ranked at 145 among 189 economies on the ease of dealing with construction permits.

It is the least among Common Monetary Area (CMA) countries with South Africa is at 26, Namibia at 31 and Swaziland 51,

Lesotho’s ranking is 28 steps below the 117 regional sub-Saharan Africa average and is three steps down from the 2013 rank of 142.

Smart regulations and construction permitting reforms can help to ensure that standards are met while making compliance easy and accessible to all.

Two set of indicators used in getting credit were strength of legal rights index which deals with rights of borrowers and lenders through collateral laws and protection of secured creditors’ rights through bankruptcy laws.

The depth of credit information index deals with the scope and accessibility of credit information distributed by a public credit registry and private credit bureaus.

Worldwide, Lesotho stands at 159 in the ranking of 189 economies on the ease of getting credit.

This is a five-step decline from position 154 last year and now it is on 159 and it is once again below the regional average and the lowest in the Common Monetary Area (CMA) countries.

Improved credit information systems and collateral and bankruptcy laws in Lesotho can support the lending and borrowing.

In today’s globalised world, making trade between economies easier is increasingly important for business.

Three key indicators were considered which are:

Documents required for exports and imports (transport documents, port and terminal handling documents, bank documents and customer clearing documents); Time required to export and import (days) and costs required to export and import (official costs only no bribery).

Globally, Lesotho stands at 144 in the ranking of 189 economies on the ease of trading across borders.

This category assesses how easy it is for a business in Lesotho to export and import goods.

Lesotho is three steps down from the regional average ranking of 141 as it resides at 144 levels.

However this is a two-step improvement as it was ranked at 146 in the previous year.

Trade reforms can help boost firms’ competitiveness.

Lesotho ranks at 136 for ease of getting electricity, down two places from the 134 ranking in 2013 and beaten by the likes of Botswana at rank 107 and Namibia at 72.

It still however fares relatively well compared to some of its counterparts in the sub-Saharan Africa with Swaziland at 163 and South Africa and Angola ranking 150 and 170 respectively.

However, improvement has been seen in the areas of starting a business, protecting investors and registering property.

The number of days it takes to start a business went down from 40 to 20. A one-stop shop was set up in the Ministry of Trade and Industry, Cooperatives and Marketing.

The paid-in-minimum capital (amount deposited in a bank or with a notary before registration) was also eliminated.

On how easy it is to register property, Lesotho ranks relatively well at 88 compared to South Africa, Angola, Namibia and Swaziland all ranking between 99 and 178.

The ranking can be attributed to reform action taken to streamline procedures making administration procedures more efficient.

Requirements for disclosure of company statements were increased and director liability in abusive related-party transactions was improved.

Although strides have been made in increasing protection to investors, at 98, Lesotho still fares poorly in the sub-Saharan Africa, beating only Swaziland.   South Africa is at 10, Botswana at 52 and Namibia and Angola both at 80.

Tabled is the summary of doing business in ease considering all key indicators.

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