—enforcement of the regulations likely to have far reaching negative consequences on Lesotho’s investment climate
Moorosi Tsiane
THE fight by local businesspeople for the government to implement the controversial Business Licensing Registration Regulations (2020) without amending them has been escalated to the High Court.
The court will today hear an application by the Meat Traders Association, being one of the complainants, for an order interdicting the Ministry of Trade, Industry and Business Development from reviewing the regulations enacted in terms of the Business Licensing and Registration Act.
The ministry has been hesitant to implement Section 34 of the regulations reserving dozens of business sectors for Basotho only. It has sought to have the regulations amended – to avoid scaring away investors – but local business owners want to see them implemented as is.
The meat traders petitioned the High Court after the government foiled their planned strike on 22 May 2024 through which they had intended to petition Prime Minister Sam Matekane to force the ministry to impose the ban on foreigners.
The Registrar of Companies, Ministry of Trade, Cabinet, and Attorney General Rapelang Motsieloa are first to fourth respondents respectively in the matter.
According to the Meat Traders Association deputy chairperson, Maliemiso Rasunyane, local business people have been “shuttered” by the government’s reluctancy to implement the law.
“I aver that we were satisfied that new laws were formulated to regulate our businesses and protect them in particular from unfair business practices, particularly by foreigners. For instance, the provisions of Schedule 16, section 34 of the Business Licensing Registration Regulations, reserve certain businesses for Basotho nationals, thus protecting and prioritizing the interests of Basotho businesses over those of foreign nationals,” Ms Rasunyane states in his founding affidavit.
He cited Section 42 (I) of the regulations which he said preserved the sale of meat and poultry and associated products such as spices, sauces and frozen foods to Basotho only.
But Ms Rasunyane complained foreign-owned businesses continued to operate due to non-implementation of the regulations by the trade ministry.
In total, the regulations reserved 47 business sectors for Basotho. These sectors include motor dealerships, which have been mainly dominated by Pakistani and Indian nationals, mobile food services and other food services, hair dressing, clearing agents, real estate agency, retail of bread and confectionery products, sale of motor vehicle parts, sale of alcoholic beverages (off-sales, taverns, public bars), metal wastes, sale of animal feeds, fast food activities, sale of second-hand goods, sale of fruits and vegetables and pharmaceuticals.
She said businesses that were operating contrary to the regulations included Econo Foods, Sefalane, Big 2 Supermarket, and Browns Cash and Carry, among others.
“I aver that although this legislation has been enacted, there is no implementation by Ministry of Trade and/or compliance by the businesses which are operating contrary to the restrictive provisions of the law; particularly foreign business. I aver that these businesses are still carrying on business without any prohibition, despite the mandate of the law.”
She said they were never consulted over the ministry’s decision to amend the regulations. They were against any such amendments as they anticipated they might accommodate foreign nationals into the business sectors reserved for indigenous Basotho.
“Our expectation is that the law be implemented as it is and enforced in totality………….
“I must disclose before the honourable court that on the 17th May 2024, a motion before parliament was passed. The motion expressed disappointment in the non-implementation of the Business Licensing Registration Regulations of 2020. The motion further urged the government to implement the said law with immediate effect.”
However, the government had ignored the motion passed in parliament and there was no action taken, she averred. Members of the applicants had then decided to embark on a peaceful protest on 22 May 2024 to press for the implementation of the regulations. However, their permit for that procession was cancelled at the eleventh hour by the Commissioner of Police, Ms Rasunyane complained.
“I aver that to date, there are no measures adopted to implement the law. I aver that the protest was an attempt to demonstrate to the respondents the seriousness of our demands…
“The business market for Basotho nationals is flooded by unregulated businesses of foreign nationals who are competing on businesses strictly reserved for Basotho. I aver that the protest was not successful as the permit to engage in the strike was subsequently revoked by the Commissioner of Police for ‘security purposes’.”
If the local traders succeed, the move to ban foreigners will have a chilling effect in a country already desperate for foreign investment.
Companies like Sefalane and Econo Foods are major international retail conglomerates that rely on international supply chains to do business. Relationships between retailers and their suppliers are built on trust and long-established partnerships that cannot simply be cancelled and replaced overnight without far reaching consequences for investment and consumers.
Moreover, these giant retailers have long been established and laws cannot be applied retrospectively. They cannot simply be asked to divest from what they have invested for years. If they are banned, it also means other foreign conglomerates like Shoprite and Clicks must be banned from Lesotho as well. That will effectively destroy any investment prospects for poor Lesotho and confine citizens to a life of permanent penury and squalor.
