Parliament adopts business indigenisation regulations

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Bereng Mpaki

PARLIAMENT this week adopted the Businesses Licensing and Registration Regulations of 2020 which reserve certain businesses for indigenous Basotho only.

The regulations have listed 47 business activities that will be reserved for indigenous Basotho.

Foreigners can participate in the 47 activities but only as minority shareholders with a maximum 49 percent stake in the companies.

The regulations operationalise the Business Licensing and Registration Act of 2019.

Under that act, foreigners who have invested in other businesses falling outside the

47 sectors reserved for locals are required to prove that they have invested at least M2 million in their businesses to renew their traders’ licences. They must also present a corporate social responsibility plan as well as plans or progress in transferring skills and technology to Basotho.

Among the 47 activities reserved for indigenous Basotho are the 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).

Parliament adopted the regulations upon a recommendation to do so by the parliamentary portfolio committee on economic development this week.

Tabling its report on the regulations, the committee’s chairperson, Mahooana Khati, said the regulations made “positive discrimination against foreign enterprises to give indigenous Basotho enterprises an opportunity to develop”.

“Section 18 (4) (e) of the Constitution of Lesotho allows for such discrimination for the purposes of prioritising opportunities for Basotho ahead of anybody else.

“In South Africa there is what is called Black Economic Empowerment (BBE) and the spirit of these regulations is for Basotho to be afforded business opportunities ahead of foreign investors for the sake of expediting the country’s economic development,” Mr Khati said.

He said the government was also concerned that many foreign-owned businesses prejudiced the country by evading taxes and externalising their profits instead of banking with any of the local banks.

“Foreign investors are now required to have a capital investment of at least M2 million with a local bank. This is because many foreign investors in Lesotho do not bank locally.

“Keeping the M2 million in the local bank will underline the investor’s intentions to operate in Lesotho and will act as some form of guarantee that he means business.

“An investor must have a clear corporate social responsibility (CSR) and skills transfer plan… and not just make money out of the country,” Mr Khati said.

National Independent Party (NIP) legislator and member of the economic and development committee, Kimetso Mathaba, welcomed the regulations saying Basotho must be protected from foreign investors to enable them to develop in business.

He called for an upward review of the M2 million capital requirement for foreign investors to €2 million (about M38, 3 million).

“I feel that is too little because even local investors can easily raise that kind of money. I suggest it should be reconsidered. It would be better if it was US$2 million (about 32, 6 million) or €2 million,” Mr Mathaba said.

For her part, Movement for Economic Change (MEC) deputy leader, Tšepang Tšita Mosena, who is also a member of the economic cluster committee, said the regulations would only achieve their purpose if they were fully supported by the government.

“If our officials are not fully committed to implementing the regulations, then we will not reap their benefits. I plead with all relevant authorities to be involved in the implementation of the regulations to ensure their success,” Ms Mosena said.

She also called on Basotho to desist from being used as fronts for foreign investors seeking to circumvent the indigenisation laws.

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