Lesotho

Investing in Lesotho?

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Lesotho is an independent country located in the heart of Southern Africa with a stable social and political environment and market based economic system. It boasts an abundant young, literate, predominantly English speaking and well motivated labour force in addition to the advantages listed below. Its location provides easy access to Southern Africa’s largest market and is close to Johannesburg, Durban and Port Elizabeth.

Market Access

  • Part of Southern African Customs Union (SACU)
  • Preferential access to Southern African Development Community (SADC)
  • Duty and quota-free access to the United States through the African Growth and Opportunity Act (AGOA)
  • Duty free access to EU under SADC-EPA.
  • Preferential trade agreements with MERCOSUR, EFTA, Australia, Canada, Japan, New Zealand, Turkey and Nordic countries.

Tax Incentives and Financial Benefits

  • 0% tax on income generated from exporting manufactured goods outside of SACU.
  • A maximum manufacturing tax rate of 10% on profits from sales within SACU.
  • No withholding tax on dividends distributed by manufacturing firms to shareholders.
  • Unimpeded access to foreign exchange and bank administered foreign currency accounts permitted.
  • Training costs are allowable at 125% for tax purposes.
  • Withholding tax of 10% on payments made in respect of external management skills and royalties related to manufacturing operations.
  • VAT rate of 14% (ensuring harmonisation with South Africa.
  • Import VAT credit facility.

Industrial Infrastructure

  • Serviced sites, factory shells and commercial buildings are available at competitive rental rates.
  • Special incentives for construction of investor-financed factory buildings.
  • Backstopping services from the Lesotho National Development Corporation (LNDC) in relation to procurement of all permits, licenses, and company registration.

Key Investment Opportunities

 

  • Basotho Fruit and Vegetable Cannery

A fruit and vegetable canning facility (peaches, asparagus, mushrooms, grains) that requires an investment of

USD 4.5 million to operate at full capacity. The current market is domestic but the EU market has been tapped into.

  • Loti brick

A brick making company for the domestic and regional market, where demand is high thanks to a booming construction industry.

  • Infrastructure development

LNDC owns commercial and industrial sites in strategic locations in Lesotho. Investment is sought for development of these sites on a Public-Private Partnership basis.

 

Opportunities also lie in the following areas:

  • Knitted fabric mill to support the local garment industry.
  • Accessories and packaging materials currently imported by the textile industry.
  • Leather and footwear in its infancy stage despite qualifying under AGOA.
  • Assembly of consumer electrical and electronic appliances utilizing a labour force with a high number of technical diplomas.
  • Agro and food processing, including crops for supply to the processing industry, dairy, and confectionaries.
  • Water bottling.
  • Mining in the sandstone and clay processing sectors.
  • Waste recycling particularly linked to the textiles sector.
  • Energy sector has a supply gap that could be bridged through solar, wind and hydro power.
  • Pharmaceuticals, all currently imported into Lesotho.
  • Tourism including accommodation, health and wellness, watersports and recreation, and high altitude training.

 

 

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www.lndc.org.ls www.trade.gov.ls