The Kingdom of Lesotho – an ideal investment destination

Lesotho is a democratic, sovereign and independent country within Southern Africa. It is landlocked within the Republic of South Africa (RSA). Formerly a British protectorate until she gained independence in October 1966, the Kingdom of Lesotho is one of the three remaining monarchies in Africa.

The country has a land area of approximately 30 355 km², roughly the size of Belgium or Taiwan, or the American state of Maryland. Located at the southern tip of Africa, Lesotho is completely outside the tropics and enjoys a cool, temperate climate. Often referred to as the “Switzerland of Africa”, it is blessed with a beautiful, often snow-capped range of mountains, the Maluti.

The Kingdom’s central position (in the heart of Africa’s most developed economy; that of South Africa), is well served by air, rail and road links to all its major centres. The capital, Maseru, is only 600 km away from Durban, South Africa’s busiest harbour, and is one-hour’s drive from Bloemfontein, a judicial and academic centre. It is also only 45 minutes by air or four hours by road from Johannesburg, in the Republic of South Africa.

The Kingdom is home to the largest and most ambitious civil engineering project in the whole of Africa, the Lesotho Highlands Water Project (LHWP), which has harnessed and commercialised her upstream surplus water resources.

Market access

  • Lesotho is part of the Southern African Customs Union (SACU) comprising Botswana, Lesotho, Namibia, Swaziland and South Africa. There are about 55-million consumers in the region.
  • Duty free and quota free access provided by the regional trade and investment block of the Southern African Development Community (SADC) – (14 countries comprising 260-million consumers).
  • Duty free access for a large list of products except for dairy, poultry and egg products granted by Canada (34-million consumers) under the GSP system.
  • A preferential treatment agreement between SACU and MERCOSUR (comprising Argentina, Brazil, Paraguay, and Uruguay (385-million consumers) grants trade preferences on specific products originating from Lesotho as member of SACU.
  • The SACU EFTA gives SACU originating industrial and fish products duty free and quota free access to SwitzerlandNorway, Iceland and Liechtenstein.
  • Lesotho can also export all products to the European Union (500-million consumers) duty free provided under SACU EPA Agreement.
  • Lesotho benefits from the lucrative American market (310-million consumers) provided by the African Growth and Opportunity Act (AGOA).

Learn more about priority sectors and investment opportunities in Lesotho.

For the past 5 years Lesotho has been the number one exporter of garments to the US under AGOA.

Tax incentives

  • 10% corporate income tax on manufacturing profit
  • No withholding tax on dividends distributed by manufacturing firms to local or foreign shareholders
  • No advanced corporation taxes are paid by companies on the distribution of manufacturing profits
  • Training costs are allowable at 125% for tax purposes
  • Payments made in respect of external management skills and royalties related to manufacturing operations are subject to withholding tax of 10%
  • Easy repatriation of manufacturing profits
  • A VAT rate of 14% (ensuring harmonisation with the RSA)
  • Furthermore, the Lesotho Revenue Authority has introduced flexible VAT payment systems, to tax compliant firms, to ease cash flows

Stability

  • A stable social and political environment which is investor friendly
  • A free enterprise and free market economic system, which forms the basis for sustained development and growth

Labour

  • Young, abundant, predominantly English speaking, literate, well-motivated labour force with a tradition of manual dexterity at competitive wage rates
  • Lesotho’s literacy levels are among the highest on the continent, with an adult literacy rate of 89.7 percent (UNDP, 2011), and female adult literacy around twice that of the sub-Saharan African average

Interested in opportunities to invest in the Kingdom of Lesotho?

See: Investment opportunities in Lesotho
Maseru, the capital city of Lesotho

Lesotho National Development Corporation

The Lesotho National Development Corporation (LNDC) is the main parastatal of the Government of Lesotho charged with the implementation of the country’s trade and industrial development policies.

The LNDC offers a host of supportive services which include the following:
  • Serviced industrial and commercial sites at competitive rentals
  • Provision of industrial and commercial buildings at competitive rentals
  • Financial assistance to investors on a selective basis
  • Investment facilitation services
  • Assistance to procure all permits and licenses
  • Assistance in company registration
  • Assistance in industrial relations issues
  • Appraisal of investment projects
For more information, contact the LNDC