The Ministry of Trade, Industry and Business Development will stop renewing traders’ licenses for reserved business activities operated by foreign nationals from December 2025, marking a significant shift toward promoting micro, small to medium enterprises (MSMEs) in Lesotho.
The enforcement will proceed only when local entrepreneurs are ready to assume control of existing foreign-owned businesses, ensuring economic continuity and protecting jobs. This will be piloted in Maseru, Leribe, and Mafeteng before nationwide possible expansion.
This development comes five years after the Business Licensing and Registration Regulations were first published in August 2020. Regulation 34 of these regulations explicitly prohibits non-citizens from operating certain business activities.
The reserved business categories span multiple sectors. In transport and logistics, restrictions apply to international road freight, domestic road transport, motor dealerships, and clearing agents. Real estate agencies and warehousing activities are also exclusively reserved for Basotho citizens.
Retail operations face extensive restrictions, including household fuel sales, bottled gas, and coal distribution. Fast food services without full restaurant facilities, hairdressing, beauty treatment, and motor vehicle maintenance and repairs are all reserved for local entrepreneurs.
Agricultural activities reserved for citizens include raising horses, sheep, goats, swine, pigs, and poultry, along with the sale of livestock and livestock products. Tour operator services and landscaping activities are similarly restricted.
The retail sector faces the most comprehensive reservations. These include stall and market sales of food, beverages, tobacco, textiles, clothing, footwear, and cultural goods. Specialised stores selling health-related products, animal feeds, medicines, chemicals, bread, confectionery, and motor vehicle parts must be locally owned. Vehicle and motorcycle repairs, hire services, and related accessories sales are also reserved.
Additional restricted activities encompass bars selling alcoholic beverages (including off-sales, shebeens, and public bars), unprocessed meat and seafood retail, fruit and vegetable sales and cultivation, and prepared meat outlets without full restaurant services.
Specialised stores for petroleum products, hardware, paints, glass, second-hand goods, cosmetics, and beauty supplies are exclusively for Basotho entrepreneurs.
Service sector reservations include mobile food services, photocopying, document preparation, general plumbing, construction activities, laundry services, footwear and clothing repairs, watch repairs, and metal waste or scrap sales.
“We will stop renewing the traders licenses for reserved business activities owned by foreign nationals, and we have already informed such owners,” said Ministry of Trade spokesperson Lihaelo Nkaota.
She said they have also informed business associations to alert their members to get ready to move into the reserved businesses. She explained that implementation was delayed because the regulations could not apply to businesses registered before their publication. They would only take effect when those businesses sought license renewals.
The Ministry also used this period to assess the potential economic impact of abrupt enforcement. Nkaota confirmed the market is now ready for implementation, with particular encouragement for local entrepreneurs to establish supermarkets and capitalise on these regulations.
Meanwhile, the private sector has expressed frustration over the protracted delay as the principal law, the Business Licensing and Registration Act of 2019, became officially operational in 2020.
“It is surprising that they are only implementing the regulations now when their principal act became operarional in 2020,” said Thabo Qhesi, CEO of the Private Sector Foundation of Lesotho (PSFL).
Nkaota said part of the reason for the delay was to afford indigenous citizens some time to get ready to venture into those reserved activities.
“We want to ensure that there is no vacuum when the foreign operators exit, so this means we will only stop license renewals when there are local entrepreneurs to step in.”
Preliminary Ministry inspections conducted in 2024 in Maseru’s central business district revealed concerning statistics. Foreign-owned enterprises generate 80 percent of retail sector jobs, presenting significant employment risks if these firms close without local replacements ready.
Strikingly, only 18 percent of locally-owned businesses operate in sectors actually reserved for Basotho, exposing a substantial gap in the country’s indigenisation efforts.
Following the survey, Minister of Trade and Industry Mokhethi Shelile reported progress to the National Assembly, announcing further inspections in Leribe and Mafeteng before presenting a comprehensive report.
“The key findings of these inspections are consistent with the hypothesis that Lesotho’s commercial space is dominated by foreign owned businesses,” Shelile said.
Of 106 retail businesses inspected, 80 were foreign-owned, accounting for 90 percent of jobs in the retail sector, he said.
“Our audit also found that 61 percent of the businesses in the reserved category were owned by foreign nationals, leaving only 18.46 percent for Basotho-owned businesses,” he told the House.
Shelile noted that 13 businesses belonged to naturalised citizens, with potentially more to be added as some claimed to be producing documentation.
The Minister acknowledged the potential negative consequences of full Regulation 34 implementation, which has sparked debate since the law took effect.
Confusion over delayed enforcement prompted the National Assembly in March to direct the Ministry to expedite implementation within 30 days. Shelile responded that the Ministry needed time to assess consequences of abrupt enforcement.
“The task team concluded that the sudden implementation of the reservation list, commonly referred to as Section 34, could disrupt market conditions, affect employment, and impact the supply of goods and services,” he explained.
“It was necessary to investigate the proportion of foreign-owned businesses in the reserved category, their contribution to gross domestic product (GDP) and employment, and to develop mitigation measures and a transition plan,” he said.
Summary
- The Ministry of Trade, Industry and Business Development will stop renewing traders’ licenses for reserved business activities operated by foreign nationals from December 2025, marking a significant shift toward promoting micro, small to medium enterprises (MSMEs) in Lesotho.
- Meanwhile, the private sector has expressed frustration over the protracted delay as the principal law, the Business Licensing and Registration Act of 2019, became officially operational in 2020.
- “We want to ensure that there is no vacuum when the foreign operators exit, so this means we will only stop license renewals when there are local entrepreneurs to step in.
Authored by our expert team of writers and editors, with thorough research.
