- 80% retail sector jobs generated by foreign-owned firms
- Only 18% locally-owned businesses in reserved category
Staff Reporters
A recent inspection by the Ministry of Trade, Industry, and Business Development has uncovered the overwhelming dominance of foreign-owned businesses in the capital city, Maseru, as lawmakers push for the full implementation of business indigenisation laws.
The preliminary inspection, conducted in Maseru’s central business district, revealed that 80 percent of jobs in the retail sector are generated by foreign-owned enterprises, reflecting a potential risk for job losses if foreign-owned firms closed down.
In contrast, only 18 percent of locally-owned businesses are operating in sectors reserved for Basotho, highlighting a significant gap in the country’s efforts to indigenise business operations.
The inspection was carried out by a task force from the Ministry, alongside representatives from the Lesotho Mounted Police Service, National Security Service, Revenue Services Lesotho, and the departments of labour, health, and immigration.
The effort is in anticipation of enforcing Section 34 of the Business Licensing and Registration Act, 2019, which reserves 47 business sectors exclusively for indigenous Basotho.
In a recent address to the National Assembly, Minister of Trade and Industry Mokhethi Shelile updated lawmakers on the progress towards fully implementing the Act. He mentioned that further inspections would be conducted in Leribe and Mafeteng before presenting a comprehensive report.
In Maseru, businesses in key areas such as the Bus Stop, Seputana, the Industrial Area, Cathedral Area, and Borokhoaneng were inspected.
“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 the 106 retail businesses inspected, 80 were foreign-owned. “Foreign-owned businesses account for 90 percent of jobs in the retail sector, and they employ the majority of migrant labourers in this industry.
“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 also noted that 13 businesses were owned by naturalised citizens, with the possibility that more could be added as some claimed to be in the process of producing their documentation.
However, the Minister highlighted the potential negative impact of fully implementing Section 34, which has sparked debate since the law came into effect in August 2022.
Confusion over the delayed enforcement of Section 34 led the National Assembly in March to direct the Ministry to expedite its enforcement within 30 days.
In response, Shelile told the Assembly that the Ministry needed time to assess the possible consequences of abruptly enforcing the section.
“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.”
The private sector, however, expressed disappointment over the inspection process. Members of the indigenous business community see the inspection as an attempt to shield foreign businesses from legal consequences.
Teboho Motšephe, of the Meat Traders Association of Lesotho, voiced his concerns: “We were part of the task team, but after realising that no genuine measures were being taken against non-compliant foreign businesses, we withdrew from the inspection. The Ministry seems more inclined to protect foreign businesses than enforce the law.”
Motšephe also called for the suspension of the entire legislation if Section 34 is not enforced.
“The government should not selectively enforce parts of the Act that benefit them in terms of revenue collection while neglecting sections that protect local businesses. If they cannot implement Section 34, they should suspend the entire law,” he stated.
The business activities reserved for Basotho by the Act are International road freight transport and logistics, Road transport and logistics, Motor dealer, Real estate agency, Clearing agent, Warehousing activities, Retail sale of household fuel, bottled gas, and coal, Fast food activities without full restaurant services, Hairdressing and beauty treatment, Repairs and maintenance of motor vehicles and motorcycles, Activities of households as employers of domestic personnel, Cleaning of motor vehicles, Raising of horses, Raising of sheep and goats, Raising of swine and pigs, Raising of poultry, Sale of livestock and livestock products, Tour operator activities, Landscaping and maintenance service activities, Retail sale via stalls and market of food, beverages, and tobacco products, Retail sale via stalls and market of textiles, clothing, and footwear, Retail sale of cultural and recreational goods in specialised stores, Activities of business agents and brokers in specialised stores including wholesale and retail sale of health-related articles or products, Retail sale of animal feeds, including animal medicines and chemicals, Retail sale of bread and confectionery products, Retail sale of motor vehicle parts and accessories, Repairs of motor vehicle parts including vehicles, and motorcycles, Retail sale, maintenance, and repair of motorcycles and related parts and accessories, Hire of vehicles and motorcycles, whether or not accompanied by a driver, Sale of alcoholic beverages in bars (off-sale, shebeen, and public bar), Retail sale of unprocessed meat and meat products including seafood, Retail sale of fruits and vegetables, Growing of fruits and vegetables, Retail sale of prepared meat and meat dishes (Chesa Nyama) without full restaurant services, Supply of liquefied petroleum gas and petroleum fuel in specialised stores, Retail sale of hardware, paints, and glass in specialised stores, Retail sale of second-hand goods, Retail sale in stalls or markets of beverages, foods, cosmetics, and textiles, Retail sale of cosmetics, hair care products, and beauty supplies in specialised stores including wholesale trade, Mobile food services and other food services without full restaurant support services, Photocopying and document preparation services, General plumbing and other construction activities, Laundry services, Repairs of footwear and clothing, Repair of watches, and Retail sale of metal waste or scraps.
