Why Invest in Lesotho
Lesotho occupies a unique geographical position reasonably centrally located within Southern Africa and with good access to some of the fastest growing industrial and economic areas in the region such as Johannesburg and Pretoria. It is also within reasonable proximity to the international ports such as Durban and Cape Town. This combined with the efforts of the Government of Lesotho to create a good enabling environment for business, make the country an attractive destination for foreign investment.
Lesotho is a signatory to the convention on the settlement of investment disputes between states and is a member of the Multilateral, Investment Guarantee Agency. Furthermore, as a member of the International Monetary Fund, Lesotho has accepted the obligations of the Articles of Agreement, thereby giving confidence to the international community of its pursuance of sound economic policies, contributing to a multilateral payments system free of restrictions. Lesotho's central position also provides distinct advantages. For investors Lesotho offers a highly competitive environment that is conducive to productivity. The current investor package includes the following:
- A stable social and political environment that is investor friendly, with a free enterprise and free market economic system forming the basis for sustained development and growth.
- An abundant labour force that is predominantly English speaking, literate and well motivated, with high productivity and competitive wage rates.
- Loan guarantees, with long-term loans and/or equity participation in strategic projects.
- Declining water and electricity tariffs as a direct spin-off from the Lesotho Highlands Water Project.
Attractive Tax Rates
A favorable fiscal and financial environment has been created to promote an attractive investment climate in Lesotho this includes:
- VAT rate of 14% (ensuring harmonization with the RSA). Furthermore, the Lesotho Revenue Authority has introduced flexible VAT payment systems, to tax complaint firms, to ease cash flow constraints.
- Training costs are allowable at 125% for tax purposes.
- Double taxation agreement with federal Republic of South Africa, Mauritius and United Kingdom.
Efficient Capital Markets and Portfolio Investment
- Lesotho has three foreign-owned banks: First National Bank, Ned Bank and Standard Bank, which bought a 70% share in state-owned Lesotho Bank. According to a recent IMF report, the banks in Lesotho are well capitalized and very liquid.
- Easy repatriation of profits.