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Small businesses strictly for Basotho

A Chinese hawker trading in the streets of Maseru

Oct. 12, 2020 3 min read

3 min read

THE government has introduced a new law which restricts foreigners from operating small businesses in Lesotho.

The Gazette “Business Licensing and Registration Regulations 2020” listed over 40 reserved business activities.

They include international road freight transport and logistics, motor dealership, activities of business agents and brokers’ activities in specialised stores including wholesale, retail sale of animal feeds including animal and crops medical goods and chemicals, retail sale of prepared meat and meat dishes whether consumed on the spot (chesa-nama) without full restaurant services and supply of liquified petroleum gas and petroleum products, to mention but a few.  

The initiative is purposed to close the loophole in the Ministry of Trade and Industry (MoTI)’s regulations that the latter had said restricted it from curbing the rate at which Chinese nationals have taken over small business enterprises reserved for Basotho nationals.

Basotho small business owners had complained that Chinese nationals who operate small businesses pose unfair competition to them.

In previous interviews, the trade ministry’s Public Relations Officer, Liahelo Nkaota had shown that there are businesses that are strictly reserved for Basotho, which include among others butcheries, restaurants, hair salons and general cafes.

The sectors are reserved for the development of Basotho while also contributing to employment creation and poverty reduction.

Prior to the release of the new Gazette, Ms Nkaota indicated that the law forbids foreigners from venturing into such businesses, adding however that there are challenges in executing the law.

Inability to take action against foreigners alleged to be operating with Basotho licenses was caused by a loophole in the law which was silent on the action to be taken (against both the license holder and the foreigner renting) if a foreigner is found operating under a license belonging to a Mosotho.

Ms Nkaota said most foreigners, especially Chinese nationals who compete with local businesses are citizens of Lesotho by naturalisation through the Ministry of Home Affairs’ regulations, which means they also have equal rights and privileges as Basotho nationals.

“Physically you will identify a person as a Chinese but, according to Lesotho’s laws, you will find that they are naturalised and that means they have all the rights a Mosotho person has, which include running businesses that are reserved for Basotho.

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Spokesperson of the Ministry of Trade and Industry Lihaelo Nkaota

“The other challenge is Basotho who lease out their shop licences to foreigners and they normally keep on renewing their licenses which are registered under their names. This makes it difficult to pin down foreigners if found running the business during inspection as they can claim to have been hired by the owner of the shop.

“During inspection campaigns, we usually find foreigners operating businesses reserved for Basotho but because of lack of sufficient evidence to prove that the businesses belong to them, we fail to take legal action against them.

“They normally claim to be just employees and although we know that they are lying, there is nothing we can do as the businesses are not registered under their names,” Ms Nkaota told the media earlier this year.

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