The Countdown to August 1st
This article written by the Lesotho chamber of commerce and industry (LCCI) secretary general Fako Hakane analyses private sector concerns over the ministries reluctance to implement.
The trial and tribulations of the business communities have become so common they no longer warrant any raising of eyebrows. A population of slightly over two million people with so much wealth disparities, alarming youth unemployment the ever-rising wage bill, rich getting richer, poor getting poorer and the economy squarely in the hands of foreigners, what kind of a nation are we?
Without apportioning blame on public servants alone the private sector too is to blame in this unsavory situation where corruption is the order of the day. Our law enforcement machinery cannot and shall not be exonerated from this scourge of non-enforcement of rampant corruption. We have laws that are passed within the legislative system which are good and presumably water tight, but if law enforcement agencies are this weak and porous, very little shall be achieved, unless of course extreme measures can be put in place and enforced vehemently, only then change can be realized.
Trading Enterprise Regulations of 1999 were good but the implementation phase was disastrous to say the least. It is during this era that there was an influx of the foreigners introduced the unfortunate culture of palm wetting which they did in earnest. We started losing patience and respect to the public servants and their bosses who never took any action to stop this scourge of corruption within their ranks, before their own eyes and concluded that they are in it together.
Some private sector players hired out their premises, their licenses to both the Chinese and the Asianic races, others resorted to fronting as a way of making quick and easy buck. There was an emergence of what was termed “tenderpreneurship”. Public sector started doing business on a grand scale, for projects that needs to go through the tender board processes were hijacked by public servants and in the process formed their own companies, that would be legible to tender for these projects. This situation worsened the relations between the private sector and the public sector.
However, the year 2019 came up with different changes that would positively impact the entire business landscape, if implemented. The business licensing and registration Act of 2019 was passed and the objective was to promote private sector development through a conclusive investment climate. Then immediately followed Business Licensing and Registration Regulations, 2020. National sensitization Road Show was undertaken by both the Ministry of Trade and the Lesotho Chamber of Commerce and Industry (LCCI). We were accompanied by Associate Members of LCCI, especially the financial institutions in the Road Show which was extremely successful, given the numbers of attendees in various districts as well as the receptive manner we were received. The thinking behind the inclusion of financial institutions, was to make them aware that resources would be required to enable smooth implementation of the new law and it is imperative for them to come to the party.
“The purpose of the business licensing and registration law is to introduce risk-based business licensing and flexible business regulation”. I choose to talk about the regulations and schedules; firstly, on the regulations is where an elaborate citation and commencement of all stages of regulations have to undergo. The other part is schedules where application forms or renewal of different business license are provided. Introduction of business activities is also included in the schedules. A distinct line has been drawn where a naturalized citizen cannot infringe on the indigenous citizen’s space as described in the Amended Business Licensing and Registration Regulations of 2020 where ancestry should be traced to three generations as citizen of Lesotho.
It is expected that a foreign enterprise should have;
- An investment of not less than two million maloti
- Business account maintained at a local financial institution
- Corporate social responsibility plan for first application or report for renewal or transfer application
- Plan or progress transfer of technology and skills
- Plan or report on effort made towards the advancement of the business undertakings owned by Lesotho citizens.
- and compliance with the workman’s compensation act 1977 for renewal or transfer application.
These are pre-requisitions that a foreign enterprise should satisfy. Above all there are 47 business activities that have been reserved for indigenous citizens. Naturalized citizens are not by law expected to trade in these reserved business activities. A twelve months (12) transition period is given for them to fold up and go to an upper level of investment. Their licenses are not being renewed, at least we have been told/ assured by the Ministry. Our concern though is, there doesn’t seem to be any effort from the Ministry’s side to show or suggest that some preparatory work is being done towards the implementation of the new law.
We have been reliably informed that the compliance division does not have adequate staff to handle this enormous transition. When sensitization was undertaken, people’s hopes were raised high and anything to the contrary would spell disaster.
We feel that by now the Ministry would have published some data of identified business activities that, come 1st August 2023 shall have been in the hands of the indigenous citizens. We feel that the Ministry would have by now published that they have clamped down on all businesses that do not heed the Noise Abatement Law and Regulations. That all stakeholders would have formed a joint Inspection Task Team that shall be an oversight body to ensure smooth transition to the new law.
That the Ministry through government would have met all financial institutions within Lesotho and negotiated on behalf of the business communities for financial assistance for those that shall be transitioning to the upper level with the understanding that those business have been proven to be viable. As private sector we would urge the Ministry to treat this matter with the urgency it deserves as a vacuum shall not be accepted in this regard.
We admit that relations between the public sector and the private sector have exponentially improved and we wouldn’t want to muddy waters at this point. However, time has come for all parties to do their fair share of what is expected of them to do.