Incentives
Lesotho has a business
friendly, fiscal and financial environment. A number of financial incentives
are available to manufacturing companies establishing in Lesotho including:
Company Taxation
The
government of Lesotho, conscious of the role of manufacturing as the main spring
of development has introduced:
§ A
permanent maximum tax rate of 15% on profits earned by manufacturing companies.
§ No
withholding tax on dividends distributed by manufacturing companies to local or
foreign shareholders.
§ Free
repatriation of profits derived from manufacturing companies.
§ Double
taxation agreements with the Federal Republic of Germany, the Republic of South
Africa, Mauritius and the United Kingdom.
TopLoan/Equity Finance
§ Loans
The
Lesotho National Development Corporation may provide loan finance to projects
which can demonstrate long-term viability. The duration of the loan can be up
to 10 years. Every application for a loan must be accompanied by a detailed
project proposal.
The
application will be appraised in conjunction with any other LNDC involvement in
the project, for example factory buildings or equity.
§ Equity Participation
The
policy of the LNDC is not to take equity investments in projects unless
requested to do so by the project promoter. The LNDC prefers to confine itself
to the provision of serviced sites, factories and loan finance.
The
exceptions to this policy relate to projects which are desirable in the national
interest but for which no private investor can be found, and of course projects
in which the promoters (local or foreign) feel the necessity of LNDC
participation.
Usually, the LNDC will require board membership proportionate to its
shareholding.
Banking Infrastructure
Lesotho is a member of the
South African Common Monetary Area (CMA) and the Loti (plural Maloti) is pegged
to the Rand. It is therefore a convertible currency and exporters in Lesotho
can easily obtain foreign exchange for business transactions. Lesotho has a
sophisticated banking infrastructure with four (4) full service banking networks
operated by:
-
Standard Lesotho Bank
-
Nedbank
-
First National
Bank
The first three have branches
throughout the country and the three international banks have branches and
agents worldwide which facilitate transfers.
LNDC operates as a
development finance institution and promotes the development of industry and
commerce.
Top
Investment Protection
Lesotho
government is irrevocably committed to the development of the private sector and
is currently involved in an extensive privatisation programme.
It is also
a signatory to the Convention on the Settlement of Investment Disputes between
states and nationals of other states and is a member of the Multilateral
Investment Guarantee Agency (MIGA). The latter promotes/encourages the flow of
foreign direct investments to developing countries by providing investment
guarantees to investors to mitigate against specified non-commercial risks
associated with a project, such as: political risks, transfer restrictions,
expropriation, breach of contract, war and civil disturbances in the host
countries.
