ANNEX 2 
KINGDOM OF LESOTHO 
 
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CONTENTS 
    Page 
I. ECONOMIC ENVIRONMENT 145 
(1) M AIN FEATURES  145 
(2) R ECENT ECONOMIC DEVELOPMENTS  146 
(3) T RADE PERFORMANCE AND INVESTMENT  148 
(i) Trade in goods and services 148 (ii) Investment 151 
(4) O
UTLOOK  152 
II. TRADE AND INVESTMENT REGIMES 153 
(1) G ENERAL  153 
(2) T RADE AGREEMENTS  155 
(3) I NVESTMENT FRAMEWORK  156 
(4) T RADE -RELATED TECHNICAL ASSISTANCE  157 
(i) General 157 
(ii) Supply-side constraints 158 
III. TRADE POLICIES AND PRACTICES BY MEASURE 160 
(1) O VERVIEW  160 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  160 
(i) Registration, documentation, import duties, and related measures 160 
(ii) Import prohibitions and licensing 162 (iii) Government procurement 162 
(iv) Standards and other technical requirements 164 
(v) Other measures 165 
(3) M
EASURES DIRECTLY AFFECTING EXPORTS  165 
(i) Registration and taxes 165 
(ii) Export prohibitions, controls, and licensing 165 (iii) Export subsidies and assistance 165 
(iv) Other measures 166 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  166 
(i) Incentives 166 
(ii) State trading, state-owned en terprises, and privatization 166 
(iii) Competition policy and price controls 167 (iv) Intellectual property protection 168 
IV. TRADE POLICIES BY SECTOR 170 
(1) O
VERVIEW  170 
(2) A GRICULTURE AND RELATED ACTIVITIES  170 
(i) Main features 170 
(ii) Policy developments 172 
(iii) Selected subsectors 175 
(3) M INING , WATER , AND ENERGY  178 
(i) Mining 178 
(ii) Water and energy 180 WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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    Page 
(4) M ANUFACTURING  182 
(5) S ERVICES  184 
(i) Financial services 185 (ii) Telecommunications and postal services 187 
(iii) Transport 189 
(iv) Tourism 191 
REFERENCES   193 
APPENDIX TABLES  195 
 
 
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TABLES 
    P a g e  
I. ECONOMIC ENVIRONMENT  
I.1  Sectoral breakdown of GDP, 2003-06 146 
I.2 Main economic indicators, 2003-08 148 
I.3 Balance of payments, 2003-08 149 
I.4 Destination of exports, 2003-08 149 I.5 Structure of exports, by SITC Rev.3 section, 2003-08 150 
I.6 Origin of imports, 2003-08 150 
I.7 Foreign direct investment, 2003-08 151 
II. TRADE AND INVESTMENT REGIMES  
II.1 Main trade-related legislation, 2009 154 
II.2 Notifications to the WTO, 2003-09 155 
IV. TRADE POLICIES BY SECTOR  
IV.1 Main crops, 2002-07 176 
IV.2 Mining licences, permits, and leases, 2009 180 IV.3 Textile industry, 2007-09 184 
IV.4 Selected telecom indicators, 2003-08 187 
IV.5 Tourism indicators, 2005-08 192 
APPENDIX TABLES 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Privatization methods envisaged, 2009 197 
AIII.2 Privatization process, 1995-08 198 
 
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I. ECONOMIC ENVIRONMENT 
(1) M AIN FEATURES  
1. The Kingdom of Lesotho is a small, mountai nous, landlocked country of 30,355 square km, 
entirely contained within the geogra phical territory of South Africa.1  Lesotho's population, estimated 
at around 1.9 million, is about three fourths rural an d one fourth urban;  it grew by 0.6% in 2006.  
Some 59.7% of the population are between 15 and 64 years old, 35.3% are in the 0-14 age group, and only 5% are 65 years or over.  Maseru, the capital and main centre of non-agricultural economic activities, is the most densely populated ar ea and the biggest city (over 225,000 people).
2  Lesotho 
ranks 155th (out of 177 countries) in the UNDP Human Development Index.3  
2. Lesotho is a least developed country, with a per capita income of US$796 in 2007 (up from 
US$457 in 2000).4  It is also classified as a food defic it country by the World Food Programme, 
importing 50% of its staple grain needs.5  Food insecurity, unemployment (estimated at around 22% 
of the labour force in 2008)6, poverty (56% of the population live with less than US$2 a day)7, and 
HIV are profoundly interrelated.8  Several factors have increased food insecurity, including severe 
droughts in recent years and encroachment of build ing on the limited arable land (about 60% of the 
cultivable land is planted).9  Water and diamonds are Leso tho's major natural resources 
(Chapter IV(3)).10  
3. Services, led by education11, is the most important sector in terms of contribution to real GDP 
(41.8% in 2006);  Lesotho is a net importer of services.  Manufacturing, notably the textiles and 
clothing subsector, accounted for 16.4% of real GDP in 2006 (18.3% in 2003), and over 80% of the 
total value of merchandise exports.  Agriculture is  a key sector of the economy, contributing 14% to 
real GDP in 2006 (down from 16.4% in 2003), and employing almost 60% of the labour force.  The mining and quarrying sector, with a share of 7.6%  in 2006, contributed roughly 65% to real GDP 
growth during 2004-06 due to the re-opening of diamond mines in 2004 (Table I.1).  
                                                     
 
1 Basutoland became the Kingdom of Lesotho upon independence from the United Kingdom in 1966. 
2 UNdata online information, "Country Profile : Lesotho".  Viewed at:  http://data.un.org/ 
CountryProfile.aspx?crName=Lesotho. 
3 UNDP (2008). 
4 UNdata online information, "Country Profile : Lesotho".  Viewed at:  http://data.un.org/ 
CountryProfile.aspx?crName=Lesotho. 
5 WFP online information, "Countries:  Lesotho".   Viewed at:  http://www.wf p.org/countries/lesotho. 
6 Figure provided by the authorities on the basis of Lesotho's Labour Force Survey 2008.  
7 In purchasing power parity terms (World Bank online information, "Country Brief".  Viewed at:  
http://web.worldbank.org/WBSITE/EXTERNAL/COU NTRIES/AFRICAEXT/LES OTHOEXTN/0,,menuPK:35
6039~pagePK:141132~piPK:141107~theSitePK:356029,00.html). 
8 According to UNAIDS es timates, 254,000 adults and 16,000 ch ildren are infected by HIV.  The 
current prevalence rate of 23.2% is th e third highest in the world, while the prevalence of tuberculosis is the 
second highest.  The pandemic has resulted in 110,000 orphans in Lesotho, nearly 6% of the population.  The 
Government of Lesotho, with the assistance of its development partners, formulated and launched the national 
AIDS strategic plan in 2001 (UNAIDS online information, "Country Responses:  Lesotho".  Viewed at: 
http://www.unaids.org/en/CountryResponses/Countries/lesotho.asp). 
9 In July 2007, the UN called on the international community to help Lesotho cope with food shortages 
and the worst drought in 30 years. 
10 Lesotho is almost completely self-sufficient in electricity production and generated about 
US$24 million from the sale of electricity and water to South Africa in 2007.  In recent years, diamonds have 
generated more revenues than water (section (3)(i) below). 
11 The Government attaches great importance to the development of education, at the primary level, 
through the expansion of free primary e ducation, and at university level. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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Table I.1 
Sectoral breakdown of GDP, 2003-06 
(Constant 1995 prices, per cent)  
 2003 2004 2005 2006a 
Agriculture 16.4 15.5 14.7 14.0 
Crops 8.9 8.7 8.3 8.1 
Livestock 6.9 6.3 5.9 5.4 
Other 0.6 0.5 0.5 0.5 
Mining and quarrying 0.0 2.6 5.9 7.6 
Manufacturing 18.3 18.0 15.9 16.4 
Construction 16.1 14.8 13.9 13.0 
Electricity and water 6.8 6.5 6.9 7.2 
Services 42.3 42.5 42.7 41.8 
Wholesale and retail trade 8.5 8.2 8.0 8.1 
Transport and communication 4.9 5.1 5.5 5.6 
Public administration 7.2 7.2 7.1 6.8 
Education 9.5 9.5 9.4 9.9 
Financial intermediation 7.9 7.3 7.5 8.0 
Other 4.3 5.2 5.2 3.4 
a Estimates.  
Source : IMF (2008), Kingdom of Lesotho:  Selected  Issues and Statistical Appendix . 
4. With the aim of, inter alia , accelerating sustainable growth, improving food security, and 
reducing unemployment/poverty/HIV, the long-term  Vision 2020 and the Poverty Reduction Strategy 
(PRS) are being implemented with the support of in ternational institutions such as the World Bank, 
UNDP, and the IMF, including through the Di agnostic Trade Integration Study (DTIS) 
(Chapter II(4)).12  In addition, the Government is developing a Growth Strategy Paper with the 
objective of achieving broad-based and sustainable gr owth.  It emphasizes the need to remove legal 
and regulatory impediments to private-sector growth  and public-sector performance, such as enhanced 
property rights, land reforms, and targeted infrastructure investment.13  Moreover, in September 2008, 
the compact with the Millennium Challenge Cor poration (MCC) for US$362.6 million (about 21% of 
GDP) entered into force.  It is to be implemen ted over five years and covers water, health, and 
private-sector development.14  
(2) R ECENT ECONOMIC DEVELOPMENTS  
5. Lesotho's development strategy has resulted in  a positive economic performance in the past 
few years, with recent high GDP growth, relatively low inflation, and surpluses in both its overall 
fiscal position and external current account.  After growing sluggishly in earlier years, real GDP grew by 8% in 2006 and 5.1% in 2007 (compared with an annual average of 4% during 1990-99), mainly 
driven by booming diamond production and a rec overy of the textiles and clothing industry 
(Chapter IV(3)(i) and (4)), and despite the negativ e contribution of agriculture due to the severe 
                                                     
 
12 Lesotho's Information and Communication Technology Policy Paper, published in March 2005, was 
also formulated as a tool to achieve the development goals of both Vision 2020 and PRS (Kingdom of Lesotho, 
2005). 
13 IMF (2008a). 
14 The MCC is a U.S. Government corporation designed  to work with some of the poorest countries in 
the world.  A compact is a multi-y ear agreement between the MCC and an  eligible country to fund specific 
programmes for reducing poverty and stimulating economic growth (MCC online information, "About MCC".  Viewed at:  http://www.mcc.gov/about/index.php). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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drought in 2007 (Chapter IV(2)).15  Real GDP growth rates of 3.5% and 0.6% are estimated for 2008 
and 2009, respectively, partly due to mo derate growth in mining and manufacturing.16  
6. The annual average inflation rate in Lesotho, as measured by the consumer price index (CPI), 
was 6.9% during 2000-07 (down from 11.1% over 1990- 99).  However, inflation rose to 8% in 2007 
owing to rapidly increasing food and energy prices (T able I.2), and an inflation rate of 10.8% is 
estimated for 2008.17  Given Lesotho's participation in the CMA, its inflation, exchange rate, and 
interest rates closely track those in South Africa (Main Report, Chapter I(2)).  The Central Bank of 
Lesotho (CBL) was first established as the Lesotho Monetary Authority in 1978.  In August 2000, the 
CBL Act of 2000 entered into force, conferring the CBL more autonomy.18  The main goal of 
monetary policy is price stability and maintaining the peg of the loti, the national currency, against the 
South African rand.19  
7. Since 2004, Lesotho has achieved an important turnaround in its fiscal position, mainly 
because SACU receipts jumped from 23.2% of GDP in 2004/05 to around 40% in 2008/09, and the limited execution of capital expenditure projects.  Th e overall public sector balance (including grants), 
as a percentage of GDP, improved from a surplus of 0.8% in 2003 to 9.1% in 2007 (Table I.2). This 
fiscal progress was the result of, inter alia , improved domestic revenue co llection mainly due to the 
establishment of an independent Lesotho Reve nue Authority (operational since 2003), and the 
introduction of VAT in Lesotho on 1 July 2003, replacing the general sales tax (GST) (Chapter III(2)(i)).
20  Nevertheless, a fiscal deficit of 0.1% of GDP is estimated for 2008 partly 
because Lesotho's wage bill (13.4% of GDP) is one of the highest in Africa and consumes 27% of 
total domestic expenditure.  Overall Lesotho, like othe r BLNS members, has to plan for the real threat 
of a decline in SACU import duty revenue, which cu rrently accounts for over 50% of budget revenue 
(section (4) below).21  
8. SACU receipts increased from US$143 million in 2003 to US$494 million in 2008, after 
peaking at US$605 million in 2007.  Part of this  revenue windfall has been used to retire non-
concessional debt.22  As a result, Lesotho's debt sustainability indicators improved significantly, with 
ratios of external debt to GDP and debt service to exports of goods and non- factor services falling, 
respectively, from 56.4% and 5.8% in 2003 to 49.9% and 3.9% in 2008 (Table I.2).  Similarly, gross 
official reserves reached the highest  level in Lesotho's history, i.e. US$1 billion in 2007 (7.1 months 
of imports) from US$501.6 million in 2003 (5.6 months of imports). 
                                                      
15 The sharp decline in agricultural production, coupled with narrow recent GDP growth which has 
been largely confined to sectors such as mining and manufacturing with limited linkages to the rest of the 
economy and capacity to increase employment, may have exacerbated poverty  and worsened income 
distribution. 
16 IMF (2009). 
17 On 1 April 2008, tariffs for electricity, water, and public transportation were increased in line with 
higher international energy prices and the increased price of imported electricity from South Africa (IMF, 
2008a). 
18 The Lesotho Monetary Authority started functioning on 2 January 1980;  its name was changed to 
CBL in 1982.  It is fully state-owned, and the Governor is appointed by the King on the advice of the Prime 
Minister (CBL online information, "About Central Bank of Lesotho".  Viewed at:  http://www.centralbank.org .ls/about/default.htm). 
19 The rand can circulate freely in Lesotho but th is is not the case for the loti in South Africa. 
20 Total VAT collected at the end of 2003/04 was 50 % higher than the GST collected in the previous 
year (Central Bank of Lesotho, undated). 
21 In October 2008, SACU revenues for 2009/10 were revised downward by about 10% of GDP, and 
the medium-term targets have also been lowered sharply (IMF, 2008a). 
22 IMF (2008c). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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Table I.2 
Main economic indicators, 2003-08 
 2003 2004 2005 2006 2007a 2008a 
M i s c e l l a n e o u s        
GDP at current prices (M m illion) 7,862 8,513 9, 065 10,120 11,358 12,941 
Real GDP growth (% change) 2.7 5.0 0.7 8.0 5.1 3.5 
Consumer price inflation (period average;  % change)  7.3 5.0 3.4 6.1 8.0 10.8 
Consumer price inflation (end of period;   % change)  5.9 4.8 3.5 6.4 10.5 10.6 
Monetary sector        
Broad money (% change) 6.0 3.3 9.1 35.4 11.4 13.8 
Interest rateb 9.83 7.86 6.95 6.76 8.82 10.05 
Government finance ( %  o f  G D P )        
Overall balance (excluding grants) -1.5 6.1 2.0 11.9 6.9 -1.7 
Overall balance (including grants) 0.8 8.8 2.9 12.8 9.1 -0.1 
Government debtc 71.1 55.9 51.4 51.2 47.1 55.0 
Domestic debt 14.7 7.6 7.1 6.6 5.9 5.1 
External debtc 56.4 48.3 44.3 44.6 41.2 49.9 
External debt-service ratiod  5.8 11.6 17.0 7.0 10.9 3.9 
External sector       
Nominal effective exchange ratee 11.7 0.5 -1.8 -3.6 .. .. 
Real effective exchange ratee 17.1 0.7 -0.1 -2.2 0.5 .. 
Exports + imports (% of GDP) 158.5 164.0 149.7 149.0 153.0 141.0 
Current account (% of GDP) -12.3 -5.7 -7.5 4.3 12.7 -3.2 
Gross official reserves (US$ million) 501.6 513.3 556.5 747.7 1,012.4 .. 
Gross official reserves (months of imports) 5.6 4.4 4.7 6.1 7.1 .. 
.. Not available. 
a Estimates. 
b End of period 91-day treasury bill rate. c The appreciation of the loti had a significan t impact on the debt to GDP ratio in 2003. 
d  As percentage of  goods and non-factor services. 
e End of period; a minus sign indicates depreciation. 
Source:  IMF (2008), Kingdom of Lesotho:  Preliminary Conc lusions 2008 Article IV Consultation ;  and IMF (2008), 
 Kingdom of Lesotho:  Staff Report fo r the 2007 Article IV Consultation ;  and information provided by the 
 Lesotho authorities. 
(3) T RADE PERFORMANCE AND INVESTMENT  
(i) Trade in goods and services 9. Lesotho's trade deficit rose from US$517.8 million in 2003 to around US$769 million in 
2008, while income and transfers, particularly SACU receipts, increased  significantly during the 
period (Table I.3).  Lesotho's external current account, as percentage of GDP, moved from a deficit of 12.3% in 2003 to surpluses of 4.3% in 2006 to 12.7 % in 2007 (Table I.2) mainly due to the big jump 
in SACU receipts.  Nonetheless,  the external current account is estimat ed to have shifted to a deficit 
of 3.2% of GDP in 2008 largely as a result of redu ced demand for exports of textiles, lower prices for 
diamonds, and redu ced remittances.
23  
10. Lesotho's economy is highly dependent on internatio nal trade: the ratio of exports and imports 
in goods and services as a percentage of GDP aver aged 155.3% during 2003-06 (Table I.2).  In 2007, 
Lesotho ranked 121st among world merchandise exporters and importers (considering the EC member 
                                                      
23 IMF (2009). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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states together and excluding intra-EC trade).  In services trade, Lesotho ranked 152nd among 
exporters and 153rd among importers.24 
Table I.3 
Balance of payments, 2003-08 
(US$ million) 
 2003 2004 2005 2006 2007a 2008b 
Current account -135.05 - 75.66 -98.99 66. 69 211.42 196.63 
Goods, services, and income -304.73 -322.88 -399.35 -322.47 -415.07 -311.72 
Trade balance -517.81 -592.43 -656.63 -667.38 -799.02 -768.60 
Exports, f.o.b.  470.26 701.80 650.70 699.49 803.97 866.19 
Imports, f.o.b.  -988.07 -1,294.23 -1,307.32 -1,366.87 -1,603.00 -1,634.79 
Services (net) -34.69 -32.26 -46.56 -35.28 -33.95 -43.06 
Income (net) 247.78 301.81 303.84 380.18 417.92 499.95 
Labour income (net) 246.94 310.68 302.20 345.18 408.45 416.37 
Other (net) 0.83 -8.87 1.64 35.01 9.47 83.58 
Current transfers (net) 169.68 247.22 300.36 389.16 626.48 508.35 
Government, net 161.46 238.09 289.73 371.52 625.36 507.88 
SACU non-duty receipts 143.00 216.15 274.43 358.03 604.99 494.14 
Other 18.46 21.94 15.28 13.50 20.37 13.74 
Other 8.22 9.13 10.63 17.63 1.12 0.47 
Capital and financial account 122.88 94.69 63.07 12.63 118.86 104.94 
Capital account (transfers recei ved) 27.51 33.48 20. 96 11.15 32.13 12.82 
Financial account 95.37 61.20 42.11 1.48 86.72 92.12 
Special financing - LHWPc 73.00 70.77 35.25 20.28 24.44 21.23 
Reserve assets 68.34 -11.70 -43.20 -191.14 -265.08 -247.71 
Errors and omissions 2.90 18.25 64.95 58.33 -47.81 -166.67 
Valuation adjustment -59.06 -25.56 14.61 53.49 -17.39 112.83 
a    Revised estimates.  
b    Central Bank of Lesotho projections. c Lesotho Highlands Water Project.  
Source:  WTO Secretariat estimates, based on data provided by the Lesotho authorities.  
11. The direction of Lesotho's trade remains highly concentrated (Table I.4):  in 2008, around 
40% of total merchandise exports were destined to  the SACU area, notably South Africa, followed by 
35.4% to North America (especially the United Stat es), and 24.4% to the EC.  The U.S. share is 
largely due to textile and clothi ng products benefiting from the U.S. African Growth and Opportunity 
Act (AGOA) preferential trade arrangement (Chapter IV(4)).  Lesotho's export structure is shown in 
Table I.5.  Imports originate largely from SACU (although its share has declined during the review 
period), followed by Asia and the EC (Table I.6).  
Table I.4 
Destination of exports, 2003-08 
(US$ and per cent)  
 2003 2004 2005 2006 2007 2008 
World (US$ million) 470. 4 716.6 649.5 698. 6 854.9 865.6 
 (per cent) 
Africa 19.6 14.5 19.7 26.3 30.7 39.8 
SACU 19.4 13.7 17.3 24.2 27.4 38.1 
SADC 0.0 0.0 0.0 0.3 0.1 0.3 
Other 0.2 0.8 2.4 1.8 3.1 1.4 
Table I.4 (cont'd) 
                                                      
24 WTO Statistics database, "Trade Profiles:  Lesotho".   Viewed at: http://stat.wto.org/CountryProfiles/ 
LS_e.htm. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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 2003 2004 2005 2006 2007 2008 
Europe 0.1 15.3 17.2 13.3 20.9 24.4 
EC 0.1 15.3 17.2 13.3 20.9 24.4 
Other 0.0 0.1 0.0 0.0 0.0 0.0 
North America 80.1 69.9 62.8 60.0 47.8 35.4 
Asia 0.2 0.3 0.3 0.4 0.5 0.3 
Oceania 0.0 0.0 0.0 0.0 0.0 0.0 
Source:   WTO Secretariat estimates, based on data provided by the Lesotho authorities 
Table I.5  
Structure of exports, by SITC Rev.3 section, 2003-08  
(US$ million and per cent)  
 2003 2004 2005 2006 2007 2008 
Total (US$ million) 470. 4 716.6 649.5 698. 6 854.9 865.6 
 (per cent) 
Food and livestock 3.3 2.2 2.4 2.7 3.6 4.4 
Beverages and tobacco 2. 7 2.2 3.3 3. 1 2.7 2.3 
Crude materials, inedible 2.6 12.5 16.1 12.7 20.7 24.7 
Minerals fuels and related pr oducts 0.0 0.0 0.0 0.0 0.0 0.0 
Chemicals and related products 1.4 0.5 0.3 0.5 0.1 0.1 
Manufactured goods 1.6 4.8 1.3 2.8 5.1 2.4 
Machinery and transport equipment 10.5 6.0 8.0 8.3 10.3 14.2 
Miscellaneous and manufactured goods 77.6 71.4 68.3 69.6 57.4 51.7 
Commodities and transactions not classifi ed elsewhere 0.3 0. 3 0.5 0.4 0.2 0.3 
Source:   WTO Secretariat estimates, based on data provided by the Lesotho authorities. 
Table I.6  
Origin of imports, 2003-08  
(US$ and per cent)  
 2003 2004 2005 2006 2007 2008 
World (US$ million) 1,112.4 1, 428.4 1,434.0 1,498. 5 1,873.0 1,791.6 
 (per cent)  
Africa 86.1 73.4 82.9 78.1 78.4 75.5 
SACU 86.0 72.9 82.5 77.3 77.7 74.8 
SADC 0.0 0.4 0.4 0.6 0.6 0.6 
Other 0.1 0.1 0.0 0.1 0.1 0.1 
Europe 0.1 0.8 0.6 0.7 0.7 2.2 
EC 0.1 0.8 0.6 0.5 0.5 1.7 
Other 0.0 0.0 0.0 0.2 0.2 0.6 
North America 0.2 1.1 0.4 0.3 0.2 0.6 
Asia 13.2 24.2 16.0 20.7 20.3 21.1 
Oceania 0.4 0.6 0.1 0.3 0.3 0.6 
Source:   WTO Secretariat estimates, based on data provided by the Lesotho authorities. 
12. Balance of payments data indicate that Lesotho is a net importer of services, with a deficit 
averaging US$37.7 million per year during 2003- 08, and peaking at US$46.6 million in 2005 
(Table I.3).  From the sale of electricity and wa ter to South Africa, Lesotho's royalties increased from 
US$14.7 million in 2003 to US$18.4 million in 20 06 (30.8% of total services receipts).25  
                                                      
25 In 2007, Lesotho's royalties from the sale of  electricity and water to South Africa reached 
23.3 million (38.5% of total se rvices receipts) (IMF, 2008c). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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(ii) Investment 
13. Lesotho's average annual inflow of foreign di rect investment (FDI) almost tripled from 
US$24 million during 1990-00 to US$70 million ove r 2003-07;  FDI inflows in 2007 reached 
US$106 million.  This was largely the result of the positive developments in the economy, and the 
reopening of diamond mines in 2004 (Chapter IV(3)).  As a percentage of GDP, the stock of inward 
FDI increased from 36.4% in 2003 to 45.9% in 2007 (Table I.7). According to the authorities, FDI inflows reached US$89.8 million in 2008. 
Table I.7 
Foreign direct investment, 2003-08 
(US$ million) 
 2003 2004 2005 2006 2007 2008 
FDI inflows 42 53 57 92 106 89.8 
FDI inflows (% of gross fixed capita l formation) 7.6 9.6 11.2 15.5 16.7 .. 
FDI inward stock 431 484 537 629 735 .. 
FDI inward stock (% of GDP) 36.4 32.0 40.2 43.5 45.9 .. 
.. Not available. 
Source:  UNCTAD (2008), World Investment Report 2008: Lesotho ;  and information provided by the Lesotho authorities.  
14. Over the last few years, Lesotho has taken step s to improve its investment climate, notably 
through the establishment of the trade and investment  facilitation centre to serve as a one-stop-shop to 
speed up the licensing process.  Nonetheless, in ge neral, FDI in Lesotho has been inhibited by 
structural constraints, such as high transport cost s;  underdeveloped legal, judicial, and regulatory 
framework;  labour market rigidities;  limited access to bank financing; and prohibition on land 
ownership by foreigners.  Lesotho ranks 123rd (out of 178 economies) in the World Bank's Ease of 
Doing Business 2009 Index26;  the Bank's ongoing Private Sector Competitiveness Programme should 
help reduce the cost of doing business and enhance Lesotho's regional and global competitiveness.  
15. Under  Lesotho's Vision 2020 and PRS, a key aim is to attract more FDI inflows as well as to 
promote domestic investment.  A number of measures are envisaged such as:  further reducing administrative impediments for investors;  providi ng water supply and other basic infrastructure;  
improving workers' productivity and labour stability;  and identifying industries, other than textiles 
and clothing, to add value to local products and di versify the economy (e.g. agri-business, mining, and 
tourism).
27 
16. About 90% of Lesotho's FDI inflows have gone into export-oriented manufacturing 
industries, notably textiles and clothing.28  The telecommunications subsector has also attracted FDI 
(Chapter IV(5)(ii)).  FDI in the mining sector has been revived through the reopening of diamond 
mines since 2004, such as the mines in Letseng, and in Liqhobong (both jointly owned by a British 
company and the government of Lesotho).29  By country of origin, the United States and South Africa 
are the largest sources of FDI into Lesotho. 
                                                      
26 The index is based on ten topics (Lesotho's ranking), i.e. starting a business (125);  dealing with 
construction permits (150);  employing workers (63);  registering property (135);  getting credit (84);  protecting 
investors (142);  paying taxes (54);  trading across borders (141);  enforcing contracts (104);  and closing a 
business (69) (World Bank Group online information, "Explore Economies:  Lesotho".  Viewed at: http://www.doingbusiness.org/Expl oreEconomies/?economyid=110). 
27 Kingdom of Lesotho (undated). 
28 Lesotho's apparel subsector is almost entirely East Asian and South African-owned. 
29 South African companies are curren tly prospecting the mine in Kolo. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 152 
 
 
(4) O UTLOOK  
17. Lesotho's annual economic growth is expected to be 3-4% over the next few years30, i.e. well 
below the GDP growth rate of 7.5% per year need ed to reach the Millennium Development Goal of 
halving the incidence of poverty by 2015.31  This is despite increased construction activity due to 
scaled up public investments, including via the MCC co mpact.  Lesotho is to accelerate the pace of its 
structural reforms, with a focus on promoting priv ate-sector development, as stipulated in its Vision 
2020 and PRS. 
18. The main risks to Lesotho's economy include the negative impact of the persistent drought on 
agriculture and the deterioration of the external e nvironment.  A further slow-down in South Africa's 
economic growth, and developments in  the global regime for trade in te xtiles, in particular the erosion 
of trade preferences on the United States market32, will greatly affect Lesotho's export sector.  
Moreover, the uncertainty of SACU revenue poses a challenge to fiscal management, as these receipts 
account for the bulk of government revenue33;  hence, the authorities recognize the need to strengthen 
fiscal policy. 
 
 
                                                      
30 IMF (2009). 
31 Kingdom of Lesotho (undated).   
32 Significant risks to Lesotho's textile and clothi ng industry include the increased competition from 
low-cost Asian countries (e.g. China and India) as well as the expiry of AGOA third-party fabric provisions in 
2012 and of AGOA itself in 2015 (IMF, 2008a). 
33 South Africa has called for a review of SACU's revenue-sharing arrangement that may result in 
lower SACU shares for member countries.  In additio n, SACU revenues could be affected by the global 
economic crisis and the reduction in SACU's CET rates due to trade liberalization.  Re mittances from workers in 
South Africa are anticipated to increase in nominal terms, although diminishing as a ratio to GDP, as the rise in 
average pay should more than offset the decline in the number of workers resulting from structural changes in 
South African mines.  The coming implementation of the Economic Partnership Agreements (EPAs) with the 
European Communities, the ongoing liberalization under the Trade, Development, and Cooperation Agreement 
(TDCA), and the SADC customs union in 2010 will also have revenue implications for Lesotho (IMF, 2008c). SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
 Page 153 
 
 
II. TRADE AND INVESTMENT REGIMES 
(1) GENERAL  
19. Lesotho has been a SACU member from the incep tion of SACU, and thus most of its trade 
policies have been shaped at the SACU level.  On issues not covered by the SACU Agreement, 
Lesotho's trade-related policies are mainly the responsibility of the Ministry of Trade and Industry, 
Cooperatives and Marketing (MTICM).   This overall responsibility is undertaken in coordination with 
all government ministries and departments. To facilita te regular consultations, the Ministry has set up 
a number of forums where all government minist ries are represented. These include the National 
WTO Network Forum, which brings together all ministries and departments as well as the private 
sector and academia to consider policy on WTO-relate d matters, and the Inter-Ministerial task team, 
which is responsible for deali ng with industry problems.  
20. Other ministries and agencies involved in trade-related policy making include the Ministries 
of Finance and Development Planning, Foreign Affa irs and International Re lations, Agriculture and 
Food Security, and the Central Bank of Lesotho.  The 2002 SACU Agreement provides for a national 
body to be established in each member country to be in charge of SACU issues (including tariff 
changes) at the national level and to make recommendations to the Customs Union Commission 
(Main Report, Chapter II(2)(ii)).  
21. The wider business community has also become more involved in trade policy making in 
Lesotho.34  A National Steering Committee (NSC) was established in February 2002 as part of the 
Government's poverty-reduction strategy, and pu rsuant to the Integrated Framework for 
Trade-Related Technical Assistance (IF).  As an LD C, Lesotho has a number of IF-related initiatives.  
The NSC comprises the Principal Secretaries of the Ministries of Trade and Industry, Cooperatives and Marketing, Finance and Devel opment Planning, Foreign Affairs a nd International Relations,  and 
senior representatives of the Lesotho Chamber of  Commerce and Industry, the Lesotho Council of 
NGOs, the Lesotho Manufacturers' Association, Leso tho Association of Exporters, Association of 
Lesotho Employers, National University of Leso tho, the Mohloli Chamber of Business, and the 
national office of the United Nations  Development Programme (UNDP).  
22. Under the NSC, an IF Task Force was estab lished, also led by the MTICM with the 
participation of the Ministries of Foreign Affair s, Finance and Development Planning, the National 
University of Lesotho, the Lesotho National De velopment Corporation (LNDC), the Central Bank, 
and the Chamber of Commerce, as well as the UNDP national office.  Under the Task Force, a Trade 
Sector Working Group for Lesotho's Poverty Reduction St rategy Paper (PRSP) was set up to address    
pro-poor trade policies and strategies for the PRSP process.  With specific reference to intellectual 
property issues (see Chapter III(4)(iv)), an inter-min isterial subcommittee on TRIPS-related issues has 
been established under the National WTO Network Forum.  
23. Lesotho's overall trade vision is to achieve a pre-eminent position in the sub-region, and in 
Africa, as an investment destination of choice, and be competitive in the multilateral trading system 
while maintaining the highest consumer protection st andards.  Lesotho hopes to achieve this through 
development of policies conducive to promotion of en trepreneurial skills and transfer of appropriate 
technology, and through sm art partnership of the public and private sectors. 
24. Pursuant to this overall objective, Lesotho seeks "to create and maintain a more equitable and 
enabling environment for industrial, ag ri-business and commercial development". 
                                                     
 
34 WTO (2003), Annex 2, p. 118. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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25. In this regard, the MTICM undertakes to:  fo rmulate, and monitor the implementation of 
appropriate commercial, marketi ng, and industrial development policies, and enforce supporting 
legislation;  establish institutional frameworks that  promote foreign direct investment and domestic 
participation in terms of the country's commercial, marketing, and industrial activities;  and foster the 
global competitiveness of Lesotho's economy.  
26. MTICM seeks to attain these goals by:  attracti ng foreign investment in order to broaden the 
country's industrial base and improve employment o pportunities for the local population;  identifying 
and assisting local entrepreneurs and the farming community to utilize export opportunities in order to improve the country's foreign exchange earnings, and create growth in the industrial, commercial, and 
agriculture sectors;  facilitating the creation of a conducive and appropriately regulated environment 
for commercial and marketing activities in order to improve the performance, and to support the 
growth, of local entrepreneurs and farmers;  fosteri ng Lesotho's effective participation in international 
and regional trade organizations a nd maximizing its benefits from treaties to which it is a signatory;  
and increasing market shares, profit margins, and on-farm income.  
27. Lesotho's main trade-related laws have remain ed largely unchanged since the last TPR of 
SACU (Table II.1). 
Table II.1 
Main trade-related legislation, 2009 
Area Legislation 
Air transport services Aviation Act, 1975  
Customs matters, including anti-dumping 
and countervailing measures Customs and Excise Act, 1982 (Act No. 10 of  1982);  Customs and Excise Regulations, 
1984;  and Customs and Excise (Amendment) Act, 1984 
Export finance New Export Finance and Insurance Scheme, 2001 
Financial services Central Bank of Lesotho Act 2000 (A ct No. 2 of 2000);  Financial Institutions Act, 1999 
and related legal notices (Act No. 6 and Legal Notices Nos. 110-113 of 1999);  Money 
Lenders Order, 1989;  Building Finance Ins titutions Act, 1976;  and Insurance Act, 1976  
Government procurement  Act No. 4 of 1965;  and Financial regulations for the Central Tender Board 
Health and sanitary regulations Procla mation 57, 1952 (Importation of livestock and livestock products);  Stock Diseases 
Proclamation (Amendment), 1954;  Stock Dis eases Regulations, 1973;  Stock Diseases 
(Amendment) Act, 1984;  Notes of the Chief Veterinary Officer, May 2000, relating to the 
Stock Diseases Proclamation of 1896, as amende d;  Agricultural Marketing (Distribution of 
Dairy Products) Regulations,1992;  Proclama tion 45, 1951 – Fishing Regulations;  and Act 
to Provide Protection to Agricultural Plants  from Damage by Pests and Diseases, 1985  
Import and export controls Agricultural Marketing Act, 1967;  Export and Import Control Act, 1984 (amended 1996);  
Export Control Regulations, 1972 (cereals a nd legumes);  Export Control Regulations, 
1975 (preparation of sunflower);  and Expor t Control Regulations, 2001 (AGOA textiles 
and apparel) 
Intellectual property rights  Industrial Property Order, 1989, amended 1997 (Order No. 5 of 1989 and Act No. 4 of 
1997);  and Copyright Order, 1989 (Order No. 13 of 1989) 
Mining and mineral operations, including sales of diamonds Mining Rights Act, 1967;  and Precious Stones Order, 1970  
Privatization Privatization Act, 1995 (Act No. 9 of 1995);  and Privatization Regulations, 1997 
Road transport services Road Transport Act and Regula tions, 1981;  and Road Transport (Amendment) Act, 2001  
Sales tax/VAT Sales Tax Act, 1995 (Act No. 14 of 1995) ;  and Value Added Tax Act, 2001 (Act No. 9 of 
2001) 
Telecommunications services Lesotho Te lecommunications Authority Act, 2000  
Tourism services Tourism Act, 2002 (Act No. 4 of 2002) 
Trade development Lesotho National Development Corporation Act, 1967;  and Lesotho National 
Development Corporation Order, 1990 (effective 1993) 
Source: Information provided by the Lesotho authorities.  SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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(2) TRADE AGREEMENTS  
28. Lesotho is an original member of the WTO;  it has been an active participant in the on-going 
DDA negotiations, as well as in other aspects of the WTO's work programme.  Lesotho is a member 
of the Informal LDC Consultative Group in the WTO, and of the WTO African Group, and the 
African, Caribbean and Pacific (ACP) Group of c ountries.  Lesotho was, until 31 October 2008, 
Coordinator of the LDC Consultative Group, whic h required leadership and advocacy on matters 
affecting LDCs in the DDA negotiations, and on overall WTO issues. 
29. Since the last TPR of SACU, Lesotho has made a number of notifications to the WTO 
(Table II.2). 
Table II.2 
Notifications to the WTO, 2003-09 
WTO Agreement Description of 
requirement Periodicity Most recent 
notification Comment 
Agreement on Import Licensing Procedures 
Article 7.3 Questionnaire on import 
licensing procedures Annual G/LIC/N/3/LSO/1 
6 June 2008 Replies to the questionnaire 
Agreement on Rules of Origin 
Article 5 and 
Annex II(4) Non-preferential and 
preferential rules of 
origin Within 90 days of 
the Agreement G/RO/N/56  
27 May 2008 Notification of non-preferential 
and preferential rules of origin 
Agreement on Implementation of Article VII of the GATT 1994 (Agreement on Customs Valuation)  
Article VII Decision on interest 
charges Ad hoc G/VAL/W/5/Rev.19 
25 April 2008 Notification of the date from 
which it will apply the Decision 
Agreement on Safeguards  
Article 12.6 Safeguards Once, th en changes G/SG/N/1/LSO/1 
16 October 2000 No laws and/or regulations 
Agreement on Sanitary and Phytosanitary Measures 
 Membership in world 
standard-setting bodies Ad hoc G/SPS/GEN/49/Rev.8 
9 October 2007 World Organization for Animal 
Health (OIE) and Codex 
Alimentarius 
Agreement on Technical Barriers to Trade 
Articles 10.1 and 
10.3 Enquiry point Once, then changes G/TBT/ENQ/33 
26 June 2008 Ministry of Industry, Trade, and 
Marketing 
Source:  WTO documents.  
30. Lesotho has limited administrative capacity at the MTICM.  In addition to the WTO, the 
country is a member of the SACU, SADC, and the African Union.35  Within SACU, Lesotho, 
Namibia, South Africa, and Swaziland (but not Botswana) form the Common Monetary Area (CMA) 
under which the Lesotho loti is maintained at par w ith the South African rand, which circulates freely 
in Lesotho. Lesotho's membership of SACU means th at it is also directly affected by the Trade, 
Development and Cooperation Agreem ent (TDCA) between South Africa and the EC.  Lesotho also 
benefits from preferential access to the markets of most developed countries under the Generalized 
System of Preferences (GSP). 
31. South Africa has hitherto set the main trade policy instruments for the whole SACU area.  
Furthermore, the revenue available for Lesotho a nd other smaller SACU members may, in the long 
run, be affected by the revision of SA CU's revenue-sharing formula and the TDCA.36  Lesotho has 
                                                      
35 All the SACU members participate in these trade arrangements.   
36 Goods imported into South Africa, and hence into the SACU area, from the EC  will, by the end of a 
transition period, be free of import duty, improving their competitive position vis-à-vis  SACU-produced goods 
and reducing the amount of import duties charged and earned by the SACU countries. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 156 
 
 
been dependent on the SACU revenue pool for a large proportion of government revenue and GDP; 
and is particularly dependent upon the c ontribution of customs duties to this pool.37    
32. Lesotho has been an active member of SADC and is committed to its regional integration 
processes (Main Report, Chapter II).  By virtue of  its small size, Lesotho also views the broader 
market of SADC as critical to th e development of its economy.  
33. Lesotho, as an LDC, benefits from unilate ral duty-free access to the EC market under 
"Everything But Arms" (EBA).38  Like other ACP countries, Leso tho is engaged in negotiations 
towards the Economic Partnership Agreements (E PA) with the EC as part of the SADC Group 
(SACU plus Angola and Mozambique).  In June 2009, Lesotho, along with Botswana, Mozambique, 
and Swaziland signed an interim EPA on goods with th e EC.  It is Lesotho's view that the EPA route 
could bring large benefits for the country.  The au thorities believe that EPA negotiations are intended 
to cover much more than goods, and that the economic  adjustment resulting from a more liberal trade 
in services regime, investment or procurement envir onment would bring more substantial benefits to 
Lesotho.39 
34. Lesotho was the first of the BLNS countries, the second in SACU (after South Africa), and 
the fifth of the 35 originally qualifying sub-Saha ran African countries, to qualify for AGOA benefits, 
as from 23 April 2001.40  The major advantage for Lesotho from the AGOA was access to the 
U.S. market for textiles and clothing. Count ries with per capita GDP below US$1,500 in 1998 
(defined as lesser developed beneficiary countries)  enjoyed, until 2007, duty-free access for clothing 
made from fabric originating anywhere in the worl d;  in contrast, the general AGOA rule provided 
unlimited access for clothing made from U.S. fabric , yarn, and thread, and permits up to 3.5% of 
overall U.S. imports of clothing originating in AGOA beneficiaries (in quantity terms, measured in 
square metre equivalents) to be made from African fabric and yarn until 2015, while the third-country 
fabric sourcing rule was extended to 2012.  
35. The increase in imports into the United St ates of textiles and clothing from Lesotho was 
remarkable during 1999-02.  However, the AGOA did not generated trade from Lesotho in other areas 
during the period.41   
(3) INVESTMENT FRAMEWORK  
36. Lesotho has no foreign investment law, but is in the process of developing a policy paper for 
legislation.  Lesotho's regime for foreign investor s remains generally liberal and non-discriminatory;  
this situation has changed little since the last TPR of SACU in 2003.42  Restrictions relate mainly to 
small-scale industries, with less than ten employees,  which require a reserved trading licence and are 
reserved for citizens.43  There are no limitations on ownership shares.  Up to 5% of an enterprise's 
employees may be expatriate staff.  
                                                      
37 See Government of Lesotho (2007), p. 3. 
38 WTO document WT/COMTD/N/4/Add.2, 5 October 2001. 
39 Government of Lesotho (2007).  
40 See Lesotho National Development Corporation onlin e information.  Viewed at:  www.lndc.org.ls/ 
AGOA-benefits/agoabenefits.htm.  
41 WTO (2003), Annex 2, p. 121 
42 WTO (2003), Annex 2, p. 121.  
43 Small-scale industries fall primar ily in the category of artisan and include agent of a foreign firm, 
barber, Basotho beer shop, butcher, snack bar, domestic fuel dealer, dairy shop, general café, general dealer, hawker, street photographer, broker, mini-market, hair and beauty salon, petrol dealer, and tentage dealer.  SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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37. As noted in the 2003 TPR, the Lesotho Constitu tion forbids foreign investors from owning 
land. Only commercial entities under the majority co ntrol of Lesotho citizens may hold land. Foreign 
investors may only lease land for limited periods (generally 30 years);  generally the LNDC leases, on their behalf, land on which to locate industrial est ates.  The LNDC manag es a facilitation service for 
foreign investors, helps to raise finance for inv estors, and assists with the necessary licences.  It 
provides foreign investors with land sub-leases and factory shells (though investors can build their 
own shells).  
38. A Land Policy Review Commission report in 2000,  recommended a complete overhaul of the 
land tenure system, and that foreign investors be a llowed to hold freehold land in designated industrial 
areas and for commercial property development. A draft Land Bill was approved in 2009 and is 
currently under review by the office of the Atto rney General, before it can be forwarded for 
discussion at cabinet level.   
39. Lesotho is a member of the International Cent re for the Settlement of Investment Disputes 
and the Multilateral Investment Guarantee Agency  (MIGA).  The Government is willing to accept 
international arbitration, though no disputes have arisen so far.  
40. Lesotho has bilateral invest ment treaties with the Unite d Kingdom (since 1981), Germany 
(1985), OPEC (2003), and Switzerland (2004). 
(4) T
RADE -RELATED TECHNICAL ASSISTANCE  
(i) General 
41. Like many other LDCs, Lesotho has wide-ranging trade-related technical assistance needs.  
These relate to implementation of WTO agreements, participation in the WTO and trade negotiations, 
human and institutional capacity limitations, and suppl y-side constraints.  However, Lesotho has the 
advantages of membership in a customs union wi th economically more advanced countries, and 
access to one of the largest and most developed market s in Africa.  This needs to be considered when 
prioritizing Lesotho's trade-related technical assist ance needs, which are now mainly covered within 
the context of the Enhanced Integrated Framework (IF).  
42. Lesotho has difficulties in implementing WTO Agreements and participating in the WTO, 
and fulfilling commitments under other trade agreem ents.  The new SACU structure may offer an 
opportunity for regional regulatory cooperation, wh ich would allow for economies of scale in policy 
implementation, including implemen tation of some WTO Agreements.44  Such benefits will also 
depend on the possible extension of the scope of th e SACU Agreement, still limited to import duties 
and related measures (Main Report, Chapter III), to other areas of regulatory cooperation.  In areas 
where regional cooperation does not sufficiently cover its national economic interests (such as 
services), the DTIS proposes that Lesotho should c onsider formulating and undertaking sovereign 
actions.45 
43. Since the last TPR of SACU, the WTO has organized a number of national activities for 
Lesotho, including on general MTS capacity buildi ng, trade and environment, trade facilitation, and 
upgrading of the WTO Reference Centre in Lesotho.   There have also been a number of IF-related 
missions to Lesotho, in which WTO has participat ed.  Lesotho participated in dozens of regional 
                                                      
44 The DTIS also suggests that, while not relate d to WTO commitments, a similar argument would 
apply to harmonization of VAT/sales tax rates, as different tax structures encourage smuggling and distort trade 
flows. 
45 Lesotho's commitments under the GATS are relatively extensive and substantially liberal. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 158 
 
 
activities covering the whole WTO technical assistan ce programme. During this period, Lesotho also 
hosted two regional WTO activities, and is scheduled to host a regional SPS activity in 2009.  Lesotho 
has had seven participants in the Geneva Regular  Trade Policy courses between 2003 and 2008.  For 
the 2008-09 TA Plan, Lesotho requested four natio nal activities in the areas of agriculture, services, 
trade remedies and SPS;  the services component h as already been delivered.  Lesotho has also 
requested assistance from the WTO and the Inte rnational Centre for Trade and Sustainable 
Development (ICTSD) to undertake the TRIPS Needs Assessment, with the aim of ensuring full 
compliance with the TRIPS Agreement.  This will al so enable Lesotho to source technical assistance 
from other WTO Members who have already attain ed full compliance with the TRIPS Agreement. 
44. The last TPR of SACU noted that in order to participate effectively in international trade 
negotiations, Lesotho needed to enhance its capac ity in data collection (e.g. setting up a modern 
statistical system) and policy analysis, and to create an institutional setting that supports the 
implementation of trade policies.   In this regard, Lesotho has es tablished a Policy and Regulatory 
Analysis Unit (PRAU) within MTICM.  
(ii) Supply-side constraints  
45. Lesotho, as an LDC, is a beneficiary of the Enhanced Integrated Framework (EIF), through 
which most of its supply-side constraints are addressed.   The Enhanced IF is not a new initiative but is 
improving on operations of the original IF mechan ism, from which Lesotho has benefited since 2001. 
The EIF is being phased in during the first half of  2009, and its facilities will be available to all 
existing IF beneficiary countries.  
(a) IF process, milestones, and achievements in Lesotho 
46. As the first step in implementation of Lesot ho's IF programme, a Diagnostic Trade Integration 
Study (DTIS) was prepared by the World Bank, as lead agency, in cooperation with the Government 
and the other five IF core agencies.46  The DTIS sought to identify Lesotho's constraints in integrating 
into the multilateral trading system and the gl obal economy, and to draft an Action Matrix.  
47. The DTIS identifies five major challenges fo r Lesotho: the pervasive level of poverty, 
especially rural poverty; the HIV/AIDS pandemic,  which affects mainly the economically active 
population;  the lack of positive spill-over so far fr om investment by foreig n firms in the garment 
industry, and their low contribution to tax revenue ; the mounting pressures on infrastructure caused by 
the rapid development of the clothing sector; and the risk that the preferential advantages that Lesotho 
currently gains under AGOA may evaporate.   
48. The DTIS also identifies various parallel, and mu tually reinforcing, trade policy strategies for 
Lesotho:  (i) the active pursuit of gains from par ticipation in regional trade agreements, focusing on 
reducing the "costs of trading" with the other SA CU partners by removing various remaining barriers 
to trade and to movement of capital and labour  within SACU, and aligning tax and regulatory 
conditions on the South African norms;  (ii) using its integration in the SACU region as a springboard 
to greater integration into the world economy, inter alia , by using the new, democratic SACU 
structure to encourage greater liberalization of the common external tariff and to limit non-tariff 
barriers, as well as encouraging regional cooperation on trade-facilitating measures;  and (iii) taking 
actions to improve Lesotho's investment climate for foreign and domestic investors, by removing 
various administrative barriers that impede the conduct of business activities.     
                                                      
46 ITC, UNCTAD, UNDP, IMF, and WTO. SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
 Page 159 
 
 
Trade mainstreaming 
49. Lesotho's penultimate Poverty Reduction Strategy Paper (PRSP) was finalized in 2005.  Since 
the IF and PRSP processes ran concurrently, most of the priority actions iden tified in the IF Action 
Matrix were fully recognized in the PRSP.  I ssues relating to institutional capacity and business 
environment fall under the employment-creation priority  in the PRSP. This priority area consists of 
actions to enable rapid employment-creation thro ugh the establishment of an operating environment 
that facilitates private-sect or-led economic growth.  Other actions identified in the Matrix relating to 
physical infrastructure and environment conserva tion were also incorporated into the PRSP. 
50. The latest, interim 2008/09-2009/10 PRSP underscores that economic growth needs to be 
driven by the private sector.  It defines the appropr iate role of Government as an "enabler", through 
sound macroeconomic management and providing a conducive investment climate, complementary 
physical infrastructure and support services, and a sound financial system.  There are many ongoing 
Government initiatives in these areas, supported by donor partners, including a Trade Facilitation and 
Investment Centre, support for SMMEs and deve loping the Metolong dam to provide water to 
industrial firms.47  
DTIS Action Matrix Implementation 
51. The DTIS Action Matrix has only been partially  implemented, due to limited implementation 
capacity and limited financial s upport from development partners. 
52. However, some donor programmes, most notably the DFID Priority Support Programmes 
(PSP) Job Creation component, and the up-coming World Bank Private Sector Development (PSD) 
programme (with funding also from the Millennium Ch allenge Account), address a number of issues 
outlined in the DTIS Action Matrix without explicitly labelling those as  IF support.  Similarly, there 
are infrastructure projects, such as those on utiliti es and transportation funded by the development 
banks, that address supply capacity constraints but are not branded as IF or trade projects.   
53. Lesotho benefits from two IF Trust Fund (I FTF) Window 2 (W2) projects:  Product and 
Market Development of Agro-based Products (tar geting mushrooms and peaches);  and Strengthening 
Capacity for an Integrated Approach to Trade E nhancement and Wealth Creation in Lesotho, which 
has, amongst other activities, supported recruitmen t of an IF Coordinator. The Coordinator, 
supporting the IF Focal Point (Director of Trade, MTICM), is instrumental in managing projects and in preparing Lesotho to benefit from the Enhanced IF.  
(b) Preparing to benefit from the EIF 
54. The EIF is just becoming operational and the national preparations in Lesotho are still in 
progress.  Lesotho has, however, indicated great co mmitment to the EIF both at the capital and 
Geneva level;  Lesotho has served as the Chair of th e IF interim Board from its establishment in 2007.  
As a result of Lesotho's commitment, development part ners also appear to be interested in supporting 
EIF implementation in the country:  Lesotho is one of the eight countries for which UNIDO is piloting 
support of the IF Action Matrix implementation. 
                                                     
 
47 Ministry of Finance and Development Planning (2008). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) O VERVIEW  
55. Lesotho continues to apply customs-relate d measures harmonized under SACU, including the 
Common External Tariff (Main Report, Chapter III(2) and (3)).  All goods imported into Lesotho are 
subject to customs control.  The Customs Trade Programme is being introduced to, inter alia , 
computerize the customs system.  On 1 July 2003, the VAT replaced the GST;  VAT is applied to all imported and locally produced goods and services.  All goods imported into Lesotho from outside the 
SACU area require import permits. 
56. A new government procurement regime entered into force in 2007;  a maximum 15% price 
preference is granted to "Basotho business".  Lesot ho continues to rely on the South African Bureau 
of Standards as it does not have its own standard s bureau.  However, a draft law to establish a 
standards bureau has been submitted to the Govern ment law office.  The only tax concessions and 
interest rate subsidies available are associated  with the Comprehensive Export Financing Scheme 
(section (4)(i) below).   
57. The Government of Lesotho is committed to reforming at least four state-owned enterprises 
(SOEs) a year, based on certain priorities;  nonetheless, there are still a considerable number.  The 
major parastatal enterprise is the Lesotho Na tional Development Corporation (LNDC). Lesotho 
currently has no competition policy, although under th e Privatization Act the Government is to use 
privatization to introduce competition in all areas of the economy and reduce monopolistic behaviour.  
Lesotho's legislation on IPRs has not changed since its last Review in 2003. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Registration, documentation, import duties, and related measures 
58. Under Lesotho's Export and Import Control Act No. 16 of 1984 as amende d, all importers are 
required to register with the Ministry of Trad e and Industry, Cooperatives, and Marketing (MTICM) 
in order to be eligible for import permits.  Cleari ng agents must register with the Lesotho Revenue 
Authority (LRA) and submit a bond of between M 25,000 and M 50,000 on the basis of the Customs 
and Excise Act 1982.  The LRA was established in 2001, as an autonomous body, to strengthen tax 
administration and increase revenue collection;   it became operational on 1 January 2003.48  The LRA 
is principally responsible for the assessment, collecti on, and remittance of all taxes due, in order to 
provide funding for deliver y of goods and services. 
59. All goods brought into Lesotho are subject to cust oms control.  The declaration form used is 
the Single Administrative Document (SAD), introdu ced in 2006 in the co ntext of the Southern 
African Development Community (SADC).  The SAD a pplies to all imports and exports regardless of 
their origin or destination.  Goods imported into Lesotho from within the SA CU, are cleared (for VAT 
collection purposes) at the land borders (all shared wi th South Africa), the international airport or the 
parcel post;  these goods are not subject to customs duties.  In general, goods imported from outside 
the SACU pass through South Africa.  Customs clearance  on SACU imports takes only a few minutes 
as they are processed instantly on submission of d eclaration documents;  non- SACU imports take two 
days to clear.   
                                                      
48 The LRA was established by an Act of Parliament in 2001 to incorporate the functions of the income 
tax, customs and excise, and sales tax departments, previously under the Ministry of Finance. SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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60. In November 2006, the LRA commenced the Customs Trade Programme (CTP), aimed at, 
inter alia , computerizing customs systems, in collaboration with the South African Revenue Service 
(SARS).49 Once fully implemented, the CTP will be a major step towards the establishment of a 
one-stop border arrangement with SARS.  The LRA is also taking steps to tackle smuggling and tariff 
evasion in Lesotho.  The main form of evasion concerns the importation of second-hand motor 
vehicles (mostly from Japan and Singapore), throug h misclassification and undervaluation (double 
invoicing).  To reduce smuggling, controls have b een tightened and courses have been provided for 
customs officials under the auspices of WCO/WTO.  Nonetheless, further technical assistance is 
needed in this regard (Chapter II(4)(ii)).   
61. Visitors from Botswana, Namibia, South A frica and Swaziland are not permitted to bring 
liquor into Lesotho.  Goods provided in the context of foreign aid to the Lesotho Government, or as part of technical assistance programmes, are exempt ed from duties.  There are also provisions for duty 
rebates on goods imported for use by the Government .   There are no other duty or tax concessions 
provided on imports beyond those granted by all SACU member states (Main Report, Chapter III(3)).   
62. The LRA is responsible for registration for tari ff concessions or rebates, and for control of 
eligible goods.  Importers must lodge a bond guara ntee to cover the duties on rebatable goods;  it 
takes at least one month for refunds to be paid to exporters.  
63. VAT was introduced in Lesotho on 1 July 2003
50, to replace the general sales tax (GST).51  
The LRA administers the VAT, which is applicable on goods and services, whether locally produced or imported.
52  There are four rates of VAT:  14% (the standard rate) on most goods and services;  
15% on all alcoholic beverages and cigarettes;  5% on electricity and telephone services;  and zero on 
certain goods (e.g. maize and pulses) as well as ex ports of goods and services (except exports of 
diamonds for which the VAT rate is 14%).  VAT is le vied on all imports based on the c.i.f. price, plus 
duties and storage fees on board.  VAT does not incl ude storage fees at destination.  The following 
goods and services are exempted from VAT:  education;  financial services;  passenger transport services;  public postal services;  supply of unimp roved land;  leasing or letting of immovable 
property (for manufacturing purposes);  water supply;  supplies to diplomats and diplomatic missions 
upon identification;  sales or transfer of second-ha nd motor vehicles already registered in Lesotho;  
services of doctors and dentists;  sporting activities (non professional);  cultural activities;  supply of 
charity arrangements;  and sale/lease of residential property.   
64. Under Lesotho's Customs and Excise Act No. 91 of 1964 as amended, customs regimes are 
classified into imports for home use, inward pro cessing, temporary imports, and warehousing.  For 
imports under free circulation or home use, Customs examines the import declaration, and customs and excise duties, as well as VAT, are collected  before the goods are released.  Imports for 
manufacturing purpose, processing or repair before re-export, are relieved of applicable duties and 
                                                     
 
49 The first phase of the CTP, completed in 2007-08, involved the computerization of the State 
Warehouse in Maseru, and the intra-SACU trade at th e five commercial border posts (Maseru Bridge, Maputsoe 
Bridge, Caledonspoort, Qacha's Nek, and Van Rooynens Gate).  The CTP is also aimed at improving efficiency 
at the border posts and enabling th e effective sharing of information between LRA and SARS (Lesotho Revenue 
Authority, 2008). 
50 Value Added Tax Act No. 9 of 2001, as amended by Act No. 6 of 2003.  The Act is complemented 
by VAT Regulation No. 95 of 2003. 
51 The GST ad valorem rate was 10%;  20% was charged on alcoholic beverages;  and 5% on 
electricity and telecommunications.  Major exemptions included exports, inputs used in exports, and capital goods (WTO, 2003). 
52 Sales by private individuals and some small traders are not normally subject to VAT.  All businesses 
with turnover above the M 500,000 threshold must register  as VAT taxpayers.  Below this threshold registration 
is voluntary. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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taxes.53  For temporary imports, i.e. for re-export in the same state, a security fee is lodged by the 
importer (the security is refunded once Customs is  satisfied that the goods have been exported).54  
Warehouse facilities are available and may be used to store imported goods without payment of duties 
or taxes for a maximum of seven days until required for use or re-export.55   
65. Applied customs tariffs, excise duties, valuation methods, origin rules, and contingency trade 
remedies are, to date, the only trade policy me asures harmonized throughout SACU (Main Report, 
Chapter III).   
(ii) Import prohibitions and licensing 
66. Import prohibitions are applied on illegal drugs;  ammunition a nd dangerous weapons, 
including swords, cutlasses, bayonets, daggers, and certain knives with cutting edges of 30 cm or 
more;  and blasphemous material, indecent or obscene  works;  articles of an inflammatory nature;  
certain flora and fauna;  and counterfeit coins or notes.   
67. All goods imported into Lesotho from outside the SACU area require an import permit.  In 
general, Lesotho's import permit system aims to m onitor imports of goods and guarantee a statistical 
database.  Imports and exports from and to all s ources (including SACU), of all agricultural produce, 
except cereals and cereals products, require a pe rmit under the Agricultural Marketing Act of 1967.56  
Import permits on other products are issued by the MTICM.  Special permission is required from the 
Ministry of Health for the importation of brand and generic named sera, vaccines, and drugs for 
human and veterinary use.  Lesotho maintains no import quotas.   
(iii) Government procurement 
68. A new government procurement regime entered in to force on 1 January 2007, on the basis of 
the 2007 Public Procurement Regulations.57 The Procurement Policy and Advisory Division (PPAD), 
under the Ministry of Finance and Development Plan ning (MFDP), is the regulatory body with overall 
responsibility for the development of Lesotho's public procurement regime.58  Individual ministries, 
districts councils, state-owned enterprises, and ot her government bodies have their own procurement 
units.  Each of these "contracting authorities" now  operates its own tender panel as the Central Tender 
Board was abolished in December 2006.59  Each tender panel is responsible for the public opening of 
tenders and for the decision on the award of contract.   
                                                      
53 There is a time limit for imports under inwards processing, but this may be extended for certain 
reasons, such as expiry before the goods are ready to be re-exported.  This procedure is mostly used for textile 
and clothing products. 
54 The security is equal to the value of the taxes payable on the goods if they were imported 
permanently.  Temporary importation is common for machinery used for construction-related projects. 
55 All imports in contravention of any laws administered by Customs are stored in State warehouses.  
However, goods may be deposited into the State warehouse pending fulfilment of customs formalities.  Goods 
may remain within the State warehouse for up to three months, then may be dispos ed of according under the 
Customs and Excise Act. 
56 Cereals (except wheat) and products thereof have  been deregulated since 1996.  See also WTO 
(2003), Chapter III(2)(ii).  
57 Legal Notice No. 1 of 2007.  In addition, the Procurement Manual and the Government Code of 
Good Practice Procuremen t have been issued. 
58 The PPAD aims to secure legality, rationality, effi ciency, and transparency in the implementation of 
public procurement, while providing contracting au thorities and the business sector with policy advice, 
guidance, and assistance (Article 6 of Legal Notice No. 1 of 2007). 
59 The Central Tender Board, an independent statutory body, was under the responsibility of the 
Minister of Finance (WTO, 2003). SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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69. In general, government procur ement of goods, services, and contracts in Lesotho involves one 
of three methods:  (i) direct purchase for goods an d services up to M 30,000;  (ii) three quotations 
from three different providers for goods and service s between M 30,000 and M 100,000;  and (iii) the 
open tender method for goods  and services above M 100,000.60  However limited tendering61, the  
comparison method62, or non-competitive procurement may be used in certain circumstances.63  
Foreign suppliers are entitled to participate in any tender process.   
70. The invitation to tender must be made availa ble publicly, through the mass media and on the 
procurement unit's website, on the issue date.64  The submission deadline for tenders is a minimum of 
30 working days from the date of initial announcement.   Except in direct tendering, the procurement 
unit invites the successful tenderer to  enter into a contract;  if the tenderer declines a contract, its 
tender security will be forfeited and the unit will offer the contract to the second most favourable 
tenderer.65  The procurement unit must offer tenderers a debriefing, after which a waiting period of 
30 working days is required, to allow any a ggrieved bidder may lodge a written complaint. 
71. Under Article 12 of Legal Notice No. 1 of 2007, in evaluating proposals, the procurement unit 
grants a margin of preference of:  (i) 15% to a "Basotho business" (the majority of directors are 
Lesotho nationals, and the majority of shares or ownership is held by Lesotho nationals) with a 
majority shareholding of at least 51%;  (ii) 10%  to (a) a business owned between 30% and 50% by 
Lesotho nationals, (b) a tenderer bidding to supply goods of Lesotho origin, (c) a tenderer performing 
at least 50% of the contract in Lesotho and using and developing the capacity of Basotho staff, (d) a 
tenderer subcontracting at least 50% of the contract to one or more Basotho businesses, (e) a tenderer 
that has the largest use of locally produced goods, ma terials, and services, or (f) a tenderer employing 
the largest share of local labour;  and (iii) 5% to a business owned between 10% and 30% by Lesotho 
nationals.   
72. Lesotho is neither an observer nor a member of the Plurilateral Agreement on Government 
Procurement.   
                                                      
60 For goods, works or services above M 100,000, a te nder security of 1% to 2% of their tender price is 
required from tenderers.  A legal entity of Lesotho may submit a bank guarantee and government treasury bonds, while a foreign legal entity may submit a guarantee from a Lesotho or a foreign bank, government 
treasury bonds, or securities authoriz ed by the Government.  The registration fee for participating in 
procurements above M 100,000 is between M 2,000 and M 5,000 depending on the complexity of the tender documentation (Schedule 1 of Legal Notice No. 1 of 2007). 
61 Limited tendering is applied when a limited number of suppliers are capable of executing 
complicated goods, works or services requiring high qualification, expertise, equipment, and technology;  or the requirement can only be secured from the single source due to ownership of exclusive design rights or patents.  
There must be convincing reasons for competition to be avoided (Article 34 of Legal Notice No. 1 of  2007). 
62 Under the comparison method, a contractor is sel ected by comparing prices for low value products 
and services;  the contractor offering the most economi c advantages is selected.  The procurement unit must 
document the prices offered by the different contractors to  justify the selection (Article 35 of Legal Notice No. 1 
of 2007). 
63 Non-competitive contracting may only be used in certain cases, such as those involving patents and 
intellectual property rights (Article 36 of Legal Notice No. 1 of 2007). 
64 The tender documents and invitation to tender must be prepared in either of the official languages;  
where Sesotho does not have technical terms to conv ey the requirement accurately, English can be used. 
65 In the absence of a second most favourable tender, the unit must seek permission from PPAD to 
adopt the direct contracting method of procurement. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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(iv) Standards and other technical requirements 
73. Lesotho does not have its own Bureau of Standards, and continues to rely on the 
South African Bureau of Standards for its needs.  A draft law on the establishment of a standards 
bureau, submitted to the government law office at the time of the previous review is still under 
discussion.  Under the SADC, harmonization of sta ndards and technical regulations is in process 
(Main Report, Chapter III(5)).  Lesotho is the only country within SADC without any metrology infrastructure.  The Weights and Measures Order of 1970 and the Weights and Measures 
(Metrological Supervision) Regulations of 2007 aim to provide the legal framework for the 
establishment of the basic metrology infrastructure covering the regulation of weighing instruments 
used for trade, the labelling and sale of goods, and the use of legal units of measurement.   
74. The Standards and Quality Assurance Departme nt, within the MTICM, was established in 
2004 as a SADC initiative.  It is the enquiry point to the WTO TBT Agreement.
66 Its main objectives 
are to promote fair trading practices, contribute to  consumer protection, enhance the competitiveness 
of Lesotho's products through quality and produc tivity improvement, and promote adoption and 
application of national, regional, a nd international standards.  The de partment is a subscriber member 
of the International Organization for Standardization (ISO)67, the focal point for SADC efforts on 
standards and quality assurance management, a nd the contact point for the WHO/FAO Codex 
Alimentarius Commission.  Through an FAO project , the department has es tablished a food control 
system and microbiology laboratory. It has also b een instrumental in preparing standards and food 
control bills.  Lesotho has not yet accepted the TBT Code of Good Practice.68  
75. In respect of sanitary and phytosanitary regula tions, the key provisions covering livestock are 
Proclamation 57 (1952) – Importation of livestoc k and livestock products;  the Stock Diseases 
Proclamation (Amendment) 1954;  and the Stock Diseases Regulations of 1973.  In addition, 
proclamation No. 10 of 1957 states that animals or  animal products may be imported or exported only 
under a permit issued by the Department of Liv estock Services to a person designated by the 
Department.  The Stock Diseases (Amendment) Act of 1984 is targeted at preventing the introduction 
of and spread among livestock in Lesotho of any di sease that is specified in the regulations.  It 
regulates the importation of livestock from outside the country and controls the movement of 
livestock within the borders of Lesotho.  The Act also provides for the notification of disease 
outbreaks within the country and gives power to the Minister of Agriculture to appoint inspectors to 
carry out inspection of livestock.  Under this Act,  inspectors can detain, isolate, test, inoculate, 
remove, brand, dip, or remove livestock,  and levy charges on livestock owners.   
76. The Agricultural Marketing (Distribution of  Dairy Products) Regulations 1992 (Legal 
Notice 241 of 1992) empowers the Lesotho National Da iry Board to issue permits to dairy producers 
and processors and to charge a levy on all invoi ced products.  Lesotho accepts certifications by 
veterinary authorities of exporting countries. 
77. Lesotho currently maintains import prohibitions  on grounds of avian flu and classical swine 
fever.  A health certificate is required up on importation of animal and animal products. 
                                                      
66 WTO document G/TBT/ENQ/34, 30 October 2008. 
67 ISO subscriber membership has been established for countries with very small economies.  Members 
in this category pay reduced member ship fees that allow them to maintain contact with international 
standardization (ISO online information, "Subscriber members".  Viewed at:  http://www.iso.org/iso/about/ 
iso_members/subscriber_members.htm). 
68 WTO document G/TBT/CS/2/Rev.14, 20 February 2008. SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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78. Lesotho has not yet notified its enquiry point nor its national notification authority to the 
WTO SPS Committee.69  Lesotho is a member of Codex A limentarius, and the World Organization 
for Animal Health (OIE).70  
(v) Other measures 
79. Lesotho has never used countertrade or offset  arrangements.  It does not maintain any 
arrangements with foreign governments or enterprise s designed to influence the quantity or value of 
goods and services exported to Lesotho, or any surv eillance measures on imports.  Lesotho has never 
imposed trade sanctions except under United Nations  resolutions. Lesotho does not currently have 
compulsory reserve stocks. 
(3) M EASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and taxes 
80. Lesotho's registration procedures are set out in the Export and Import Control Act No. 16 of 
1984.  Exports that require certification of origin must be declared to the Customs Office, which operates a one-stop shop for registration, licensi ng, and export processing.  Customs only verifies 
compliance with the requirements as there are no duties or taxes applicable to exports.  The only 
special export registration or documentation requireme nts relate to exports of  diamonds, for which the 
exporter must obtain an export permit and pay export du ties (Chapter IV(3)).  Firms seeking to benefit 
from the country's export credit scheme must be registered with the MTICM and approved by the Central Bank of Lesotho.   
(ii) Export prohibitions, controls, and licensing 
81. Some livestock and livestock products are subject to export controls.   
82. Only licensed diamond dealers or producers, or their accredited agents, may export diamonds.   
(iii) Export subsidies and assistance 
83. Lesotho has no general export subsidy scheme.  However, there are provisions for rebates or 
refunds of import duty paid on raw materials/componen ts used as inputs in goods for export.  Except 
for diamonds, exports are not subject to VAT.   
84. The Export Finance and Insurance Scheme, administered by the Central Bank of Lesotho 
(CBL), covers against commercial and political risks, rather than just export finance.  It applies to 
large, medium-sized and small e xporters, but large exporters may be assisted only if they establish 
linkages with small and medium-sized exporters.
71  The exporter is expected to put up collateral for 
the uninsured component of the lending.72  
                                                      
69 WTO document G/SPS/GEN/27/Rev.18, 1 October 2008. 
70 WTO document G/SPS/GEN/49/Rev.8, 9 October 2007. 
71 Under the scheme, 50% of the loan to the exporter is guaranteed.  Under the Export Development 
Fund (EDF), small and medium-sized local  exporters are guaranteed up to 50% of their export loans, and export 
finance and insurance are guaranteed.  See WTO (2003).  
72 The security may comprise the exporter's assets, i rrevocable letters of credit, any bills insured by the 
buyer's bank or advance payments or any other form of security that may be agreed upon between the bank and the exporter. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 166 
 
 
85. The Trade Promotion Unit (TPU), within the MTICM, is responsible for supporting  
manufacturers' and exporters' endeavours to market  their products outside Lesotho.  TPU was 
established in 1978 to promote, coordinate and de velop Lesotho's foreign trade with a view to 
accelerating its full industrial and ag ricultural potential.  TPU offers technical assistance and advice to 
Lesotho's trade sector, promotes and publicise its  exports abroad, undertakes research and studies on 
specific exportable products, and assist foreign buyers.  The Unit also facilitates participation of local manufacturers and exporters at regional and inte rnational trade fairs and exhibitions.  The 
Government provides marketing assistance, but does not provide direct financial support for costs 
associated with trade fair participation.   
(iv) Other measures 
86. Lesotho has no legal provisions for export processing zones, although several studies have 
been undertaken by the MTICM.  In practice, all regions of the country are treated as an export 
processing zone, since all duties on imports are rebated in full for goods used in export production.   
87. Lesotho does not maintain any voluntary export restraints.   
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
(i) Incentives 88. The only tax concessions and interest rate  subsidies are still associated with the 
Comprehensive Export Financing Scheme.
73  Investors in the mining and quarrying sector are offered 
some incentives, such as exemption from ta xes on capital items during mine evaluation and 
construction, and from withholding taxes on dividends and interest payments (Chapter IV(3)).   
89. Lesotho maintains no specific incentives for regional development.   
(ii) State trading, state-owned enterprises, and privatization  
90. Lesotho has pursued its privatization programme, under World Bank auspices, on the basis of 
the 1995 Privatization Act74, and the 1997 Privatization Regulations .  Under the Act, the Privatization 
Unit (PU) was established in the Ministry of Finance to:  reduce the budgetary burden on the 
Government and release funds for other essential e xpenditures;  inject capital, technology, and 
managerial skills through private-sector participa tion and by enhancing mana gement and supervisory 
structures in the case of retained enterprises;  eliminate the administrative burden of Government 
participation in commercial activities and services whic h can best be undertaken by the private sector;  
develop entrepreneurial skills among Lesotho citizens;   provide adequate co mpensation and relevant 
retraining opportunities for any retrenched workers;  facilitate technical partnerships with foreign 
investors where essential for the enhanced manage ment and performance of formerly state-owned 
enterprises (SOEs) or parastatals;  and increase efficiency and growth of the economy.  The PU monitors individual privatization projects on a regul ar basis to judge whether various objectives have 
been realized.  In pursuing privatization, the G overnment is also advised by the Private Sector 
Advisory Committee (PSAC), comprising Governme nt, trade unions, women's associations, and 
private-sector representatives.   
                                                     
 
73 WTO (2003).  
74 Act No. 9 of 1995. SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
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91. In prioritizing SOEs, the Governme nt is committed to reform at least four parastatals a year.75  
There remain a considerable number of SOEs, th e largest being the Lesotho National Development 
Corporation (LNDC) (Chapter IV(4)).76  
92. The privatization methods envisaged are:  (i) public offer of shares;  (ii) private placement;  
(iii) trade sale through competitive bid;  (iv) sal e of assets;  (v) management/employee buyout;  
(vi) management contract, lease, and concession;  (vii) joint-venture;  and (viii) capitalization 
(Table AIII.1).  Table AIII.2 shows the privatiza tions since 1995 and the methods used, indicates the 
shareholding structure of the privatized enterprises,  the companies in the privatization portfolio, as 
well as the companies recommended for liquidation.  As required by the Privatization Act, proceeds 
from the privatization programme are deposited in special accounts held at the CBL.  These funds 
may only be used for private-sector development.  
93. Lesotho has not made any notification to the WTO regarding state-trading enterprises.  
Nonetheless, some SOEs and joint ventures such as Lesotho Electricity Company (LEC) and Lesotho 
Highlands Water Development Project (LHW DP) are still operating under monopoly or hold 
exclusive rights (Chapter IV(3)(ii)).   
(iii) Competition policy and price controls 
94. Lesotho currently has no competition policy.  Nonetheless, under the Privatization Act it is 
envisaged that the Government will use privati zation to introduce competition in all areas of the 
economy and reduce monopolistic behaviour.  Comp etition will be created by separating monopoly 
producers into competitive business units and selling th ese separately (when this is possible), and by 
allowing market entry by substitutes, imports, or similar (or same) products  supplied by different 
producers.77  Where the local market is not sufficiently large78, some monopolies will be privatized as 
monopolies.  After privatization, the Government will perform a regulatory oversight role for the 
privatized enterprise to ensure that the nati onal interests are protected from unfair commercial 
measures.   
95. Some laws in Lesotho (e.g. Price Control Ac t No. 25 of 1974; Hotels and Restaurants Act 
No. 11 of 1984; and Export and Import Control Act No. 16 of 1984), appear to encourage and 
promote anti-competitive practices, such as abuse of  dominant position and restrictive agreements or 
arrangements.  The Government is in the process of enacting legislation on consumer protection.79   
96. Over the last few years, some legal cases on comp etition issues have arisen in Lesotho.  In 
2006, an investigation by the MTICM revealed rest rictive practices (agreement between firms with 
                                                      
75 The reform priorities are firms that:  offer scope fo r reducing the need for support from the Treasury;  
require major capital investment that the Government is un likely to raise without private-sector participation;  
offer scope for improved profitability but  are constrained by a lack of skills  or of ready access to markets for 
their products;  and firms that are known to be attractive to private sector investors and could therefore generate 
both revenue and momentum for the privatization effort. 
76 The LNDC, originally established in 1967, is 90% owned by the Government and 10% by the 
German Finance Company for Investments in Developing Countries (DEG).   
77 Where it is not in the national interest to create competition in the market by privatizing the 
underlying assets (e.g. mail delivery, telecommunicati ons, water delivery and sewerage systems, and power 
generation facilities), the Government will pursue other options to create competition by contracting certain 
aspects of the operation of the entity to the private sector or by granting contracts to the private sector to build, 
operate and then transfer to the Government new assets, such as power generation stations. 
78 For example, a cement company, which produces  a non-transportable commodity for which the 
market is too small to support more than one producer. 
79 Makara (undated). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 168 
 
 
respect to prices to reduce competition) by the bigge st bakeries in Lesotho.  The MTICM intervened 
and introduced minimum and maximum bread pri ces pursuant to the Price Control Act No. 4 of 
1979.80  
97. Oil products and electricity are subject to price c ontrol to maintain prices at affordable levels.  
The Fuel and Services Control Act of 1983 (No. 23 of  1983) gave the Minister responsible for water, 
energy, and mining broad powers to regulate the supp ly and price of fuel, including electricity.   
(iv) Intellectual property protection 
(a) Overview 
98. Lesotho's intellectual property legislation has not changed since its last Review in 2003.81  
The Registrar General's office in the Ministry of Law and Constitutional Affairs is the focal point for 
all intellectual property issues.   
99. Lesotho is a signatory to the WIPO Convention;   the Paris Convention on Industrial Property;  
the Berne Convention on Literary and Artistic Works;   Article 3 bis of the Madrid Convention on 
Registration of Marks;  the Rome Convention on Pr otection of Performers;  and Patent Cooperation 
Treaty.  Lesotho is also a member of the African Regional Industrial Property Organization (ARIPO).   
100. As a least developed country, Lesotho is not required to notify its legislation under the WTO 
TRIPS Agreement until 1 July 2013.82  Lesotho benefits from the waiver for least developed countries 
in respect of the obligation under Article 70.9 of th e TRIPS Agreement (protection of existing subject 
matter).   
101. The Government has established an interministe rial committee to review intellectual property 
issues and the TRIPS Agreement.  It comprises representatives of the Ministry of Law and 
Constitutional Affairs; MTICM as the focal point fo r all WTO issues; Ministry of Agriculture and 
Food Security; Ministry of Science and Technology;  and the Lesotho Association of Inventors.   
(b) Patents, industrial designs, trade marks, and utility models 
102. The Industrial Property Order (IPO) of 1989, as am ended in 1997, covers patents, industrial 
designs, marks, collective marks, trade names in cluding marks "well known in Lesotho", and utility 
models.  Patents are granted for 15 years, extendable by five years;  industrial design marks for five 
years, extendable for two successive periods of five  years;  and trade mark rights for ten years, 
extendable for consecutive periods of ten years.  Utility model certificates are not extendable. The 
IPO of 1989 provides for compulsory licences. There are no explicit restrictions on parallel imports since they are not covered under the IPO. 
(c) Copyright and related rights 
103. Copyright protection covers works of Lesotho-based resident authors, and works first 
published in Lesotho regardless of the nationality or residence of th eir authors;  performers who are 
nationals of Lesotho, and performances taking place, fixed in a phonogram or broadcast in Lesotho;  
performers, phonograms, and broadcasts originating in  foreign countries prescribed by the Minister of 
Law and Constitutional Affairs;  unpublished works and works first published by foreign authors or in 
                                                     
 
80 Price Control (Minimum and Maximum Bread Price) Legal Notice No. 143 of 2008.    
81 WTO (2003). 
82 WTO document IP/C/40, 30 November 2005. SACU-Kingdom of Lesotho WT/TPR/S/222/LSO/Rev.1 
 Page 169 
 
 
foreign countries if the country in question grants similar protection to Lesotho;  and expressions of 
foreign folklore, foreign authors, pe rformers, phonograms, and broadcasts.   
104. The IPO defines the substance of copyright as th e economic and moral rights of the author of 
a protected work (original or derivative).  Works are protected for the life of the authors plus 50 years;  
cinema and audiovisual works for 50 years from the making of the work or its communication to the 
public.  Other provisions include authorization and contract for the use of works, use of works in the public domain, expressions of folklore, neighbouring rights, authorization by performers, protection 
of phonograms, and other relevant procedures.  The Order created a Society of Authors and Artists 
and a register (and registrar) of works, and estab lished civil remedies and sanctions, including fines 
and imprisonment.   
(d) Geographical indications, integrated circuits, and new plant varieties 
105. A Bill on geographical indications, based on the WIPO Model Law, has received Government 
approval and is before Parliament.  Conditions for protection of integrated circuits and undisclosed 
information are under discussion, as is legislation on new plant varieties, on the basis of the UPOV Model Law.  Lesotho has no specific legislation co ncerning genetically modified organisms, although 
it has accepted GM foodstuffs as part of food aid.   
(e) Enforcement 
106. The IPO contains provisions for both civil and criminal remedies for owners of patents and 
other rights, including fines ranging up to M 10,000 a nd imprisonment for up to ten years or both.  
Lesotho still has fragmented laws dealing with  enforcement of IPR and lacks well trained 
law-enforcement officials. Lesotho encounters many  IPR enforcement difficulties, notably pirated and 
counterfeit goods, mostly related to the music indus try, such as CDs and DVDs.  According to the 
authorities, an IPR coordination unit on enforcement is to be established.   
107. Lesotho requires technical assistance on IPR issu es, including for training of officials and 
amendment of its legal framework (Chapter II(4)(ii)). 
 
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IV. TRADE POLICIES BY SECTOR 
(1) OVERVIEW  
108. Lesotho's economy remains depende nt on subsistence agriculture.  It is a net importer of 
agricultural products, notably wheat, maize, sorghum, potatoes, and pulses;  it also relies on foreign 
food donations.  The National Action Plan for Food Security 2007-17 is aimed at achieving food 
security and reducing poverty in rural areas by, inter alia , improving farm productivity through 
intensification, diversification, and commercializat ion of farming systems;  and promoting sales of 
agricultural produce.  Agriculture in Lesotho is threatened by various factors, notably drought. 
109. Mining and quarrying in Lesotho have been revived with the reopening of diamond mines 
since 2004. Nevertheless, reductions in the pri ce of rough diamonds combined with increased 
production costs for energy and the global economic dow nturn have recently affected the sector.  In 
an attempt to attract foreign and local investors to the sector the Government offers a number of incentives.  Development of exports of water to  South Africa through the Lesotho Highlands Water 
Development Project (LHWDP) has contributed significantly to Lesotho's foreign earnings. 
110. Manufacturing is the staple contributor to the growth of Lesotho's formal GDP, and the 
textiles and clothing is the key subsector.  Lesotho is eligible for the African Growth and Opportunity 
Act (AGOA) and is counted as a lesser develope d beneficiary country.  Nonetheless, exports of 
garments and apparel to the United States have fa llen over the last few years. The Industrialization 
Master Plan 2007-10 is being implemented, with the pr ivate sector expected to be the main engine of 
growth and the Government creating an enabling environment. 
111. Services, notably tourism, makes up a crucia l component of Lesotho's overall policy of 
economic diversification.  The Government is pr omoting the development of the sector, and several 
state-owned enterprises (SOEs) have been privati zed, such as Lesotho Bank and Telecom Lesotho.  
Fixed-line and mobile telecoms services in Lesotho are currently offered by Telecom Lesotho, while 
VodaCom Lesotho only provides mobile services.  Lesotho is implementing its Transport Sector 
Policy, which sets out a strategy for achieving an efficient, cost effective, and safe subsector. 
(2) A
GRICULTURE AND RELATED ACTIVITIES  
(i) Main features 
112. Agriculture employs around 57% of Lesotho's labour  force, mostly on the basis of subsistence 
farming83;  provides livelihood to over 70% of its population;  and contributes about 15% to export 
earnings.84  Some 25% of Lesotho's land area has potential for agricultural development.85  
Smallholder farmers dominate producti on, with farms averaging 1.9 ha.86  Agricultural practices 
mainly comprise draught animal power for see dbed preparation, manua l husbandry operations, 
                                                      
83 Subsistence farming, based on mixed farming of crops and livestock, is the most common form of 
farming.  Some (small-scale) commercial farming ha s gathered momentum recently, as commercial farmers 
lease land from the small holders on a seasonal/annual or long-term basis.  The Government sees commercial 
farming as one of the avenues for increasing agricultural production and household food security.  Commercial farmers involved in market-oriented production account for about 10% of total output (FAO/WFP, 2007). 
84 Encyclopedia of the Nations online information.  Viewed at:  https://www .nationsencyclopedia.com/ 
economies/Africa/Lesoth o-AGRICULTURE.html. 
85 The inaccessible mountain region makes up more than  60% of the country.  Approximately 40% of 
Lesotho's population are landless, and 70% of the plots are share-cropped informally (IMF, 2008b). 
86 Encyclopedia of the Nations online information.  Viewed at:  https://www .nationsencyclopedia.com/ 
economies/Africa/Lesoth o-AGRICULTURE.html. SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 on-farm produced inputs, and household labour.  Leso tho is a net importer of agricultural products, 
notably wheat, maize, sorghum, potatoes, and pulses87;  it also relies on foreign food donations.  
Major imports include tobacco products, maize flour, chicken meat, sheep, cattle, milk, maize, apples, 
refined sugar;  its main exports are wool, maize flour, cattle, vegetables, hides, and horses.  Lesotho 
produces about 30% of its total food requirements;   South Africa supplies approximately 70% of 
Lesotho's food imports.   
113. As a result of the worst drought in the last 30 years, the sector is estimated to have registered 
an annual growth rate of -39.3% in 2007 (-1 .9% in 2004, -1.7% in 2005, and 1.7% in 2006).88 
Drought reduced the production of maize to less than half the previous year's crop:  only 
72,000 tonnes of cereal was produced.  A third of  Lesotho's boreholes and wells, and many small 
dams and reservoirs on which liv estock and gardens depended, dr ied up;  and around 30% of the 
population needed humanitarian assistance.  In July  2007, the Government declared a state of 
emergency and requested international assistance;  as part of its own national emergency response, it 
spent US$19 million, of which US$12 million were a llocated to large cash-for-work projects through 
land reclamation, and US$6 million to agricultural activities.89  
114. Crop production, mostly rain-fed and character ized by low input, accounts for 70% of the 
agricultural GDP.90  The total area under cereal cultivation has declined over the past few years, with 
only some 10% of Lesotho's 30,000 km2 classified as arable.  Because of traditional customs, many 
farmers grow maize and sorghum, though these are not  the best crops for Lesotho's conditions;  as a 
result, land productivity is declining.  There is a ne ed to find crops that suit the country's soil types 
and weather.   
115. Livestock production contributes 30% to Lesotho's agricultural GDP.91  The majority of rural 
households own livestock, mainly cattle, sheep, a nd goats;  many also have a horse, donkeys, and 
chickens.  Much of Lesotho's terrain is suited to animal production, although the subsector has 
suffered from drought in recent years.   While livestoc k production is a substant ial contributor to rural 
income, and the only revenue source at higher eleva tions, the uncontrolled an imal numbers have had 
an adverse effect on rangeland and water resources. Th ere have been some improvements in terms of 
controlling grazing systems (rotation of grazing areas to allow growth) and patterns, which have 
resulted in proper numbers (only a certain number of animals is allowed for a certain area) per grazing 
area and vegetal cover.92  
116. Lesotho is one of the least forested countries in Africa;  forest cover is very fragmented as 
neither the arid lowlands nor the colder highlands favour tree growth.  Forest and other wooded land 
represent around 1.3% of total land area ( down from 3.6% in 1990  and 2% in 2000).93  Planted forest 
trees, mainly eucalyptus, covered about 7,000 ha  in 2005 (2.5% of the total area under arable 
                                                      
87 Lesotho imports up to 65% of its annual maize requirements and 80% of its annual wheat needs 
(FAO online information, "Aquastat: Lesotho".  Viewed  at:  http://www.fao.org/nr/water/aquastat/countries/ 
lesotho/index.stm). 
88 Lesotho's agriculture is highly vulnerable to chronic drought.  In 2007, there was a combination of 
extremely high temperatures and low rainfall (IMF, 2008b). 
89 UNOCHA (2007). 
90 FAO/WFP (2007). 
91 FAO/WFP (2007). 
92 FAO online information, "Aquastat:  Lesotho".  Viewed at:  http://www.fao.org/nr/water/aquastat/ 
lesotho/index.stm. 
93 FAO online information, "Forestry country profiles:  Lesotho".  Viewed at:  http://www.fao.org/ 
forestry/18308/en/lso. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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production).  Almost all sawn wood and other industr ial forest products are imported;  there are no 
exports of forest products.    
(ii) Policy developments 
117. The Ministry of Agriculture and Food Security (MAFS) is responsible for the overall running 
of the sector, such as formulating policies and provi ding advisory services to farmers.  Lesotho's key 
policy objective for agriculture is food security .  To achieve this, agricultural production and 
marketing policies are being moved away from a hi ghly regulated inward-looking strategy, towards a 
liberalized outward-oriented market environm ent within an integrated regional economy.94  
Maize-driven food self-sufficiency is being replaced by a policy that promotes the interest of farmers 
and facilitates the growth of a sustainable, effici ent, and competitive sector that reflects comparative 
advantage, such as certain vegetables and fruits .  The key elements of this policy include: 
development of a national land policy, intensifi cation of agricultural production, a block farming 
approach for grain, horticulture, and fruit trees, and strengthening and d ecentralization of the 
extension service.95  
118. The National Action Plan for Food Security 20 07-17, launched in October 2006, is aimed at 
achieving food security and reducing poverty in rural areas by, inter alia , improving farm productivity 
through intensification, diversification, and comme rcialization of farming systems;  and promoting 
marketable sales of agricultural produce.96  The objective is to improve food security by, inter alia , 
increasing maize production to 140,000 tonnes, and wheat and sorghum output to 30,000 tonnes each 
in order to reduce the proportion of households w ith food insecurity from 36% to 32% within three 
years.  In addition, some vegetables and fruits have been identified for diversification, such as various 
types of squash, green beans, broccoli, apples, paprik a, asparagus, and cherries.  The cost of the plan 
is estimated at US$435 million.97   
119. Agriculture is also a key priority in Lesotho's Vision 2020 and its Poverty Reduction Strategy 
(PRS):  both documents identify increased agricultu ral productivity and sustainable food security as 
one of the country's primary challenges.  The objectives, set by the Information and Communication Technology (ICT) Policy for Lesotho
98, include improved agricultural productivity, protection of 
investment of livestock farmers and prevention of disease spread, better access to agri-related information for farmers and other stakeholders, lin king rural agricultural producers to markets, and 
monitoring the sustainable utilization of natural r esources in agricultural production.  The ICT can 
also be used to improve crop planning and forecast ing, and to track and locate livestock throughout 
the country.   
120. Among the key challenges envisaged in Lesotho's PRS 2004/05-2006/07 are:  (i) adopting 
appropriate farming policies, with  focus on crop diversification a nd substitution;  (ii) encouraging 
                                                     
 
94 Until the mid 1990s, the Government participated directly in producing, marketing, and processing 
most agricultural inputs and outputs, thereby limiting pr ivate-sector involvement in these activities.  The policy 
measures included protection for local farmers from fo reign competition, subsidies on inputs, and intervention 
by Government marketing output (WTO, 2003). 
95 IMF (2008b). 
96 The plan also aims to enhance the nutritional and health status of the most vulnerable (particularly 
those living with HIV and affected by the AIDS epidemic ).  The UN system, under the leadership of FAO, is 
helping the Government in resource mobilization for the plan.   
97 FAO/WFP (2007). 
98 The ICT Policy paper, published in March 2005, was formulated by the Ministry of 
Communications, Science and Technology as a tool to enable Lesotho to achieve its development goals 
stipulated in its Vision 2020 and PRS documents (Kingdom of Lesotho, 2005). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 field crops in agri-ecologically suitable areas;  (iii) exploring opportunities for block farming, 
especially in lowland areas;  (iv) introducing improved agricultural technologies;  (v) developing 
appropriate irrigation;  (vi) incorporating agri-forestry practices into all scales of farming systems;  (vii) strengthening and decentralizing extension services;   (viii) ensuring an efficient and standardized 
land tenure system;  and (ix) encouraging appr opriate animal husbandry and fodder production, 
including the introduction of milk goa ts and indigenous poultry.   Targ ets were set to bring cereal crop 
production from the base level of 185,000 tonnes to  200,000 tonnes;  increase crop yields for maize, 
sorghum, and wheat;  almost double the irrigated area;  and reduce by one third the share of households with food insecurity, and increase liv estock product exports (wool and mohair).
99  
121. Lesotho's soil conservation programme is one of the most advanced in Africa;  it uses 
terracing, grass stripping, and the construction of dams and irriga tion canals.  Nonetheless, the 
vulnerability of much of the land to soil erosion a nd the continuing soil degradation, associated with 
the region-wide process of desertification, are key factors in food insecurity.  Several UN agencies are 
involved in soil conservation programmes, but there is a growing recognition that low farm productivity cannot be solved solely through so il conservation measures, improved seed, and 
chemical fertilizers.  The MAFS sees irrigation as a key avenue for increased agricultural production 
and household food security, as it would enable farmers to intensify and diversify their crop production base.
100   
122. Land in Lesotho traditionally belongs to the people;   the King, as Head of State, is responsible 
for allocating land on behalf of the nation.  Th e 1979 Land Act grants Villa ge Development Councils 
authority to administer allocation of arable land to  individuals by issuing a permit, which guarantee 
exclusive rights for a specified peri od;  these licences do not constitute officially registered title.  The 
1992 Land Regulation (Agricultural Lease) allows for 90 year-leases on land, but this is rarely applied 
to agricultural holdings.101  The drafting of a Land Bill to replace the 1979 Land Act was initiated in 
2002, and the Bill is to be finalized in 2009.  Th e legal and institutional aspects of the Bill cover the 
broad land tenure conditions necessary for successf ul farming and urban- based livelihood and 
economic activity.102  
123. As part of its response to the state of famine  declared in 2002, the Government introduced 
block farming (to encourage commercial farming with in the sector), and a crop input subsidy scheme, 
with the objective of increasing the purchasing power of farmers and enabling them to recover from 
the crisis, while ensuring that all fields in the country were ploughed, fer tilized, and planted.  All 
farmers were entitled to seed, fertili zers, and machinery at subsidized rates;  the quantities were based 
on field size.  Seeds and fertilizers were subsidized at 50% and distributed to farmers either for payment in cash or on a credit basis.  Field mach inery operations (e.g. pl oughing, cultivating, and 
planting) were also subsidized 50% (100% subsid y upfront with 50% repayment at the end of the 
season).  Funds distributed for the provision of machinery and the purchase of seed and fertilizers 
amounted to more than US$7.5 million.  Accord ing to the World Bank, "the programme was 
untargeted, operated on a first come first serve basi s, was fiscally unaffordable, had an adverse private 
sector impact on fertilizer and seed distribution,  encouraged production in marginal lands and 
perpetual farmer dependency".
103  The provision of input subsidies was to end in 2005/06 as it largely 
failed to contribute to the subsector's productivity.104  However, due to the 2006/07 drought and 
subsequent crop failure, the Government provide d a 30% subsidy on agricultural inputs and a 20% 
                                                      
99 Kingdom of Lesotho (undated). 
100 FAO/WFP (2007). 
101 FAO online information.  Viewed at:  http ://www.fao.org/DOCREP/005/ AC849E/AC849E00.HTM. 
102 World Bank (2004). 
103 World Bank (2004). 
104 Central Bank of Lesotho (2005).   WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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subsidy on grains.105  A food price subsidy was available, from 1 October 2007 to 31 March 2008, on 
selected food items, including maize meal, fresh and sour milk.106  Input fairs, a system through which 
households are provided with vouchers for the purc hase of seed and other agricultural inputs from 
local vendors, have also been organized in areas of highest vulnerability.107   
124. The 2008/09 Budget provides guarantees of M 105 m illion to farmers for "block farming" to 
purchase inputs, lease machinery, and for ploughing .  An Agricultural Development Fund is being 
considered for continued assistance to farmers, and a supplementary budget is being assessed, to 
provide M 40 million for a cash-for-work programme that reclaims land due to soil erosion.  
Moreover, the Government is evaluating a progra mme to boost food production over time and provide 
additional relief to the poor.  It includes scaling-up input subsidies for "block farming" and irrigation 
development, and broadening e ligibility for this assistance.108   
125. Pursuant to the 1984 Export and Import Cont rol Act, as amended in 1996, permits are 
required for imports of agricultural products from countries other than SADC members.  Permits are 
granted by the Ministry of Trade and Industry, Cooperatives and Marketing (MTICM) and are valid 
for 12 months.  Non-tariff measures apply to agri cultural products imported from South Africa (fresh 
vegetables).109  According to the authorities, this is in or der to manage local supply.  A permit system 
applies to all consignments imported from non-SACU  members.  Manufacturers can obtain a "blanket 
permit" valid for 12 months and an a dditional grace period of 3 months.   
126. In recent years, Lesotho has undertaken structur al reforms in the agri culture sector, including 
removal of price subsidies and import cont rols on maize and wheat produce in favour of 
market-determined prices.  Howe ver, the 1967 Agricultural Marketing Act continues to control 
imports of bread, legumes, sugar, eggs, meat, dairy products, fru its, and vegetables.  With the 
exception of eggs, sugar, and legum es, import restrictions allow a limited exemption for consumer 
purchases outside the country.  The Department of Marketing, under the MTICM, monitors local production of consumer goods and issues import licenses for goods that are in short supply.
110  
127. Availability of finance and credit is a constrai nt to agricultural development, since rural 
family incomes do not generate enough surpluses for investment in working capital.  The risk 
involved in dry-land agriculture and the high cost of  credit to scattered small farmers in remote areas 
discourages banks from investing in agriculture.  Before its collapse in August 2000, Lesotho 
Agricultural Development Bank provided agricultur al credits;  its closure made crucial the 
development of an appropriate institutional framewo rk to address the provision of financial services 
for farming communities largely dependent on agricultu re.  The involvement of the financial sector 
was needed for a successful agricultural di versification and privatization strategy.111  Since 2005, the 
Central Bank of Lesotho has undertaken several activities including on sensitization campaigns, monitoring, and facilitation of operations under the Rural Savings and Credit Scheme.
112   
                                                      
105 USTR (2008). 
106 Afrol News , "Lesotho launches price subsidy campaign", 25 October 2007.  Viewed at:  
http://www.afrol.com/printable_article/27054. 
107 The system is considered more effective than providing input subsidies, since most farmers do not 
have any cash, and is also used during droughts. 
108 IMF (2008a). 
109 WTO document G/LIC/N/3/LSO/1, 6 June 2008. 
110 USTR (2008). 
111 Kingdom of Lesotho (2006). 
112 Central Bank of Lesotho (2007).   SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 128. The privatization of agricultural enterprises is  being implemented under the Privatisation Act 
of 1995 and the 2000 Agricultural Sector Adjustment  Programme.  The objective is to eliminate the 
fiscal burden on Government and to improve efficien cy.  All state-run agricultural enterprises have 
been advertised.  However, privatization in th e sector has moved very slowly, mainly because the 
local private sector does not have the resources to purchase enterprises.113   
129. In November 2007, the UN International Fund for Agricultural Development (IFAD) 
launched a US$8.7 million programme aimed at he lping about 37,000 poor rural households in 
Lesotho through, inter alia , better access to capital for investment purposes.114  Other programmes 
financed by the IFAD and the Lesotho Government  aim to increase farmers' incomes through better 
use/management of natural resources, improved agriculture and livestock production techniques.115  
130. Lesotho's agriculture is relatively open to extern al influence, principally from South Africa.  
Where the Government of Lesotho does not restrict imports, price trends and changes in South Africa 
directly affect prices in Lesotho.  Thus, there is a strong direct link between prices in South Africa and Lesotho and a direct interdependence of trade po licies.  As an LDC, Lesotho enjoys duty-free, 
quota-free market access to the markets of most de veloped countries and certain developing countries. 
According to the authorities, however, Lesotho has not  been able to benefit owing to the stringent 
rules of origin applied.  
131. The simple average applied MFN tariff in agri culture (ISIC Rev.2 definition) is 3.7%, with 
rates ranging from zero to 44% (Main Report, Table A III.2).  Specific, mixed, and variable (formula) 
duties apply mainly to agricultural prod ucts (Main Report, Chapter III(3)(i)).   
(iii) Selected subsectors 
(a) Cereals 
132. Lesotho's annual domestic cereal production aver ages around 110,000 tonnes, i.e. about 30% 
of its annual cereal requirements, estimated at 360,000 tonnes.  Crop production is a high-risk, low-
yield activity due to poor soil quality and a harsh climate.  Mono-cropping predominates throughout 
the country and accounts for about 90% of areas planted with cereals.  Sharecropping offsets the 
constraints related to access to land, labour, and farm inputs.  A good portion of current crop 
production is uneconomical, requiring farmers to cr oss-subsidize production from other sources of 
income.  Lesotho's cereal production is around 27 kg  per person, far below the FAO standard of 
180 kg.  Lesotho produces around 30% of the total f ood required to feed its population in a normal 
year.
116  MFN tariffs on cereals average 0.5%, with rates ranging up to 5% (Main Report, Table 
AIII.1).   
133. Maize constitutes some 80% of the rural diet, a nd accounts for some 60% of the cropped area;   
sorghum accounts for between 10% and 20%, wheat for about 10%, and beans for a further 6%.  Imports of maize represent 60- 65% of national requirements.
117  Beans and peas, important field 
                                                      
113 FAO/WFP (2007). 
114 UN News Service , "Lesotho: UN Agriculture Fund Announces $8.7 Million Programme for 
Support", 7 November 2007.  Viewed at:  http://allafrica.com/printable/200711070727.html. 
115 Other UN Agencies are also activ e in Lesotho to alleviate the consequences of recurrent droughts 
and increasing land degradation, which are among the majo r causes for food insecurity and famine.  Among the 
programmes intended to make the country less dependent on precipitation, are several dam projects and efforts 
to restore agricultural productivity and infrastructure. 
116 FAO/WFP (2007). 
117 FAO/WFP (2007).    WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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crops, are grown extensively, largely for home consum ption, but also for cash (Table IV.1).  Other 
crops include potatoes, sunflower, pumpkins, citrus , fruit trees, groundnuts, lentil, oats, barley, alfalfa 
for dairy cows, and other vegetables.  Sunflower, so ya beans, and potatoes grow well in Lesotho, but 
have no market in the country.118   
Table IV.1 
Main crops, 2002-07 
Commodity 2002/03 2003/04 2004/05 2005/06 2006/07 
Maize      
Area planted (hectares) 137,583 129,435 120,012 180,078 190,598  
Share harvested (%) 92.65 98.60 93.58 93.72 90.35 
Production ('000 tonnes) 85.03 81.00 100.72 100.82 72.64 
Average yield (100 kg/hectare) 6.18 6.26 6.60 5.11 .. 
Sorghum      
Area planted (hectares) 26,441 29,378 30,646 42,175 48,190  
Share harvested (%) 95.32 99.37 96.88 81.61 84.66 
Production ('000 tonnes) 11.95 11.48 18.53 11.33 7.82 
Average yield (100 kg/hectare) 4.52 3.91 6.00 1.59 1.90 
Wheat      
Area planted (hectares) 15,999 16,031 11,795 10,367 17,546  
Share harvested (%) 45.27 98.37 88.27 99.81 98.23 
Production ('000 tonnes) 19.2 11.65 2.05 1.98 1.55 
Average yield (100 kg/hectare) 8.19 7.27 1.70 5.11 0.89 
Beans      
Area planted (hectares) 12,363 6,261 11,467 30,975 33,781  
Share harvested (%) 90.35 136.88 76.62 89.57 88.14 
Production ('000 tonnes) 3.70 4.83 2.46 0.75 1.31 
Average yield (100 kg/hectare) 2.99 5.22 2.15 0.24 0.39 
Peas      
Area planted (hectares) 5,462 3,275 2,709 2,038 1279  
Share harvested (%) 85.01 92.00 96.94 66.64 98.91 
Production ('000 tonnes) 1.30 1.50 0.95 0.88 0.25 
Average yield (100 kg/hectare) 3.98 5.53 3.37 4.31 1.96 
.. Not available. 
Source:  Information provided by the Lesotho authorities.  
134. In an attempt to source grain for its national feeding programme from local farmers and avoid 
the high transport costs and grain prices in the region, the World Food Programme (WFP) promotes a 
new approach of conservation agriculture, whereby the soil does not have to be ploughed.119  T h e  
methodology is being spread to farmers living in th e most insecure areas and has a beneficial effect on 
local communities.120  The Government supports the effort, with a US$4 million budget to subsidize 
larger producers using conservation agriculture t echniques.  NGOs have also been popularizing 
intensive, no-dig horticulture plots as a way of in creasing vegetable production;  plants grown include 
leafy vegetables, root vegetables, legumes, and onions.121  
                                                      
118 FAO/WFP (2007).    
119 Minimizing disturbance of the topsoil helps to protect it from Lesotho's heavy rains and preserve 
organic matter.  Where possible, planting holes are covered with compost. 
120 In 2007, the WFP was able to buy over 7,000 tonn es of surplus maize dir ectly from farmers, which 
saved around US$45 per tonne compared with grain bought from South Africa.   
121 See African Agriculture , "No-tillage farming improves yields, reduces soil erosion in Lesotho", 
16 July 2008.  Viewed at:  http://africanag riculture.blogspot.com/search/label/Lesotho). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 (b) Livestock 
135. Livestock theft seriously affects Lesotho's farming communities, in terms of household assets 
and seasonal land preparation practices.  Stock Theft (Livestock Registration and Markings) 
Regulations were made in 2004 under the Stock Thef t Act of 2000.  The regulations established the 
office of the Registrar of Livestoc k, whose duties include keeping a re gister of livestock, marks, stock 
numbers and groups, their identification, locatio n and movements, grazing areas, livestock owners, 
and herdsmen. This function has since been tr ansferred to the Ministry of Home Affairs.122  
136. Despite cases of theft and pasture degrada tion, from 2004/05 to 2005/06 cattle numbers 
increased from 677,214 to 729,327;  sheep from 984,177 to 1,041,313;  goats from 768,332 to 
821,717;  and pigs from 111,699 to  135,266.  There were also 348,104 cows;  40,250 horses;  
153,716 donkeys;  1,969 mules;  196,171 dogs;  and 70,000 chicken.123  Unlike in the previous 
drought years, the effects of the 2007 drought on livestock were minimal.  Cattle exports have 
traditionally accounted for around one third of agricu ltural exports and a number of projects are under 
way to improve the cattle herd for stock rearing.  Lesotho also exports wool and mohair, each of 
which contribute around 30% to total agricultural e xports.  The national abattoir in Maseru, which 
created the capacity for meat exports to the regiona l market, is to be privatized due to management 
problems.  Meat imports include mutton, beef, pork, and chicken.124   
137. Standards of production, storage, packaging, pr ocessing, and distribution of dairy products are 
set out by the Lesotho National Dairy Board, which also grants or withdraws permits for production, 
processing, and distribution.  The MTICM is explori ng ways to maximize the production potential of 
the poultry and dairy sub-sectors.   
138. Imports of live animals and products of animal  origin are duty free, while the tariff rate is 
17.4% for meat products and 23% fo r dairy products (Main Report, Ta ble AIII.2).  Pursuant to Legal 
Notice No. 196 of 1991, a livestock importation levy is collected by the Department of Livestock Services of the Ministry of Agriculture and Food Security (when import permits are issued, to cover 
printing costs).  The rates levied are M 39 and M 15 for each head of large and small stock, 
respectively (for private persons);  M 10 for meat in bulk quantities;  and M 7.50 and M 3.75 for each 
head of large and small stock, respectively (for licensed butchers).
125  
(c) Forestry 
139. The Ministry of Forestry and Land Reclama tion (MFLR) is responsible for the overall 
administration of the subsector and provides, inter alia , services in forestry, soil and water 
conservation, range resources, and management an d nature conservation to address the problem of 
land degradation.126  
140. Under the current National Forestry Policy, ad opted in 1997, communities play a major role 
in forestry management.  Tree ownership is in the hands of the individual or group who planted the 
tree, according to the 1998 Forestry Act, which also empowers the authorities (currently the MFLR) 
to transfer ownership of trees, forest plantations  or indigenous forests/woodlands to groups or 
individuals for a certain number of years.  The Government has initiated wood-lot development;  the 
                                                      
122 Central Bank of Lesotho (2007).   
123 Lesotho Bureau of Statistics online informa tion.  Viewed at:  http://www.bos.gov.ls. 
124 Lesotho Bureau of Statistics online informa tion.  Viewed at:  http://www.bos.gov.ls. 
125 IMF (2008b). 
126 Government of Lesotho online information, "Ministry of Forestry and Land Reclamation".  Viewed 
at:  http://www.lesoth o.gov.ls/forestry. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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project also involves development of a forest policy127, establishment of a forest service, and 
provision of plants for conservation purposes.128   
141. The indigenous vegetation at the Masitise Nati onal Reserve, the Sehlabethebe National Park, 
and the Tsehlanayane Nature Reserve is under prot ection.  The importance of protection provided by 
the forest against land degradation, and the use of shrub and tree planting in land reclamation is 
growing, given the severe land erosion in the mountainous and hilly areas as a result of heavy grazing.  Very little is done in the rural areas to enforce c onservation of indigenous trees and forest patches, 
and due to aggressive wood collection for cooking , warmth, and home construction trees do not reach 
commercial size.
129  
142. MFN tariffs on forestry products average 4.3% , with rates ranging up to 25% (Main Report, 
Table AIII.2). 
(3) MINING , WATER , AND ENERGY  
143. Mining and quarrying accounted for 7.6% of Lesotho's real GDP in 2006 (up from almost 
zero up to 2003), while water and electricity contribu ted 7.2% (up from 6.8% in 2003) (Table I.1).  
The Ministry of Natural Resources is responsib le for coordinating deve lopment and operational 
activities in mining, quarrying, energy and water.   Specific programmes and projects are carried out 
by its departments (Geological Survey, Mines, an d Water Affairs) and parastatals, notably the 
Lesotho Electricity Company (LEC).  The average MFN tariff in mining and quarrying (ISIC Rev.2 definition) is 0.8%, with rates ranging from zero to 10% (Main Report, Table AIII.2).   
(i) Mining 
144. Mining and quarrying in Lesotho were revived with the reopening of the diamond mine in 
Letseng in 2004.
130  This was followed by the opening of diamond mines in Liqhobong (2006), 
Kao (2007), Mothae (2006), and Kolo (2006).131  As a result, diamond production rose from 
45,378  carats in 2005 to 216,446 carats in 2008.  
145. Exports of diamonds represented 13.1% of to tal merchandise exports in 2006 (up from 0.1% 
in 2003).  The reduction in the price of rough diam onds, combined with increased production costs for 
energy, has reduced earnings in the industry;  toge ther with the global economic downturn, this is 
                                                      
127 FAO (2003). 
128 DTI online information, "Economic overview:  Lesotho".  Viewed at:  http://www.thedti.gov.za/ 
econdb/raportt/lesothoOverview.html. 
129 Few people in rural areas are connected to th e nation's electrical grid, and wood is the only 
affordable fuel source. 
130 The Letseng mine remained abandoned after De Beer s ceased operations in 1982.  The mine is now 
owned by Gem Diamonds from the United Kingdom (70%), and by the Lesotho Government (30%).  Letseng doubled its plan capacity from 50,000 carats in 2004 to 105,000 carats in 2009 (Gem Diamonds online 
information, "Our business:  Our Operations:  Lesotho:   Letseng".  Viewed at: http://www.gemdiamonds.com/ 
b/o_ls_letseng.asp).  In 2 006, the fifteenth largest diamond in the wo rld was found in the Letseng mine.  It 
weighed 603 carats, and was sold for US$12.4 million (Central Bank of Lesotho, 2007). 
131 Kopane Diamond Developments, from the United Kingdom, owns 75% of Liqhobong Mining 
Development Company (LMDC), the licence holder and operator of the project;  the Lesotho Government owns the remaining 25% ( Rapaport News , 1 December 2008). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 expected to affect exports of diamonds significantly.   Some mines have either delayed their planned 
expansion projects or stopped operating, while awaiting a significant injection of new funds.132  
146. Remittances by Basotho workers employed in  mining in South Africa fell from around 90% 
of GDP in the early 1980s to less than 50% by the beginning of the 1990s, and 31.3% in 2008.  The 
number of Lesotho workers in South Africa's mines fell from 127,000 in 1990 to around 52,000 
in 2008.133  
147. Other than diamonds, Lesotho's mining sector produces limited amounts of coal, galena 
(sulphite of lead), quartz, agate, sandstone, and uran ium.  Clay is extracted for manufacture of bricks, 
quality ceramics, and tiles.   
148. The Mines and Minerals Act No. 37 of 2005, wh ich replaced the Mining Rights Act No. 43 of 
1967, deals, inter alia , with the allocation of prospecting and mining licences and leases, transfer and 
revocation of mineral titles, granting of incentives to local and foreign investors, conditions for 
possession of and dealing in rough or uncut preci ous stones or unwrought precious minerals, and 
limitation of output, control, and disposal of preci ous stones.  It also established the Commissioner of 
Mines and Geology and the Mining Board.134  The Commissioner, inter alia , must keep and maintain 
a register of all mineral concessions issued under the Act.  The Board, inter alia , investigates, 
negotiates or consults in all mineral right concessi ons.  Trade in precious stones is regulated by the 
Precious Stones Order No. 24 of 1970.   
149. Under the Constitution, all rights of ownership in minerals are vested in the Basotho nation.  
On the basis of the Mines and Minerals Act, the Board issues prospecting licences, mining leases, and 
mineral permits for any mineral other than diamonds (Table IV.2), provided the applicant (national or 
foreign) has adequate financial resources, tec hnical competence and experience, and makes proper 
provisions for environmental protection.  The hold er of a mineral right must give preference to 
citizens of Lesotho in terms of employment, use pr oducts and equipment made in Lesotho, as well as 
services available in the country.135  
150. The Government offers a number of incentives to attract investors to the sector.  Mining 
companies, local or foreign, are, inter alia , exempted from taxes on capital items during mine 
evaluation and construction, and there are certai n exemptions from withholding taxes on dividends 
and interest payments.  Under the Mines and Mine rals Act No. 37 of 2005, the Government requires 
payment of a 10% royalty on precious stones (previous ly 8%) and 3% on other minerals or mineral 
products.136 
                                                      
132 In December 2008, Kopane Diamond Developments  announced it was suspending production at 
Liqhobong due to the current economic crisis, which has caused diamond prices to fall between 30-50% since 
October 2008 ( Rapaport News , 1 December 2008). 
133 Central Bank of Lesotho (2008). 
134 The Board consists of: the Princi pal Secretary of the Ministry of Natural Resources (the chairman), 
the Commissioner, the legal officer of the Ministry of Natural Resources, a represen tative of the Ministry of 
Finance, two other members with knowledge and experience in mining matters, appointed by the Minister, and a 
representative of the Chamber of Commerce (Article 11 of the Mines and Minerals Act No. 37 of 2005). 
135 Article 11 of the Mines and Minerals Act No. 37 of 2005. 
136 Royalty is defined in the Act as the gross sale va lue receivable at the mine gate.  The Minister may, 
in the public interest, remit all or part of any royalty payable on any mineral product for a period he/she may 
determine.  Failure to pay royalties is punishable by a fi ne of not less than  M 50,000 or impr isonment for not 
less than one year or both. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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Table IV.2 
Mining licences, permits, and leases, 2009 
 Prospecting permit Mining lease Mineral permit 
Area  
 Not more than 25 km2 
Reduced by not less than half of the 
initial area at the end of the first term  Not defined Not more than 100 m2 
Duration  
 Initially for up to two years, renewable 
for up to one year  Initially for up to ten years, renewable 
for ten years Initially for one year, renewable for 
another year 
Fee 
 M 5 per km2 or part thereof, subject to 
a minimum of M 500 for industrial minerals and M 1,000 for all other 
minerals M 100 M 0.05 per km
2 
Holder's main obligations  
 Start operations within three months or 
such further period as the Minister may allow, from the date of issue of the 
licence Notify the Commissioner of the 
discovery of any mineral within 
14 days  Take all reasonable steps to secure the safety, welfare and health of the 
persons employed 
Submit to the Commissioner every financial year an audited report and 
statement of the expenditure incurred  
Keep a full record on, inter alia , any 
geographical or geophysical data, 
minerals discovered, and persons 
employed  Start operations on or before the date 
referred to in the programme of mining operations as the date by which work 
for profit is intended Submit a diagram of the mining area  
Keep a complete technical record of 
the operations or a copy of all maps and geological reports Permit an authorized  officer to inspect 
the books and records  
Furnish the Board with a copy of the annual audited financial statements 
within six months of the end of each 
financial year In the case of mining lease for 
diamonds, a government representative 
is required to oversee the operations Submit a report to the Commissioner, 
each financial year Submit a report of the production in 
the preceding year and its value Submit a brief description of the plant, 
vehicles, and equipment 
Submit an average number of employees during the preceding year 
Government shares or investment  
 Not defined The Government may, through the 
Ministry of Natural Resources, acquire 
not less than 20% shareholding in a proposed mine Not defined 
Source:  Mines and Minerals  Act No. 37 of 2005. 
151. Under the Precious Stones Order, only licensed diamond dealers or producers, or their 
accredited agents, may export diamonds.  Exporters of  diamonds must apply for an export permit and 
pay export duties (Chapter III(3)(i)).  Exports of diamonds are subject to VAT (Chapter III(2)(i)). 
(ii) Water and energy 
152. The development of water exports to South Africa, through the Lesotho Highlands Water 
Development Project (LHWDP), has contributed signi ficantly to Lesotho's foreign earnings, as well 
as creating a major destination for FDI into Lesotho since 1986.137  The Water and Sewerage 
Authority (WASA), established in 1991 as a parast atal, aims to provide satisfactory water and 
sewerage services to the population.138  From the sale of electricity and water to South Africa, 
                                                      
137 The LHWDP, a joint venture between Lesotho and South Africa, was initiated in 1986 to supply 
water to South Africa, especially to  Gauteng province, and to meet domestic power needs in Lesotho (WTO, 
2003). 
138 Lesotho Water and Sewerage Authority Order No. 29 of 1991.  WASA provides safe drinking water 
to over 45,000 connections plus some 400 standpipes, serving over 200,000 people out of a total population of 
around 2 million.  It also serves indu stries and commercial pr emises (WASA online information.  Viewed at:  
http://www.wasa.co.ls/about.php). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 Lesotho's royalties increased from US$11.6 million in 2002 to US$32.4 million in 2008.  Water 
consumption has increased over the last few years on account of, inter alia , the ongoing Maseru Peri 
Urban Water Supply Project.139  
153. Rural and urban households are responsible for some 80% of Lesotho's total energy 
consumption.  About 85% of house holds do not have access to grid electricity, and almost 70% of all 
households use biomass fuels as their main source of energy, reflecting the poverty of the country and 
the scale of the subsistence sector.  Petroleum acc ounts for 80% of the remainder, with coal (all 
imported from South Africa) and electricity the other main sources of energy consumption.  Renewable energy currently plays a small role in term s of total energy consumed, but this is expected 
to change in the near future;  solar energy elect rification is being introduced in three districts. 
154. All petroleum products are imported from Sout h Africa;  there are three depots in Maseru 
with storage capacity of approximately six days of petroleum supply.  Lesotho has no known oil or gas deposits.  The supply and pricing of petroleum products in Lesotho and the other SACU countries 
is coordinated by the Interstate Oil Committee (IOC);   pricing in Lesotho is the responsibility of the 
Minister of Natural Resources, but powers have be en delegated to the Petroleum Fund Board.  The 
Board is responsible for setting the pump prices of diesel and petrol, and the wholesale price of 
illuminating paraffin.
140  Over the last few years, there has been  an increase in the consumption of  
liqueified petroleum gas (LPG).  Although the s upply and price of LPG is not controlled, its 
importation  in quantities greater than 100 kg is limited to registered wholesalers or retailers according 
to the Liquefied Petroleum Gas (Trade and Hand ling) Regulations of 19 97.  LPG prices vary 
significantly throughout Lesotho, and the authoriti es intend to establish a national price regulation 
mechanism taking into account the different transport costs.141  
155. The Department of Energy, under the Ministry of Natural Resources, formulates medium- to 
long-term energy plans, and develops policies and st rategies for the subsector.  The main goal for the 
subsector is to make energy universally accessible and affordable in a sustainable manner, with 
minimal negative impact on the environment.  Th e Electricity Act No. 7 of 1969 was repealed and 
replaced by the Lesotho Electricity Act of 2002.  Th e LEC has sole responsibility for the transmission 
and distribution of electricity.142  The LHWDP is responsible fo r electricity generation and for 
exporting water to South Africa.   
156. Electricity demand in Lesotho is met thr ough purchases (72 MW) from Muela Hydropower 
Station (owned by the LHWDP) by the LEC, with the remaining demand in peak periods (about 
18 MW) being met by purchases from Eskom in South Africa and recently from Mozambique.  
Electricity is being supplied to end-users through a system of transmission and distribution lines 
operating at various voltages of 132 kV or lower.143 Lesotho is an operating member of the Southern 
Africa Power Pool.  It is also a signato ry to the SADC Energy Protocol.   
                                                      
139 Central Bank of Lesotho (2007). 
140 There four pricing zones based on the distance from the nearest depot inside and outside Lesotho;  
each zone has a transport differential (L esotho Electricity Authority, undated). 
141 Lesotho Electricity Authority (undated). 
142 Privatization Act (approved privatization scheme for Lesotho Electricity Corporation) Notice 2004. 
Viewed at:  http://www.lesotho.gov.ls/ articles/2004/Ad_LEC_Privatization.htm. 
143 In the mountainous eastern areas of the country, electricity is supplied either by one of four 
mini-hydro plants with diesel-powered back ups also operated by LEC, or by separate 22kV interconnectors to 
the South African grid (Privatization Act (approved priv atization scheme for Lesotho Electricity Corporation) 
Notice 2004.  Viewed at:  http://www.lesotho.gov.ls/articles/2004/Ad_LEC_Privatization.htm). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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157. The Lesotho Utilities Reform Project, financed by the World Bank, the African Development 
Bank, the EU, and the Government of Lesotho at a cost of about US$40 million, aims to restructure the subsector to improve and expand the delivery of el ectricity in Lesotho.  The restructuring process 
has involved:  (i) updating legislation that governs el ectricity and the establishment of an independent 
sector regulator in 2002, the Lesotho Electricity Aut hority (LEA), to ensure efficient services, with 
maximum outreach, and competitive prices
144;  (ii) improve the managerial, technical, commercial, 
and financial performance of the LEC in prepara tion for eventual privatization (Table AIII.2)145;  and 
(iii) recruitment of a Sales Advisory Group to help draft secondary legislation to supplement and enable implementation of the new electricity legislation.   
158. During 1993-03, electricity tariffs in Lesotho re mained unchanged.  As part of the subsector 
reforms, electricity target tariff levels were determin ed, on the basis of a study by consultants, so as to 
encourage the LEC to improve efficiency, minimize the financial impact on domestic consumers, and 
minimize the (implicit) subsidy required for as long as ta riffs are below the target levels.  A three-year 
phase-in was adopted:  on 1 January 2004, there was an initial increase of 18% on electricity for all 
domestic and general purpose consum ers, with subsequent increases at the start of 2005 and 2006.
146  
On 1 April 2008, tariffs for electricity, water, and public transportation were increased in line with 
higher international energy prices and the increase in price of imported electricity from South Africa. The electricity tariff was increased  again in November 2008 mainly due to the restructuring of the 
LEC.  Electricity tariffs are set by the LEC. 
159. Imports of electricity are duty free.   
(4) M
ANUFACTURING  
160. Manufacturing remains the main contributor to Lesotho's formal GDP growth;  and textiles 
and clothing comprise the main element in manufacturing growth and trade.147  In August 2006, there 
were 44 manufacturers in Lesotho employing 47,466 people, and projections were 54 firms would be 
employing 54,347 people by January 2007.  Over 80 % of firms operating in Lesotho's manufacturing 
sector are foreign, half of them from Chinese Taipei, and 23% from South Africa.  Locally-owned 
firms are mostly micro, small, and medium enterprises (SMMEs).148  Around 95% of manufacturing 
firms export their products, about two thirds to th e United States, and one-quarter to South Africa.149  
                                                      
144 Lesotho Electricity Authority Act No. 12 of 2002.  The LEA has exclusive authority to regulate the 
subsector, and all licensed operators.  It can also re gulate prices charged to co nsumers, and the charging 
methods, where these are not competitive.   
145 LEC is to be restructured thr ough the concession method:  70% of LEC's shares will be offered to 
investors (under concession) at a fixed price, with the government retaining the remaining 30%;  and the initial 
concession will be for 20 years, with subsequent concessions of 15 years.  This method aims to ensure that the 
Government retains long-term control over electricity a ssets, while achieving the benefits of private-sector 
investment and expertise in the LEC (Privatization Act (approved privatization scheme for Lesotho Electricity 
Corporation) Notice 2004.  Viewed at:  http://www.les otho.gov.ls/articles/2004/Ad_LEC_Privatization.htm).  
146 Privatization Act (approved privatization scheme for Lesotho Electricity Corporation) Notice 2004. 
Viewed at:  http://www.lesotho.gov.ls/ articles/2004/Ad_LEC_Privatization.htm. 
147 Lesotho's manufacturing sector emerged in the early 1980s when South Africa-based clothing 
manufacturers relocated to Lesotho in order to avoid the sanctions imposed  because of the apartheid regime 
(WTO, 2003). 
148 In Lesotho, a micro-enterprise has less than th ree workers;  a small enterprise employs 3 to 
9 people;  and a medium enterprise has between 10 and 49 people.  In 2005, there were more than 
100,000 SMMEs employing nearly 200,000 people (up from 59,650 SMMEs employing 82,567 people in 1990) 
(Ministry of Trade and Industry, Cooperatives, and Marketing, 2007). 
149 Ministry of Trade and Industry, Cooperatives, and Marketing (2007). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 161. In May 2007, the Ministry of Trade and I ndustry, Cooperatives and Marketing unveiled its 
Industrialization Master Plan 2007-10 (IMP), aiming to further promote the manufacturing sector, create more employment, and help reduce poverty.
150  The private sector is expected to be the main 
engine of growth, with the Government facilitating the process by creating an enabling environment.  
The IMP envisages 29 specific measure s to address obstacles:  development of a centralized structure 
for formulating and monitoring industrialization po licy, so as to address the lack of administrative 
coherence and failures in coordination;  improv ements in the investment-incentive regime;  
diversification of manufacturing activities;  secu ring access to export markets through improvements 
in trade negotiating capacity;  infrastructure deve lopment;  improving the business environment;  
facilitating access to credit from commercial banks;  promoting labour productivity;  and developing 
SMMEs.   
162. Under the IMP, the Government keeps to ame nd the 1979 Land Act to allow private investors 
to acquire leasehold and freehold titles in land designa ted for industrial use.  This is to encourage 
private provision of industrial locations, and will al so permit the use of land holdings as collateral for 
business loans.  This is to address the problem of  under-representation of Basotho enterprises in the 
industrialization process, which is due largely to their difficulty in raising credit from commercial 
banks.   
163. The major parastatal enterprise is the Leso tho National Development Corporation (LNDC), 
whose purpose is "to initiate, promote and facilitate  the development of manufacturing and processing 
industries, mining and commerce in a manner calculate d to raise the level of income and employment 
in Lesotho."  Its mandate to date has been limite d to manufacturing and to a lesser extent commercial 
activities;  this implies a bias towards encouragi ng the manufacturing sector as against others.  The 
authorities are taking steps to redefine the LNDC 's mandate to include the service sector.  The 
LNDC's core functions include finance, investme nt promotion, monitoring and appraisal, legal 
services, technical services, and entrepreneurial deve lopment;  in these matters, it works as a one-stop 
shop for investors.151  
164. Tariffs on manufactured imports average 8.5%, with rates ranging up to 96% on some food 
products (Main Report, Table AIII.2). 
Textiles and clothing 
165. In 2006, around 41% of all manufacturing fi rms were textiles and clothing producers, 
employing 95.5% of manufacturing workers.152 Lesotho mainly produces garments for the 
high-volume/low-value market, including top-weight  knitted fabric products (notably T-shirts) and 
bottom-weight trousers/slacks (especi ally jeans) (Table IV.3).  Exports of textile and clothing 
products represented 49.8% of total merchandise expo rts in 2008 (71.8% in 2003).  Tariffs on textiles 
products average 19.4%, with rates ranging up  to 60% (Main Report, Table AIII.2).   
166. The United States accounts for more than 80% of  Lesotho's export market for garments, with 
almost all exports (99.6% in 2006) benefiting from the AGOA preferential trade arrangement 
(duty-free/quota-free access).  Moreover, as a "les ser developed beneficiary country", Lesotho is 
granted, until 2012, duty-free access for clothing manu factured from fabrics sourced in third-countries 
under AGOA's Special Provision.  Nonetheless, the Unite d States market is likely to become more 
                                                      
150 The MPI was agreed between the Government and the World Bank under the Private Sector 
Competitiveness and Economi c Diversification Project. 
151 The LNDC administers four se rviced industrial estates, in Maseru, Thetsane, Maputsoe, and 
Ha Nyenye, as well as a factory building at Mafeteng.   
152 Ministry of Trade and Industry, Cooperatives, and Marketing (2007). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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difficult for Lesotho exporters mainly because of increased competition and preference erosion.  
Another key challenge for Lesotho's textile and clot hing subsector is to develop backward linkages in 
the domestic economy.   
Table IV.3 
Textile industry, 2007-09 
Industry subsector January 2007 January 2008 January 2009 
 Workers Establishments Workers Establishments Workers Establishments 
Knit garments 26,263 31 25,229 27 23,182 29 
Woven garments 15,961 10 13,681 9 13,965 9 
Fabric (denim) and yarn 1,155 1 998 1 816 1 
Embroidery, screen-print, 
and home textile 705 8 769 7 842 7 
Total 44,084 50 40,677 44 38,805 46 
Source:  Information provided by the Lesotho authorities.   
167. Under the IMP, Lesotho will seek to diversif y both its higher-value products (woven and 
knitwear)153, and its markets, including in the EC on the basis of the ongoing EPA negotiations.  The 
IMP will also promote Lesotho as a manufacturing location for the supply of regional markets.  It will also seek to develop import-substitution activities, such as the provision of "findings" (buttons, zips, 
and garment components) for the textile and garment industries, will also be sought.
154  
168. Other manufacturing industries established in L esotho include leather, food and beverages, 
consumer electronics, clay-based brick and ceramic til es, television assembly, and edible oils.  A total 
of 18 non-garment firms were employing 4.5%  of workers in the sector in August 2006.155  
169. According to the IMP, Lesotho's greatest rela tive comparative advantage appears to be in 
subsectors requiring labour-intensive assembly of imported components, such as electronic and electrical goods for regional markets, and the pr ocessing of local agricultural and mineral raw 
materials to add value in-country prior to export.  Manufacture of generic medicines is also to be 
considered.  The main outlets for non-textile expor ts are expected to be in regional markets in 
southern Africa.
156  
(5) S ERVICES  
170. The services sector accounted for 41.8% of GDP in 2006.   Education services comprise the 
main segment (9.9% of total GDP);   followed by wholesale and retail services (8.1%);  financial 
intermediation (8%);  public administration (6.8%);   transport and communication (5.6%);  and other 
services (3.4%).  Lesotho is a net importer of services;  its services trade deficit averaged US$37.7 million per year during 2003-08 (Chapter I(3)(i)).   
171. Services, notably tourism, comprise crucia l component of Lesotho's overall policy of 
economic diversification.  The Government is  promoting the development of the sector and 
                                                     
 
153 Woven and knitwear products are required in relatively low volumes with very short delivery 
periods, thus making it difficult for producers in East and South Asia.  Lesotho will consider the possibility of 
producing the high-quality fabrics needed for the manufacture of these items, possibly on the basis of imported grey cloth (Ministry of Trade and Industry, Cooperatives, and Marketing, 2007). 
154 Ministry of Trade and Industry, Cooperatives, and Marketing (2007). 
155 Ministry of Trade and Industry, Cooperatives, and Marketing (2007). 
156 Ministry of Trade and Industry, Cooperatives, and Marketing (2007). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 private-sector participation is being encouraged;  L esotho has divested several state-owned enterprises 
(SOEs), such as Lesotho Bank and Telecom Lesotho (Chapter III(4)(ii)).   
172. Under the General Agreement on Trade in Services (GATS), Lesotho scheduled 
sector-specific commitments across virtually all major service categories.157 Under its horizontal 
commitments on market access, Lesotho specifies th at there will be no limitations on cross-border 
supply, or on consumption abroad, of the 85 sectors or subsectors included in the schedule.  However, measures affecting one or both of these modes of supply are unbound in 33 sectors or subsectors, and 
under "architectural services",  the services of a locally registered architect must be utilized for 
building plans of 500 square metres or over.  In respect of presence of natural persons, the Schedule 
binds the automatic grant of entry and work permits  for up to four expatriate senior executives and 
specialized skill personnel "in accordance with relevant provisions in the laws of Lesotho", and states 
that enterprises must also provide training in hi gher skills for locals to enable them to assume 
specialized roles.  Lesotho maintains no limitations  on national treatment;  however, as with market 
access, measures affecting the supply of certain  services remain wholly or partly unbound.
158  
173. Lesotho has not yet tabled its initial conditional offer in the ongoing services negotiations.  
Speaking on behalf of the LDC Group, Lesotho has st ressed that LDCs need to  maintain their current 
flexibilities under the GATS;  special consideration n eeds to be given to sectors and modes of export 
interest to LDCs, notably Mode 4;  it has requ ested the operationalization of special priority for 
LDCs;  and stated that LDCs should also be exem pted from any disciplines, particularly on domestic 
regulation, given their weak regulatory capacities.159  
(i) Financial services 
174. Lesotho's financial services subs ector is small and concentrated.  It comprises three banks (all 
South African), one Post Office savings bank, and numerous  non-banking institutions (NBIs), 
including around 800 domestically owned Saving s and Credit Cooperatives (SCCOs), 6 insurance 
companies (mostly foreign-owned), and 12  insurance brokers.  As a percentage of GDP, total assets of 
Lesotho's banks represented 40% at the end of 2006, while that of NBIs was 46.2%.160  
175. The banking system, dominated by three Sout h African commercial banks, is profitable, 
well-capitalized, and liquid;  non-performing loans have recently increased but remain moderate.161  
In 2006, Standard Bank of Lesotho and Lesotho Bank merged to form a new bank, Standard Lesotho 
Bank Limited with shareholding by:  Standard Bank of South Africa (80%), Lesotho Unit Trust 
(10.4%), and Government of Lesotho (9.6%).162  The locally owned Kish City Bank was licensed as 
the first merchant bank in August 2006, but its licen ce was revoked in May 2008 by the Central Bank 
of Lesotho (CBL).163  The bank's loan portfolio is concentr ated on a few borrowers, with little finance 
offered to SMEs and households.  The authorities have indicated that the ongoing strengthening of 
                                                      
157 WTO document S/DCS/W/LSO, 24 January 2003. 
158 Concerning commercial presence, the schedule specifi es that wholly foreign-owned enterprises must 
satisfy a minimum equity capital requirement of US$200,000, joint-venture companies must  have a minimum 
foreign equity capital outlay of US$50,000 in cash or in kind, and that agency establishments must have 
authority to negotiate and conclude contracts on behalf of their foreign parent companies.  Some restrictions are also placed on the issuance of shares by banks (WTO, 2003). 
159 WTO document TN/S/M/27, 14 November 2007. 
160 IMF (2008d). 
161 IMF (2008a).  
162 Central Bank of Lesotho (2007). 
163 CBL also revoked the licences of two insurance br okers.  No specific reasons were given, but Kish 
City Bank had not become operational (Economist Intelligence Unit, 2008). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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Lesotho Postbank, together with ordered development of microfinance, would increase the 
population's access to financial services.164   
176. Lesotho has some insurance companies that deal  in long-term insurance business, and others 
that deal with short-term business;  there is also a composite company.  Insurance brokers deal with 
long- and short-term business.  The main insurance bu siness is compulsory motor insurance.  There is 
one private insurance company, whose assets were ar ound 15% of GDP at the e nd of 2006, while total 
assets of insurance compani es represented 18% of GDP.165  Almost all resident pension funds are 
managed by insurance companies.  The Government is undertaking pension refo rm to switch from the 
current unfunded defined benefit plan to a pre-f unded defined contribution plan.  Lesotho does not 
have a stock exchange.   
177. The main risk to the financial subsector seems  to be the weakly supervised NBIs, notably 
savings and credit cooperatives (SCCOs)  and informal investment schemes.166  SCCOs have grown 
over the last few years in response to the high costs of using formal banking services and the low access to bank credit.
167  Total SCCO assets represented about 7% of total NBI assets at the end of 
2006.168 Most SCCOs offer savings accounts, investme nt deposits, cooperatives shares of certificates, 
and car and housing loans.  The le gislation on NBIs is being reviewed by the CBL (which at present 
has no jurisdiction in this area), with the intention of putting in place a sound regulatory framework.   
178. The CBL regulates all financial institutions.  It is not independent as its  capital is owned and 
held exclusively by the Government and, it is both the banker and adviser to the Government in 
relation to monetary and financial questions.  The Governor is appoint ed by the Minister of Finance, 
and the Bank's ability to issue securities, undert ake exchange clearing operations with foreign 
financial institutions, and participate in any currenc y union (i.e.  the CMA) is subject to government 
approval.  Over the last few years, the CBL has focused on establishing a well functioning money 
market with sound operational and regulatory struct ures with the aim of providing a springboard for 
developing other market segments.169  
179. The basic framework for financial services in Le sotho is contained in the Central Bank of 
Lesotho Act 2000170, the Cooperatives Societies Act 2000, th e Financial Institutions Act 1999 and 
related legal notices171, the Money Lenders Order 1989, the Anti-Money Laundering Act 2008, the 
Building Finance Institutions Act 1976, and the Insurance Act 1976.  The Insurance Act 1976 has 
been revised to comply with the International Association of Insurance Supervisors (IAIS) core 
principles and transfer supervisory powers (vested  in the Minister of Finance and Development 
Planning), to the Commissioner of Insurance.  This  resulted in the Insurance Bill currently awaiting 
adoption by Parliament.   
                                                      
164 IMF (2007c). 
165 IMF (2008d). 
166 These informal investment schemes, also known as pyramid or Ponzi schemes, have large and fast-
growing liabilities, and pose significant risks of failure.  The extent of the SCCOs operations, which by law are 
permitted to take deposits from non-memb ers, is not well known (IMF, 2008a). 
167 Access to banking services is generally not available to certain segments of the population such as 
those living in rural areas or without steady incomes. 
168 IMF (2008d). 
169 There has been significant progress in the reform of the treasury bill market;  new trading 
regulations have been introducted and the duration (tenor) lengthened to include 273 and 364 days treasury bills 
(IMF, 2008a). 
170 Act No. 2 of 2000. 
171 Act No. 6 and Legal Notices Nos. 110-113 of 1999. SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 180. Under the CBL Act of 2000, the Bank's functi ons include promoting the sound development 
of the financial system.  The CBL acts as Commissi oner of Financial Institu tions under the Financial 
Institutions Act of 1999 and the Money Lenders Or der of 1989, as Commissioner of Building Finance 
Institutions under the Building Finance Institutions  Act of 1976, and as Commissioner of Insurance 
under the Insurance Act of 1976.  It may set required reserve ratios to be held  by financial institutions 
and impose penalties on financial institutions that fa il to respect them.  It may also set temporary 
conditions and restrictions on total credit, if this objective cannot be attained by other means.    
181. Conditions for licensing and superv ision of all banking and credit institutions are set out in 
the Financial Institutions Act of 1999.  Institutions  providing only insurance business in Lesotho are 
exempt.  Any new bank or credit institution must be licensed by the CBL, acting as Commissioner of 
Financial Institutions.  There is no limitation on foreign banks establishing branches or agents in 
Lesotho, as long as they fulfil the conditions of the Act.  Financial institutions established in Lesotho 
must maintain minimum capital of M 10 million, or as prescribed by the CBL.   
(ii) Telecommunications and postal services 
182. Lesotho's telecommunications network has grown during the last few years, notably mobile 
phone services, which are key for the economic de velopment of a small, mountainous country.  
Subscriber numbers in the mobile market jumped from 126,000 in 2003 to 581,000 in 2008, while the number of internet users rose from around 30,000 to about 73,300 (Table IV.4).  At the end of 2008, the teledensity was 22.96 per 100 inhabitants, up from 8.95 in 2003.   
Table IV.4 
Selected telecom indicators, 2003-08 
 2003 2004 2005 2006 2007 2008 
Telephone subscribers ('000) 161.1 233.4 297.8 411.0 411.0 411.0 
Telephone subscribers per 100 inhab itants 8.95 12.98 16.59 22.96 22.96 22.96 
Main  fixed telephone lines ('000) 35.1 37.2 48.0 53.1 53.1 53.1 
Main fixed lines per 100 inhab itants 1.95 2.07 2.67 2.97 2.97 2.97 
Cellular mobile subscribers ('000) 126.0 196.2 249.8 357.9 456.0 581.0 
Cellular subscribers per 100 inhabitants 7.0 10.91 13.92 19.99 22.71 28.76 
Internet subscribers ('000) 2.0 2.4 2.6 2.6 2.6 2.6 
Internet subscribers per 100 inhabitants 0.11 0.14 0.14 0.14 0.14 0.14 
Internet users ('000) 30.0 43.0 51.5 60.0 70.0 73.3 
Internet users per 100 inhabitants 1.67 2.39 2.87 3.35 3.49 3.63 
Source:  ITU online information. "ICT Statis tics Database". Viewed at:  http ://www.itu.int/ITU-D/i cteye/Indicators/ 
 Indicators.aspx# [24 June 2009].  
183. The Ministry of Communications, Science and Technology (MCST) is the policy maker for 
the subsector.  The Lesotho Communications Authority (LCA) (formerly Lesotho Telecommunications Authority (LTA)), established under the Lesotho Telecommunications Authority 
Act 2000, is an autonomous and independent regulat ory body with supervisory roles over all aspects 
of telecommunications development in Lesotho.  Its duties are spelled out in the Act.
172  The LCA 
regulates the pricing of telecommunications servi ces on the basis of proposals submitted by the 
operators.  The LCA is awaiting legisl ation to regulate postal services.   
184. Fixed-line and mobile telecoms services in Lesotho are currently offered by Telecom 
Lesotho, while VodaCom Lesotho (VCL) provides only  mobile services.  In November 2000, Lesotho 
                                                      
172 Lesotho Telecommunications Authority Act 2000, Part III, paragraph 15.(2).  See also WTO (2003). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 188 
 
 
Telecommunications Corporation (LTC) was priv atized and renamed Telecom Lesotho (TL).173  I t  
was granted a five-year exclusivity period for the provision of fixed-line telecoms services, with 
specific targets against which performance was monitored by the LTA.174  VCL had the monopoly 
over mobile services until June 2001 wh en TL was granted a cellular licence.175  Lesotho has twelve 
radio stations, two television stations, and six inte rnet service providers.  Internet service providers 
were prohibited from trading in voice-over-inter net telephony (VoIP) until 8 February 2006.   
185. The regulatory system needs to address issues of interconnection.  The current pricing 
structure for interconnection takes into account only co sts directly attributable to interconnection plus 
a reasonable profit margin.  A 2006 study recommen ded a phased reduction of interconnection rates 
over three years based on operators' costing information176;  the fixed operator would pay a higher rate 
than the mobile operators.  The network operators  implemented the revised interconnection rates in 
July 2007 but failed to reduce the rates in July 2008 in line with the ITR study recommendations.  
Interconnection terms are agreed between operators, subject to approval by LCA.  However, network 
operators contended that the LCA is not mandated to approve interconnection rates on the basis of the 
LTA Act 2000 (as amended).  The parties agreed that the issue should be addressed through an 
arbitrator or under a new legislative framework currently being developed. 
186. High-speed internet access is very limited throughout Lesotho, and internet service is 
expensive.  As a result, the LCA established the regulatory framework for the provision of internet 
service aimed at reducing costs and make it widely available.  The new system will allow internet 
service providers to set up infrastructure to access ba ndwidth from international sources.  Previously, 
only two licences have been granted for provision of international internet bandwidth.  The LCA 
plans to set up a new licensing regime to encourage more competition. 
187. The LCA manages the licensing system for fixe d and mobile telecommunications and has set 
out relevant fees under the (Licensing Fees) rules of 2008.  Under section 48 of the LTA Act 2000 (as 
amended), LCA established the Universal Access  Fund (UAF) to ensure that the network 
infrastructure and communications services are e xpanded throughout Lesotho, including in remote 
areas.  The LCA commissioned a communications de mand study in 2004 to help network providers 
by identifying commercially viable areas.  It  also aimed to bridge the efficiency-gap.177  The LCA is 
implementing the universal access strategy with a view to addressing the access gap178, and network 
operators' first contribution has been received.  In addition, the LCA has put aside funds as seed 
capital to start the universal access fund, and will contribute 25% of its annua l surplus funds towards 
the UAF. 
                                                      
173 The Government retained a 30% share in Telecom Lesotho, while the remaining 70% is owned by 
Econet Wireless International. Telecom Lesot ho is also known as Ec onet-Telecom Lesotho. 
174 See WTO (2003). 
175 In November 2000, the Government's 12% shares in VCL were sold to a consortium of Lesotho 
investors. 
176 The study on Interconnection and Tariff Rationalisation (ITR) was funded by the World Bank 
through the Lesotho Utilities Sector Reform project. 
177 Efficiency gap is the difference between what ma rkets are actually achieving  and what they could 
achieve if regulatory barriers were removed and regulation were used to provide incentives (information provided by the Lesotho authorities). 
178 An access gap occurs when some areas or populati on groups are not served by the market without 
intervention, even if the market is operating efficiently and is fully liberalized (information provided by the Lesotho authorities). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
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 188. Postal services in Lesotho are under the monopol y of the Department of Postal Services 
(DPS);  it runs its own budget and is audited annually by the Government.  Plans are under way to 
enact a law that would convert the DPS into a corporation.  There are currently 47 post offices in Lesotho.  Under the Lesotho Postal Act of 1979, posta l services tariffs are dete rmined by the Minister 
of Communications, Science and Technology.   
(iii) Transport  
(a) Overview 
189. Transport, including the construction and main tenance of transport infrastructure, accounts 
for 7-10% of Lesotho's GDP.  As a landlocked c ountry, Lesotho is completely dependent on links 
through South Africa for road, rail, and air transpor t.  Most of Lesotho's international trade passes 
through the port of Durban and continue by rail or road.   
190. The Ministry of Public Works and Transport (MPWT) is responsible for the overall running 
of the subsector, including formulating policies, monitoring their implementation, and administering 
the institutional and legal framework.  Some of the main challenges for the subsector include the lack 
of transport infrastructure and services, which isolates remote areas from access to health and 
education services;  high transportation costs
179;  poor condition/maintenance of the infrastructure;  
and the high number of road accidents.   
191. In light of these challenges, the MPWT publishe d its Transport Sector Policy in 2006 with the 
aim of achieving an efficient, cost-effective, and saf e subsector.  Some of the proposed policies are to: 
ensure that roads and access rout es are comprehensively and regularly maintained, rehabilitated when 
required, and extended in an efficient manner;  enc ourage the private sector to invest in and manage 
public passenger and freight transport on a commercial basis;  provide air transport infrastructure, including a fully equipped international airport;  in crease road safety;  facilitate a safe and efficient 
rail transport;  make available a safe and efficien t inland water transport;  and integrate the various 
modes of transport into complementary roles.
180  
192. Regional integration in transport has not been achieved although it has been planned for some 
time under the SACU Memorandum of Understanding of 1990 and the S ADC Protocol on Transport, 
Communications and Meteorology 1996.  These provi sions have only been implemented in Lesotho 
for "tours" or special transit visits.  Most passengers leaving Lesotho disembark from Lesotho-operated vehicles at the border, and afte r clearing border formalitie s, board foreign-owned 
vehicles for the onward journey.
181  
(b) Road transport 
193. The transport system in Lesotho is based princi pally on road transport.  The road network is 
about 7,438 km in length, of which 1,217 km are pa ved, 7,758 km are gravel roads, and 2,463 km are 
earth tracks.  There are a number of different agencies involve d in the construction and maintenance 
of roads, which has resulted in very little coordina tion, planning or coopera tion.  To address this, it 
                                                      
179 Transport costs in urban areas, especially for lo w income earners, are estimated at 17-24% of total 
wages (Ministry of Public Works and Transport, 2006). 
180 Ministry of Public Works and Transport (2006). 
181 The process is reversed for the return (Ministry of Public Works and Transport, 2006). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 190 
 
 
has been proposed that a Roads Directorate be established under the direction of a Chief Executive 
Officer.182  
194. The Road Fund, established by the Regulations issued under the Finance Act 1995, is only 
able to partially fund total-ro ad maintenance budget requirements.183  Under the Roads Act 1969, the 
Principal Secretary of the MPWT has been appointed  the Road Authority by the Minister of Public 
Works and Transport.   
195. Road passenger transport services are provided almo st exclusively by private entrepreneurs, 
with the exception of some passenger services to re mote areas in Lesotho, which are provided by the 
state-owned Lesotho Freight and Bus Services Corporati on.  Road transport is mainly governed by the 
Road Transport Act and Regulations 1981 (as ame nded), and by the Road Transport (Amendment) 
Act 2001184, which set out the conditions for various pe rmits issued by the Road Transport Board.185  
Tariffs for road passenger transport services are c ontrolled by the Road Transport Board Regulation, 
under the Road Transport Act 1981;  they are reviewed periodically, and are determined by the MPWT  on the basis of the costs of operating the vehicle.   
196. Road freight is key for Lesotho as every product and input delivered has to be transported for 
at least some distance by road.  All freight is deliver ed or collected by road, while international freight 
is via road and rail.  Freight transport by road requi res a permit (A or B) issued by the Department of 
Transport and Traffic.  Applications for freight tr ansport permits, previously considered by the Road 
Transport Board, are now issued by the Office of the Commissioner, on behalf of the Board.  Road 
freight transport is privately owned, with tariffs  determined on the basis of market conditions.  A 
major problem is the overloading of freight vehicles, which damages the road infrastructure, and 
create a safety risk.  As a result, weighbridges ha ve been installed at two border points (Maseru and 
Maputsoe), and weigh-points for use of mobile weighbridges are in place at other locations.  
Comprehensive axle-load control is essential in or der to protect the road infrastructure, improve 
safety, and ensure a healthy freight transport subsector.
186  
197. Cross-border road freight transport into SACU countries is carried out under a SACU        
cross-border permit F, issued by the Office of the Commissioner.  This permit authorizes the carriage 
of goods on any cross-border journey in the SACU region.   
(c) Air transport 
198. Lesotho has no national airline and no domestic air services.187  All international air services 
are operated by South African Airlink, a subsidiary of South African Airways.188  Ground handling of 
passengers is undertaken by South African Airways.  Only three aircraft (excluding military planes) 
are registered in Lesotho.  The Government provides all airport and aerodrome infrastructure.  
                                                      
182 The Roads Directorate would have operational autonomy and would be assisted by five directors in 
charge of the roads network planning, development, maintenance, quality assurance, and support services 
(Ministry of Public Works and Transport, 2006). 
183 The Road Fund receives income di rectly from various "road user charge" sources, and allocates 
such income to road agencies on the basis of budget submissions for specific maintenance activities.  Road user 
charges are comprised of the fuel levy, vehicle licence fees, toll gate fees, and fines on overloaded vehicles. 
184 Acts No. 6 of 1981 and 10 of 2001. 
185 Permit classifications are:  A ( carrying goods for purposes of reward);  B (carrying goods for own 
use);  C (carrying passengers for reward (taxi and bus);  D (carrying passengers in sedan vehicles);  and E (carrying passengers cross-border).   
186 Ministry of Public Works and Transport (2006). 
187 Air Lesotho ceased operations in February 1999 (WTO, 2003). 
188 There are two return flights (Maseru-Johannesburg) per day. SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
 Page 191 
 
 
 Moshoeshoe I International Airport (MIA), situat ed 22 km of Maseru, and the main air transport 
gateway, is seriously underutilized as there is very little traffic and operational costs are high.189  
199. Under the Aviation Act 1975190, the Department of Civil Aviation is responsible for 
regulating civil aviation and establishing and main taining aerodromes and air navigation facilities.  
This includes licensing air transport operations and maintaining International Civil Aviation 
Organization Standards and Recommended Practices.  The Aviation Act also provides for development of bilateral agreements on air transp ort;  Lesotho's only bilateral agreement is with 
South Africa.  The Aviation Bill 2006 will update  the Aviation Act 1975 by focusing on the 
liberalization of civil aviation, and incorporati ng measures regarding threats to aviation safety and 
security.
191 
(d) Rail transport 
200. Lesotho's rail infrastructure consists of about 2.5 km of line from Maseru Bridge border post 
to Maseru container terminal.  The railway is  maintained by Spoornet from South Africa.192  The 
facilities at the Maseru container terminal, and th e bulk grain depot, are owned by the Government 
and leased to Spoornet.193  Other rail facilities are the Ficksbur g and Wepener rail heads for freight.  
Two freight trains run between South Africa and Maseru daily, carrying container traffic and bulk 
goods.  Regular passenger servi ces were withdrawn in 1989.194  
(e) Inland water transport 
201. Lesotho is landlocked, and several rowing-boat ferries provide river crossings at strategic 
places.  These are operated, but not regulated, by th e Department of Transport and Traffic, under the 
MPWT, as a service to the communities.  In additio n, the population of the two lakes created during 
the Lesotho Highland Water Project (LHWP) need water transport services;  no boat services are yet offered on the lakes.
195  Once the entire LHWP is completed, other water transport services will be 
needed.   
202. Most water transport services are provided free of charge by the Department of Transport and 
Traffic;  individual ferry operators offer service s on a commercial basis.  The Lesotho Highlands 
Development Authority promulgated the Lesotho Hi ghlands Development Authority Order No. 23 of 
1986 relating to boating safety, and protection of water and the environment on the lakes under the 
LHWP.196  
(iv) Tourism 
203. The contribution of tourism to Lesotho's GDP ( estimated at 4.7%) is small compared with 
some neighbouring countries.  In 2008, the subsec tor generated M 151.6 mill ion in revenue, up from 
M 44.9 million in 2005 (Table IV.5).  Tourism's growth has been largely static over the last few years, 
with annual arrivals of 293,076 in  2008 (329,301 in 2003); it is highly dependent on the South African 
                                                      
189 Lesotho has other aerodromes and airfields, but most are closed due to lack of domestic traffic.   
190 Act No. 32 of 1975. 
191 Ministry of Public Works and Transport (2006). 
192 Liaison between Spoornet and the Government is through the Lesotho Revenue Authority. 
193 The terminal and the facility at the container handling are in poor condition.   
194 Ministry of Public Works and Transport (2006). 
195 Completion of the Katse Dam, under Phase IA of the LHWP, created a 35 km long lake;   Mohale 
Dam, under Phase IB, created another (20 km long). 
196 Ministry of Public Works and Transport (2006). WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 192 
 
 
market (92.4% of total tourist arrivals in 2006); and has a high degree of seasonality (Easter holidays, 
July-September, and Christmas holidays are peak seasons for foreign arrivals).  Nonetheless, 
Lesotho's tourism has significant potential given it s unique natural environment, a wide range of 
mountain-based activities, and rich Basotho culture.197  
Table IV.5 
Tourism indicators, 2005-08 
 2005 2006 2007 2008 
Hotels 17 18 18 20 
Beds 1,240 1,288 1,520 1,545 
Rooms  823 855 878 882 
Bed occupancy rate 23.1 27.4 25.1 27.2 
Revenue (M million) 44.9 81.4 122.7 151.6 
Source:  Information provided by the Lesotho authorities.   
204. The development of tourism activities is a key policy objective in Lesotho.  In 2007, the 
Ministry of Tourism, Environment and Culture (MTEC) in charge, inter alia , of establishing and 
implementing policy for the subsector, unveiled its Tourism Strategy 2020.  The key challenges 
identified refer to:  market demand, including th e need to distinguish Lesotho from competitor 
destinations;  product development and diversification, including the need to diversify the product 
base to increase the length of stay and retain a higher  spend per visitor;  an enabling environment for 
rapid tourism growth, including im proved visitor access to and within Lesotho;  and management, 
including establishing appropriate policy, planning, and legal frameworks.  Some of the main goals 
are: improving the packaging and presentation of existing attractions; supporting and promoting 
tourism investment and facilitating small medium and macro enterprises (SMMEs) and community-based tourism;  and ensuring that th e infrastructure is adequate and is further 
developed.
198  
205. Four tourism development zones are proposed:  th e highlands circuit, covering the north and 
north-western part of Lesotho, and including the na tional parks and the Katse and Mohale dams;  the 
heritage circuit, covering southern Lesotho;  the ro of of Africa circuit, covering the central part of 
Lesotho;  and the Maseru business circuit.  The ke y tourism targets for 2020 are to:  increase overall 
international tourism arrivals to 914,000;  raise in ternational leisure tourism arrivals to 450,000;  
increase international tourism earnings to M 1.1 billion;  and create some 60,000 additional 
tourism-related jobs.199  
206. In addition to the MTEC, the Lesotho Touris m Development Corporation (LTDC) and the 
Lesotho Council for Tourism (LCT) are active in  the subsector.  The LTDC, established under the 
Tourism Act No. 4 of 2002, has wide powers, incl uding the designation of tourism development areas 
and provision of financial assistance in the form of grants, loans or tax exemptions for tourist 
development.  The LTDC is 51% state-owned and is chaired by the Director of Tourism:  its Board 
comprises representatives of Government, local associations, and the private sector.  The LCT 
represents the private sector in the subsector.200  
207. According to the authorities, there are no barrier s to foreign entry in tourism.  There is no 
official taxation system for the subsector, and Lesotho does not impose a tourism levy. 
                                                      
197 Ministry of Tourism, Environment, and Culture (2007). 
198 Ministry of Tourism, Environment, and Culture (2007). 
199 Ministry of Tourism, Environment, and Culture (2007). 
200 Ministry of Tourism, Environment, and Culture (2007). SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
 Page 193 
 
 
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Central Bank of Lesotho (2005), Annual Report 2004 , Maseru.   
Central Bank of Lesotho (2007), Annual Report 2006 , Maseru.   
Central Bank of Lesotho (2008), Quarterly Review , June, Maseru. 
Central Bank of Lesotho (undated), Introduction of VAT in Lesotho .  Viewed at: 
http://www.centralbank.org.ls/publications/Value_Added_Tax.pdf. 
Economist Intelligence Unit (2008), Country Report:  Lesotho , London. 
FAO (2003), State of Forest and Tree Genetic Resources in Lesotho , Working Paper FGR/40E.  
Viewed at:  http://www.fao.org/DOCREP/005/AC849E/AC849E00.HTM. 
FAO/WFP (2007), Crop and Food Supply Assessment Mission to Lesotho , Rome. 
Government of Lesotho (2007), Lesotho and EPAs: Economic Implications and Adjustment , Maseru. 
IMF (2008a), Kingdom of Lesotho:  Preliminary Conclu sions 2008 Article IV Consultation Mission , 
Washington, D.C. 
IMF (2008b), Kingdom of Lesotho:  Selected Issues and Statistical Appendix , Washington, D.C. 
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D.C. 
IMF (2008d), Kingdom of Swaziland:  Selected Issues and Statistical Appendix , Country Report 
No. 08/355, Washington, D.C. 
IMF (2009), World Economic Outlook , April, Washington, D.C. 
Kingdom of Lesotho (2005), ICT Policy for Lesotho , 4 March.  Viewed at:  
http://www.lesotho.gov.ls/documents/Lesotho_ICT_Policy_Final.pdf. 
Kingdom of Lesotho (2006), National Report , International Conference on Agrarian Reform and 
Rural Development (ICARRD), Brazil, March.  Viewed at:  http://www. icarrd.org/en/icard_doc_ 
down/national_Lesotho.doc. 
Kingdom of Lesotho (undated), Poverty Reduction Strategy 2004/2005-2006/2007 .  Viewed at: 
http://www.lesotho.gov.ls/documents/Lesotho_PRSP_Final.pdf. 
Lesotho Electricity Authority (undated), Energy Policy for the Kingdom of Lesotho:  Draft , Maseru. 
Lesotho Revenue Authority (2008), 2007 LRA Report , Maseru. 
Makara M. (undated), Inventory of Lesotho Legislation with a Bearing on Competition: Report 
submitted to the Ministry of Trade and Industry, Cooperatives and Marketing, prepared under the 
auspices of the UNCTAD technical assist ance project on competition policy and law,  Maseru. WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
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Ministry of Finance and Development Planning (2008), Interim Poverty Reduction and Growth 
Strategy 2008/09-2009/10 , 5 May, Maseru. 
Ministry of Public Works and Transport (2006), Transport Sector Policy , Maseru. 
Ministry of Tourism, Environment, and Culture (2007), Tourism Strategy for Lesotho: Tourism 
Towards 2020 , Maseru. 
Ministry of Trade and Industry, Cooperatives, and Marketing (2007),  Industrialization Master Plan 
2007-2010 , Maseru. 
UNDP (2008), Human Development Report 2008/2009 , New York. 
UNOCHA (2007), Lesotho Drought Flash Appeal 2007 .  Viewed at:  
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sotho.doc?OpenElement. 
USTR (2008), Foreign Trade Barriers .  Viewed at:  http://www.ustr.gov/Document_Library/ 
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WTO (2003), Trade Policy Review:  SACU , Geneva. 
 
 APPENDIX TABLES 
 SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
 Page 197 
 
 
 Table AIII.1 
Privatization methods envisaged, 2009 
Privatization method Description  
Public offer of shares The Government would sell shares in a SOE at a specific price to whomever has the cash to buy them 
To promote local participation, the offer may be restri cted to nationals.  To promote widespread interest, 
the number of shares offered may be limited to a small number per bidder to maximize the number of 
investors in a particular entity.  To allow for the f act that nationals may not be in a position to attract 
finance, the Government may allow discounts on the offer of shares 
Private placement The Government would sell shares to a si ngle investor identified because  that investor has unique 
attributes (e.g. an enterprise whose commodity has a single market to its customer).  The price is 
determined through a process of negotiation 
Trade sale through 
competitive bid The Government sells the enterprise either as whole or in part (usually a majority holding) to another 
company or individual (either foreign or domestic ) through a competitive process whereby interested 
purchasers submit bids which the Government evalua tes according to a pre-determined set of criteria 
A trade sale may be done in conjunction with a ma nagement/employee buyout, a public offering or may 
include some form of employee participation 
Sale of assets The Government sells either all the assets or parts of the assets separately 
This option may be considered when  the enterprise is no longer a concern and would face bankruptcy in a 
commercial environment.  As the liabilities of the ente rprise exceed the assets, th e assets may be sold in 
order to meet either part of the lia bilities, or the liabilities are discounted 
Management/employee 
buyouts This method is similar to a trade sale, except that the purchaser is the existi ng management and/or the 
employees.  The buyout proposal must show manageri al ability and access to capital and markets in order 
to be effective in managing the enterprise.  Manage ment and employees may have  difficulty in financing 
the purchase of the enterprise.  In this case, a discounted share price or a leveraged buyout may be 
considered 
Management contracts, 
leases and concessions Where the Government does not wish to transfer ownership (particularly in the case of a natural 
monopoly), the Government may either enter into a mana gement contract, a lease or a concession.  In a 
management contract, the Government  would pay a private company to manage the enterprise.  Fees may 
be fixed or may incorporate a performance fee which refl ects the profit that may be attributed to the private 
company managing the enterprise.  In leases, the priv ate party would pay the Government a fee to use the 
assets but assumes the commercial risk of the opera tion and the capital costs of maintaining the assets.  
Concessions are similar to leases ex cept that the private party also is required to bear the costs of capital 
expenditures and investment.  Concessions are usually used in the privatization of utilities 
Joint-venture The assets in the SOE would be transferred to  a separate company formed as  a joint-venture between the 
Government and the private owner.   The Government would contribut e the assets of the SOE and the 
investor would add his own assets (capital, tec hnology, and access to markets) to the new company 
Capitalization Capitalization is a form of trade sale whereb y the Government does not sell the assets, but rather would 
evaluate the need for investment in  a enterprise.  The amount of the investment would be sought from a 
private partner as equity in the ente rprise.  The relative values are assesse d to establish the ownership ratio.  
After the enterprise is restructured , the shares held by the government may be sold using several methods 
(e.g. the shares may be sold to na tionals when the enterprise is opera ting profitably on a sustainable basis) 
Source:  Information provided by the Lesotho authorities.   WT/TPR/S/222/LSO/Rev.1 Trade Policy Review 
Page 198 
 
 
Table AIII.2 
Privatization process, 1995-08 
(a)  Privatization transactions 
Privatization (Act section) Year Govt share
(%) Investor share (%) and 
nationality 
Sale of shares (Section 9(1)(a))    
Security Lesotho 1995 0 100:  Lesotho 
Avis Lesotho 1998 0 100:  South Africa 
Lesotho Flour Mills 1998 49 51:  United States 
Minet Kingsway 2000 20 80:  Netherlands 
Lesotho Telecommunications Corpora tion 2000 30 70:  South Africa (Eskom 
Enterprises) and Zimbabwe 
(Econet Wireless) 
Vodacom Lesotho 2000 0 12:  Lesotho  
Sale of business (Section 9(1)(b))    
Plant and Vehicle Pool Services 1999 20 100:  South Africa 
Lesotho Airways Corporation 1997 0 100:  South Africa 
Lesotho Bank 1999 30 70:  South Africa 
Sale of assets (Section 9(1)(c))    
Orange River Lodge 2000 0 100:  Lesotho 
Plant Pool Workshop 2000 0 100:  Lesotho 
Leasing (Section 9(1)(d))    
Marakabei Lodge 1998 0 100:  Lesotho and South Africa 
Management contracts (Section 9(1)(f))    
Maluti Highlands Abattoir 1997 n.a. n.a. 
Loti Brick 1999 n.a. n.a. 
Contracting out of services (Section 9(1)(g))    
LTC Cleaning Services 2000 n.a. n.a. 
LTC Security Services 2000 n.a. n.a. 
LTC Sanitary Services 2000 n.a. n.a. 
Liquidations (Section 9(1)(h))     
Lesotho Agricultural Development Bank 1998 0 100 
Lesotho Airways Corporation 1997 0 100:  South Africa 
Lesotho Bank  1999 30 70:  South Africa 
International Freight and Travel Services (IFTS):  American 
Express 1998 0 100 
IFTS:  travel services 1998 0 100 
Transformation of a parastatal thereof into another form of a 
parastatal (Section 9(1)(a))    
Lesotho Building Finance Corporation:  me rger into Lesotho Bank 1995 100 100:  Lesotho 
Water and Sewerage Authority (WASA):   pit latrine and septic 
tank emptying services department 2001 n.a n.a. 
(b)  Agricultural enterprises to be advertised after Cabinet approvala 
Botšabelo Dairy Farm (already liquidated)  Poultry Plant (already liquidated) 
Farmers training Centres Quthing Sheep Stud 
Feedlot Technical Operation Unit 
Forestry Facilities – Woodlot  Thaba-tsek a Pony Centre (no longer in operation) 
Mejametalana Farm Tšakholo Fa rm (no longer in operation) 
Mokhotlong Sheep Stud Tšalitlama Farm 
Molimo-Nthuse Pony Trekking Ce ntre Veterinary Services 
National Pig Breeding Herd Farm (already liquidated) Wool and Mohair Marketing 
Table AIII.2 (cont'd) SACU-Kingdom of Lesotho  WT/TPR/S/222/LSO/Rev.1 
 Page 199 
 
 
 (c)  Enterprises recommended for liquidation  
Basotho Pony Breeding Farm (already liquidated)  Tsakholo Farm Fish (already liquidated)  
Forestry Facilities  Technical Operations Unit  
n.a. Not applicable. 
a Under the supervision of the Ministry of Agriculture as a wa y of building capacity to underta ke privatization for small-holde r 
agricultural enterprises.  Privatization to be conduc ted in line with the Privatization Unit procedures.  
Source:   Privatization Unit online information,  "Privatized Corporations".  Viewed at:  http://www.priv atisation.gov.ls/ 
 projects/privatized.htm  [3 April 2009];  and information provided by the Lesotho authorities.