Business Registration and Licensing Reform Lesotho - Chaba Mokuku

1. Business Registration and Licensing
Reform
LESOTHO
Chaba Mokuku
Project Manager
Lesotho Private Sector Competitiveness and Economic Diversification Project
Email: cmokuku@psc.org.ls

2. Key Investment Climate Reforms in
Lesotho
• Company Registration Reform (Complete).
• One Stop Business Facilitate Centre (Complete –
improvements in progress)
• Business Licensing Reform (In progress).
• Construction Permit Reform (In progress)
• Access to Finance (In progress).
• Insolvency (In progress).
• Customs modernisation (In progress).
• Tax reform (In progress).
• Financial Sector Reform (In progress).4/24/2015 2

3. Business Start Up - Related Reforms
• Company registration reform 2007-2014.
• One Stop Business Facilitation Centre 2007-present.
• Business licensing reform 2014 – 2019.

4. Doing Business Ranking for Lesotho - 2015
TOPIC
Botswana
Lesotho
Namibia
South
Africa
Swaziland
Singapore
Mauritius
Overall Rank 74
(-8)
128 (0) 88
(-8)
43
(-6)
110
(+1)
1
(0)
28
(+1)
Starting a Business
149 108
(130 in 2010)
156 61 145 6 29
Dealing with
construction permits
93 161 25 32 55 2 117
Getting Electricity 103 117 66 158 140 11 41
Registering property
51 93 173 97 129 24 98
Getting credit 61 151 61 52 61 17 36
Protecting Investors
106 106 87 17 110 3 28
Paying Taxes 67 109 85 19 74 5 13
Trading Across
Borders
157 147 136 100 127 1 17
Enforcing Contracts 61 115 53 46 173 1 44
Resolving Insolvency
49 120 81 36 80 19 43

5. Current Licensing in Lesotho
• The licensing regime covers all licenses and authorizations in
different Government agencies in addition to trade and industrial
Licenses issued by Ministry of Trade and Industry.
• High cost and regulatory burden with limited justifiable benefits.
• Universal licensing regime.
• Absence of clearly stipulated goals and rational for licensing.
• Some common justification for licenses include the following:
• Fiscal solvency
• Revenue collection
• Zoning enforcement
• Information collection

6. Legal Framework – Initial Coverage
Four (4) licensing categories will be established
for activities that are currently regulated
through licensing in Lesotho in accordance
with the Industrial Licensing Act, Trading
Enterprises Act, Agricultural Marketing Act,
Betting Control Act, Accommodation, Catering
and Tourism Enterprises Act, and Liquor
Licensing Act.

7. Licensing Categories
• Category 1 includes activities that will be fully
deregulated;
• Category 2 includes activities where licensing will
be replaced with premises certification. Operating
businesses who lease certified premises will also
be fully deregulation;
• Category 3 includes activities where licensing is
replaced with premises certification + declaration
+ inspections;
• Category 4 includes activities that will still be
licensed.

8. Examples of Categories
EXAMPLE Category 1
deregulation
Category 2
Premises
Certification
Category 3
Declaration,
combination
Category 4
Permanent
licensing
Comments
FLORIST
ARRANGEMENTS
No risks
ARTS AND CRAFTS
PRODUCTION
(JEWELLERY AND
POTTERY)
These can be manufactured at
home, and do not pose much
risk. For larger scale
production premises
certification is adequate.
FURNITURE AND
CAPENRTRY
Process has to conform to
minimum standards to avoid
risks. Prior approval will not
address these standards.
CANNERY( FRUITS
AND VEGETABLES)
Food production – sanitary
risks, equipment risk–
especially for larger scale
production. Small scale can be
home based and deregulated.

9. Compensation for Possible Revenue Losses
• Nominal increase in license fees for activities that will
still be licensed, especially for large companies.
• Charging higher fees for licensing socially undesirable
activities (trade in alcohol, tobacco, gambling etc.).
• Keep annual license renewals fees for socially
undesirable activities.
• Charge once-off fee for issuance premises certificate
(category 2).
• Charging once-off fee for declarations when a business
operation commences (Category 3).
• Introduction of the pre-emptive tax for various
categories of small businesses (Category 1).

10. E-Licensing Portal
Characteristics and functionalities of the system will include:
1. Integration with business registration portal and business
database.
2. Informational: All business activities; licensing requirements;
laws and regulations; forms etc.
3. Transactional: Declaration using Unique Identifying Number
(UIN); online applications through UIN; Automatic completion
of parts of application forms with info from business
registration database; and scheduling of interviews,
inspections, hearings etc.
4. Functionality of e-licensing should allow verification of a
license by a Government Agency or a third party.

11. Conclusion - Licensing
• Activities that pose moderate risks to safety, health and environment
should be regulated with clear conduct rules and inspections rather
than licenses.
• A limited number of currently licensed activities will remain to be
licensed through a system of permanent licenses.
• “Socially Undesirable” activities such as trade in liquor and gambling
will be licensed by annually renewable and expensive licenses.
• It is envisioned that overall decrease of licensing coverage will free
Government resources for more efficient and effective regulation of
licensed activities.
• Establishment of clear licensing conditions together with risk based
approach to licensing and inspections will further improve regulatory
regime in Lesotho.

12. Lessons - Critical Requirements for
Investment Climate Reform
• Political will.
• Political stability.
• Sound Institutional Framework and Coordination
Mechanism.
• Adequate capacity building within the Public Sector to
match the reforms.
• Change Management Strategy.
• Effective Performance Management System.
• Data management capacity and robust M&E framework.
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