Calm your nerves
By Editorial
REPORTS that the government is considering a new policy that makes it mandatory for foreign investors to sell at least 51 percent of their companies has caused concern in the business community.
Banks and other companies are worried.
It turns out that the panic was based on a headline in Business Day, a week ago.
The story said Lesotho was considering a 51:49 business ownership structure akin to the controversial indigenisation policy in Zimbabwe.
The mere mention of the Zimbabwe-style “business grab” is enough to scare anyone who has invested even a cent in any country.
Little wonder executives and shareholders of the few foreign-owned businesses in Lesotho are losing sleep.
But we believe the anxiety is based on limited, if not incorrect information.
The policy under discussion has nothing to do with the wholesale change of the ownership structures of foreign businesses in Lesotho. It relates only to the mining industry as Prime Minister Tom Thabane said in yesterday’s edition of Business Day.
He said Lesotho was interested in following the Botswana “formula” rather than the Zimbabwean one.
So there we have it: Other businesses need not panic because there is no nationalisation on the agenda.
It is also important to remember that this localisation discussion is not an entirely new thing. The Lesotho Congress for Democracy government discussed the issue some years ago but the policy did not see the light of day due to lack of consensus.
But when the discussion does gather momentum, as we suspect it will soon, we believe it would be in the interest of the mining sector to participate fully in the debate on the policy.
The business community has a tendency to mourn and throw stones from a distance. They need to engage the policy makers.
The mining sector in this country, young as it is, must not miss the opportunity to contribute to this localisation discussion.
To allow this discussion and policy to be driven by politicians would be suicidal.
If at all the discussion does result in a policy, it is important to note that it will not lead to something that is completely new.
The Lesotho government already has a 30 percent stake in Letseng Mine which is owned by the London-listed Gem Diamonds.
It also holds 34 percent of Kao mine whose majority shareholder is Namakwa Diamonds, another London-listed firm.
Assuming that the government does want to increase its shareholding in those companies to 51 percent, it will have to pay the market value.
The danger lies in how the government seeks to use that majority stake to influence the running of the mining companies.
If it is just to be a silent shareholder who waits for a dividend and contributes capital when it’s needed then it will be fine.
The management of the mining companies must be left to those who are competent to do so — mining companies.
We are encouraged that Thabane says he wants to study the Botswana model where the government takes a stake in mining companies but does not interfere with their management.
The government should not confuse ownership and wealth creation. Mining is not for the faint-hearted. It’s a long-term investment that requires serious capital.
If the government does want to be the major shareholder in the mining sector then it must be prepared to dig deep into its pocket to make the investment needed and wait for a long time before it starts getting the dividend.
But then again, perhaps the debate should not be about how much more shares the government needs to take in the companies but how much of its current stake it needs to sell to Basotho. That will be a much more direct form of empowerment than the government increasing its shareholding in the mining companies.
It would be brilliant if the government helps Basotho buy some of its shares in Letseng and Kao Mines.
While at that, it may be helpful if the debate about ownership also includes issues of who really benefits from the dividend the government gets from mining companies.
We should talk about how that money is used to benefit communities in which these companies operate.
Empowerment doesn’t mean having a share of something only.
Roads, schools, clinics and jobs are also forms of empowerment.
Comment by Selomo on 2 August 2012:
He bathong! Hoa ea ha ea, Lesotho Times is now the Lesotho Government Apologist… Mokgala Mmakapane!! Hoa ea ha lengoa ts’imokholo!
Comment by oa tebetebeng on 2 August 2012:
mxm bo selomo batho ba teng ha ba ikutloe le ha ba pota i think this is a fair commentary, there is no need to press panic buttons bt there is a need for meaningful reform so that the benefits of the proceeds filter down to the people especially the communitties where the mines are based
Comment by Apole on 2 August 2012:
Ke hore bo selomo ba pota hore! Hobane feela ur nt in Govern o utloisisa hore ur against everything hao mature enough. Osale mashanyana
Comment by Lintle on 2 August 2012:
Tom o etsisa mugabe jwale well re se re tla bona
Comment by Gaddafi on 7 August 2012:
First of all, Lesotho is a poor country that doesn’t foreign investments(FDIs) at all. Lets alone 51% stake to localists. Unfortunately Coalition government scare away investors to come in our country. How do you expect to have 51% stake from the foreign company whilst you haven’t contributed anything in it? Its ridiculous and its always the case with Africans as they don’t want to work hard for themselves, they just want to get everything for free on earth. Basotho, just open businesses for yourself, work hard so they can flourish, stop wanting to cheat foreigners, leave them alone.
Where is Zimbabwe and that so-called Mugabe now with 51% stake? They got very very poor and no single investors wish to go to that country. They are now hungry, scattered everywhere in our countries. Educated Zimbabweans are domestic workers, security, gardeners, farm workers in RSA just because they are hungry and they fled starvation and poverty in Zimbabwe. We stay with them here in Lesotho where they sell brooms, materials etc. 51% stake didn’t work for them at all, instead they got deeper into poverty. I assure you, no one will come to Lesotho to put money in a country that want to have majority shares in his/her company. Do it and you will see the consequences. Mugabe’s Zimbabwe is struggling a lot even today. Basotho must open their own companies and should not expect foreigners to do everything for them. Basotho must not think of cheating foreigners by demanding majority shares from their companies. O
Comment by Gaddafi on 7 August 2012:
First of all, Lesotho is a poor country that doesn’t foreign investments(FDIs) at all. Lets alone 51% stake to localists. Unfortunately Coalition government scare away investors to come in our country. How do you expect to have 51% stake from the foreign company whilst you haven’t contributed anything in it? Its ridiculous and its always the case with Africans as they don’t want to work hard for themselves, they just want to get everything for free on earth. Basotho, just open businesses for yourself, work hard so they can flourish, stop wanting to cheat foreigners, leave them alone.
Where is Zimbabwe and that so-called Mugabe now with 51% stake? They got very very poor and no single investors wish to go to that country. They are now hungry, scattered everywhere in our countries. Educated Zimbabweans are domestic workers, security, gardeners, farm workers in RSA just because they are hungry and they fled starvation and poverty in Zimbabwe. We stay with them here in Lesotho where they sell brooms, materials etc. 51% stake didn’t work for them at all, instead they got deeper into poverty. I assure you, no one will come to Lesotho to put money in a country that want to have majority shares in his/her company. Do it and you will see the consequences. Mugabe’s Zimbabwe is struggling a lot even today. Basotho must open their own companies and should not expect foreigners to do everything for them. Basotho must not think of cheating foreigners by demanding majority shares from their companies.
Comment by Gaddafi on 7 August 2012:
Correction: Lesotho is a poor country that doesn’t attract foreign investments (FDIs) at all.
Comment by hama on 8 August 2012:
Talk of something you know please Mr Gaddafi,don’t read of the news making the headlines only.It is no true that no foreign investors want to go to Zimbabwe.
Their are investors flocking into Zimbabwe no wonder why Zimbabwe internatinal airport is coming alive,when Lesotho’s is domant,not even domestic aviation is living.
Africa should turn around the situation of being the provider of natural resources whereby they only benefit by being labourers.Of course when you bring the issue,the foreign multicompanies will use the media to demonise such leader like they do with Mugabe and sideline such leader.
Comment by hama on 8 August 2012:
No wonder South Africa land reclamation and economic emancipation for majority black African won’t see a day.Coz the first thing they consider is foreign investment,not correcting inequality that is still thriving in South Africa.
Comment by MAKOKO RSA on 11 August 2012:
Real investors are interested on returns on their investment. They will invest in China or Angola if returns are good. Our national governments must balance the need to attract foreign investment with the need to create local industrialists. The so-called investment will otherwise be merely extraction – neocolonialism with a respectable face.
Comment by Moshebelli on 24 August 2012:
Being a strategist by profession,I am a proud Mosotho but looking at the current scenario of our country, this may not be a clever move.
FDI is a good thing but in this state and manner if instilled we are to be worried