MASERU — The Private Sector Foundation of Lesotho says the government must create a conducive environment for the private sector to thrive.
The foundation’s executive committee member, Lebohang Thotanyana, was speaking at a private sector development strategy midterm review meeting conducted by the World Bank in Maseru last Thursday.
The meeting, which looked at the challenges affecting the private sector, follows the release of a report by the World Bank last year which assessed Lesotho’s private sector competitiveness.
Lesotho this year slumped to number 130 from the previous year’s 128 in the 2010 World Bank’s Doing Business report.
The report, titled Doing Business 2010: Reforming Through Difficult Times, investigates regulations that enhance business activity as well as regulations that constrain it.
The report measures regulations relating to starting a business, dealing with construction permits, employing workers as well as registering property.
It also looks at aspects such as accessing credit, protecting investors, trading across borders, enforcing contracts and closing a business.
The World Bank’s Ganesh Rasagam told the meeting that the drop was mainly due to the slow pace of reforms by Lesotho to improve the business climate.
The World Bank and the government of Lesotho in 2007 financed the private sector competitiveness and diversification project.
The bank gave US$8.1 million to the project with the government of Lesotho pumping in US$2 million.
The five-year project seeks to develop Lesotho’s private sector.
“The private sector is the engine of growth for every economy. The facilitation of service provision is essential for the growth of the local private sector,” Thotanyana said.
He said the costs of doing business in Lesotho were high due to the slow pace in licensing new business.
Thotanyana said some of the challenges affecting the development of the private sector related to the long delays in registering a company in Lesotho.
In South Africa it takes between seven and 14 days to register a company.
The World Bank report says it takes an average of 40 days to register a company in Lesotho.
Thotanyana added that inter-ministerial collaboration was also a challenge in the construction sector.
“In the construction sector getting licences is a challenge, categorisation has not taken place in the past nine months,” he said.
Thotanyane said regularising land and property rights had to be prioritised.
He said lack of access to credit was also proving to be a big impediment in the development of the private sector.
Thotanyana said commercial banks seemed to prefer lending to established businesses than to newer companies.
He also lamented the chaos at the Lesotho-South Africa border gates following the imposition of stringent control measures last June.
He said the measures had seriously affected the flow of business across the borders.
“Clearance of customs on both sides is slow. They need to increase their capacity as people with proper documentation would opt to smuggle goods into the country due to the slow and long customs processes at the border,” Thotanyana said.
The project manager at the Private Sector Competitiveness project, Chaba Mokuku, said information communication technology is being “under-utilised in a country which could significantly reduce the time taken to register businesses”.
Mokuku said there had been some achievements though following the launch of the project in 2007.
“The company registry has been automated and the registry information system has been digitalised and time for company name approvals has been reduced,” he said.