The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of Department of State’s Investment Climate Statement website.

The Kingdom of Lesotho (GOKL) is open to and eagerly seeking foreign direct investment (FDI).  The GO has made major strides to improve the business environment in terms of licensing, business registration, water, and electricity connections in recent years.  With the entry of a new government in October 2022, the GOKL announced its intention to strengthen the private sector, and to welcome foreign direct investment focused on job creation, market diversification, and local capacity development.  

 While the GOKL clearly recognizes the importance of FDI and has continued to enact policies to make foreign investment easier, 2020 also saw the rollout of rules intended to protect local entrepreneurs from foreign competition in designated sectors.  In recent years, many migrants have started businesses in these designated sectors and the government announced aggressive measures in 2020 to reverse this trend.  These sectors—such as small retail food sales and basic auto repair—are dominated by local small and micro enterprises but some do have participation by medium-sized foreign-owned firms.  

Although these regulations may have a negative effect on some foreign investors, they will have low impact on overall FDI because most businesses in the designated sectors are relatively small.  However, the government has also enacted other regulations, such as requiring foreign investors to renew their business licenses yearly instead of every three years, a condition that many foreign investors describe as onerous to the point of impossibility given the bureaucratic challenges.  

Moreover, recent policy debates within the government around proposals to mandate a minimum percentage of local ownership enterprises earmarked for local citizens have caused real concern.  In February, the government implemented the regulations in the used car motor dealership sector, which removed barriers to entry for foreign investors.  Uncertainty concerning the execution of the regulations in other sectors remains.  

COVID-19 negatively affected Lesotho’s economy and FDI in 2021 and 2022, with several foreign-owned textile factories closing or cutting back on operations due to the global downtrend in demand.  The government introduced measures to reduce the impact of COVID-19 on the private sector.  Other challenges include corruption, with Transparency International’s Corruption Perceptions Index ranking Lesotho as 99 out of 180 countries.  Foreign investors are requested to adhere to international labor standards, however, there were reported instances of Gender Based Violence and Harassment (GBVH) in many textiles factories.  The government, in collaboration with the stakeholders, is working to address GBVH.  Lesotho was already grappling with chronic food insecurity prior to Russia’s February 24 full-scale invasion of Ukraine but the invasion has only exacerbated the situation.  As a net food importer, changes in global and regional dynamics have significant negative impacts on the availability of food products and the population’s purchasing power in Lesotho.  Despite these challenges, the GOKL is refining the services it offers foreign investors, and Lesotho retains advantages such as ready access to the South African and regional markets as well as lower labor, electricity, and communications costs than neighboring countries.  Lesotho also has a government that remains focused on providing jobs to its citizens, and which has publicly proclaimed its eagerness to work with foreign investors—especially those ready to partner with locals.

To access the full text of the 2023 ICS, visit the U.S. Department of State Investment Climate Statements website.