1. No category

Business Registration and Licensing
Reform
LESOTHO
Chaba Mokuku
Project Manager
Lesotho Private Sector Competitiveness and Economic Diversification Project
Email: cmokuku@psc.org.ls
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).
3/17/2015
2
Business Start Up - Related Reforms
• Company registration reform 2007-2014.
• One Stop Business Facilitation Centre 2007-present.
• Business licensing reform 2014 – 2019.
Registering property
Getting credit
Protecting Investors
Paying Taxes
Trading Across
Borders
Enforcing Contracts
Resolving Insolvency
88
(-8)
43
(-6)
110
(+1)
1
(0)
28
(+1)
149
108
(130 in 2010)
156
61
145
6
29
93
161
25
32
55
2
117
103
117
66
158
140
11
41
51
93
173
97
129
24
98
61
151
61
52
61
17
36
106
106
87
17
110
3
28
67
109
85
19
74
5
13
157
147
136
100
127
1
17
61
115
53
46
173
1
44
49
120
81
36
80
19
43
South
Africa
128 (0)
Namibia
74
(-8)
Lesotho
Mauritius
Starting a Business
Dealing with
construction permits
Getting Electricity
Singapore
Overall Rank
Botswana
TOPIC
Swaziland
Doing Business Ranking for Lesotho - 2015
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
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.
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.
Examples of Categories
EXAMPLE
Category 1
deregulation
Category 2
Category 3 Category 4
Premises
Declaration, Permanent
Certification combination 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.
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).
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.
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.
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.
3/17/2015
12