Job only half done

LESOTHO’s rise on the World Bank’s Ease of Doing Business survey released this week paints a picture of a country making strides to improve its investment climate.

A 12-place rise moves Lesotho to 100^th out of 190 countries surveyed.

That helped it leap over Namibia and Swaziland, its regional peers of almost the same economic size.

Only six of the 48 countries in sub-Sahara Africa are ranked above Lesotho.

This is thanks to some seemingly small but significant developments like the establishment of the Onestop shop for company incorporation and the elimination of paid-in minimum capital requirement.

Lesotho has also made property registration easier and tweaked the company law to protect minority shareholders.

This is in addition to setting up of a credit bureau and a commercial court.

The improved ranking will probably give the government something to point at when it pitches Lesotho as an investment destination.

As is their nature, politicians might be tempted to crow.

Yet we should caution against popping the champagne bottles too early.

The Ease of Doing Business survey remains biased towards regulation and procedure.  To improve on the ranking a country has to cut the red tape and rid its laws of off-putting requirements.

In this regard Lesotho is moving in the right direction.

But of much significance for Lesotho however is what the survey does not measure.

For instance it does not deal with the impact of political instability, corruption, government procurement systems and lack of infrastructure on business.

Coincidentally those are the four main problems facing Lesotho.

As we write the speculation that the government might collapse has reached fever pitch.

That feeds into an already ubiquitous perception that Lesotho is not politically stable.

Corruption seems to be festering in government and the state’s procurement systems seem to have been either bastardised or completely high-jerked.

Infrastructure remains largely rudimental. We could add that it still takes people of steel to put up with delays in work and residence permits.

Central to dealing with these problems is political will, especially in tackling instability and corruption.

The problems in the procurement system and poor infrastructure can be partly blamed on corruption.

All the shabby roads in this country can be traced back to some underhand deals that manipulated the procurement systems. It is the same corruption that is about to shove the government over a cliff.

Unfortunately is takes more than just a few tweaks in the laws and regulations to deal with such problems.

If they are not sorted no investor will notice Lesotho even if it sprints up the Ease of Doing Business’ rankings.

They are fundamental problems that require substantial solutions.

So as we celebrate moving 12 places up the rankings we must remember that the job is only half done.