Majoro pushes for urgent reforms

MASERU – PRIME Minister Moeketsi Majoro says Lesotho should speed up reforms to attract both local and foreign investors who are urgently needed to revive the economy and create jobs. Majoro was speaking at the 11th public-private sector consultation hosted by the Prime Minister’s Delivery Unit (PMDU) last Thursday. He said the ruinous impact of the Covid-19 pandemic and the accompanying lockdowns have made the economic and regulatory reforms urgent. Those reforms, Majoro said, are not only central to Lesotho’s economic recovery but will also help the economy withstand shocks of the same ilk as the Covid-19 pandemic. Since early last year, Lesotho’s economy has been in a tailspin, with companies shutting down, production in a slump and thousands losing their jobs. Although some companies have reopened, it might be long before their production and employment levels reach the pre-Covid-19 levels. The Prime Minister however believes the recovery can be quickened if Lesotho implements reforms that will remove barriers to business and investment. The ultimate goal, Majoro told the virtual meeting, is to create a conducive environment for the private sector to thrive. He said the efforts to remove those ‘roadblocks’ to investment have been underway since 2007 but Covid-19 has pushed the government to hasten the pace of reforms. He told the meeting that the government now has a ‘dashboard for tracking the progress of legislative reforms”. He however lamented the slow pace of some reforms, especially those whose implementation depends on either amending or enacting new laws. “We have a lot of legislative work in various stages still outstanding. We found that one was overdue by 605 days,” Majoro said. He said the pace of those reforms will be determined by the level of engagement between the government and the private sector. “Lesotho will not develop at the rate at which the government wants but will develop at a pace at which investors and the business sector wants to achieve.” He said although Lesotho has done fairly well on some indicators on the World Bank’s Ease of Doing Business rankings, “there is a lot that needs to be done to give investors and businesses an improved experience that is both time and cost-friendly”. “Even though we have the One-Stop Business Facilitation Centre (OBFC) where services are automated an investor cannot complete all the processes online.” “He (investor) still needs to physically go to the other 12 offices or so before completing the process of setting up a business in Lesotho.” This, he added, calls for synergised automated systems so that decisions and processes are faster. The Deputy Registrar of Companies, Florence Motoa, said the OBFC has significantly improved the business registration processes since its launch in 2009. Motoa said the centre has drastically cut the number of days and steps it takes to register a company. Before the OBFC it used to take months to register a company. The centre has reduced that to a one-day job and removed the need for lawyers who were essentially expensive middlemen in a process that genuinely did not need their services. Also, a bank account is no longer a requirement when registering a company. Inspection of business premises now takes under two weeks instead of months. “Before Covid-19 we saw a significant increase in horticulture, agriculture and tourism investors because we have managed to make a user-friendly set-up for registering a business by cutting the middleman,” Motoa said. She said they also witnessed the importance of the OBFC during the Covid-19 lockdowns when offices were closed and travel was banned. She however said a lot remains to be done to make the system perfect. “Agencies are still reluctant to let go of their mandate to enable reforms,” Motoa said. “Many stakeholders are still doing things manually and even those who have managed to automate the challenge is that our systems are not synchronised, they do not talk to each other.” “It is time we choose one line that government systems will run on to enable synergy between systems.” Ntsane Mafereka, the Information Technology Communication Officer at the Land Administration Authority (LAA), said they are pulling all stops to make it easier and faster to register property. Mafereka said because of several reforms the number of days it takes to register a property has been reduced from two weeks to three days. The reforms have also resulted in more women acquiring land titles. “Going forward we want to improve collaboration between other land administering entities like the Maseru City Council, we want to fully automate services and frequently maintain our systems to ensure effective functionality,” Mafereka said. The World Bank is currently helping Lesotho to improve six indicators which are starting a business, registering property, trading across borders, getting credit, resolving insolvency and dealing with construction permits. The Ease of Doing Business report shows that there has been a marked improvement on some of the indicators. On trading across borders, for instance, Lesotho scores 91.9 out of a hundred. The starting a business indicator is at 88.4, ranking Lesotho at number 84 out of 190 countries and the best in the SADC region. Lesotho’s overall ranking however remains a lowly 122. These rankings matter because they inform investors’ decisions on where to set up shop. Poorly ranked countries don’t get much notice from investors who loathe dealing with cumbersome legislation and red tape. Generally, burdensome regulations and bureaucracy make it difficult and expensive to start a business. Investors that are brave enough to deal with such problems tend to charge hefty premiums on their products to compensate for the risk, rent-seeking and high cost of production. The biggest losers are however the consumers who pay more. And without investors, both local and foreign, countries struggle to generate foreign currency, tax revenue and create jobs. A World Bank report on investment climate, growth and poverty says improving the investment climate creates opportunities and incentives for firms to invest productively, create jobs and expand. This, the report says, is the key to sustainable progress in attacking poverty and improving living standards. It further says investment climate influences “the decision of the farmer to sow more seed, the decision of the micro-entrepreneur to start a business, the decision of the local manufacturing company to expand its production line and hire more workers, the decision of the multinational to locate its next global production facility.” Lemohang Rakotsoane