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Govt reverses indigenisation of motor dealership industry

Bereng Mpaki

THE government has reversed its 2020 decision to indigenise the business of importing and reselling used cars.

The reversal of the indigenisation of the sector means that foreign entrepreneurs, who have always dominated the business importing and reselling used vehicles mainly from Japan, can continue with their business as before.

Motor dealership was one of the businesses that was reserved for indigenous Basotho in the government gazette of the Business Licensing and Registration Regulations, 2020.

Under the restrictions, naturalised Lesotho citizens and foreigners were barred owning and operating businesses such as international road freight and logistics, road transport and logistics.

They were also banned from motor vehicle dealerships among others.

But the government has since made a U-turn on the matter.

Announcing the move on Friday, Trade and Industry Minister, Thabiso Molapo, said the government had hearkened to widespread calls to allow foreign investors in the sector.

In any event, the policy had not yielded the desired results as only five indigenous Basotho had invested in the capital-intensive sector to date, he said.

“I must indicate that this sector showed a remarkable potential and it was reserved for Basotho as it seemed uncomplicated,” Dr Molapo said.

“However, there were widespread calls to allow the sector to remain open to foreign enterprises. Therefore, the sector will remain open to foreign investors,” Dr Molapo said.

He said the motor traders’ licence fees for businesses with M200 000 to M5 million turnover was M50 000 per annum while for those with over M5 million turnover would have to fork out M150 000.

The licence fees were initially pegged at M600 per annum.

Dr Molapo defended his ministry’s decision to hike the licence fees, saying this was meant to prevent possible money laundering and terrorist financing within the motor dealership industry.

He said the hiked fees were also meant to counter environmental pollution caused by the second-hand vehicles.

He said Lesotho was involved in climate change mitigation, and had to take steps to minimise pollution through carbon emissions by the imported pre-owned vehicles.

He encouraged the public to consider buying vehicles directly from suppliers without involving motor dealers if they felt the dealers were now charging exorbitant sums due to the hiked traders’ licence fees.

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