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New wine in new wine bags



. . .economic reforms for better business

Robert Likhang

WE have exciting times ahead of us as the country prepares to implement SADC recommendations which we hope will provide the country with the much-needed political and economic stability.

However, the words of Jesus Christ came to my mind, when he told the Jews that they cannot put new wine into old wine bags.

This means we cannot obtain economic stability unless we review the old ways and change, cut or create where necessary, that explains need for political reforms, but that also says we need reforms in the economy as well.

I present below immediate reforms we need to implement for a turnaround on our business eco-system to ensure a thriving economy.


Better Planning

Lesotho has Vision 2020 which is supported by other supplementary plans. Each ministry prepared own business plans but execution was not always in line with the masterplan.

The resource allocation (financial, human etc.) was not always driven by the strategic goals in the masterplan.

The state-owned entities and agencies did not always align their strategic plans to the national masterplan.

If we do not plan well as a nation we will remain forever poor and increase the political conflicts.

The new government needs to quickly review their economic system and ecosystem and plan differently.

This country has been talking about a National Planning Board for many years but this has never seen the light of the day.

The absence of a National Planning Board has led to disarray in national planning, poor coordination of resources and activities, poor execution and tragically poor governance where the pillars of good governance are not visible (Responsibility, Accountability, Fairness and Transparency).

I therefore recommend the establishment of the Board. The Ministry of Development Planning should serve as secretariat for the board.

 Better Laws

There have been good strides which led to the 2011 Companies Act, but too late and too little to have meaningful impact on business. Existing laws make it difficult to open and run businesses in the country. A number of business-related laws and regulations are still making it more difficult to start and operate a business in the country.  Basotho are running small financial cooperatives and social enterprises even at village level but registering a small bank or lending institution is still very difficult and costly. I support the adoption of international standards but if standards make it difficult for us to put food on the table can we not do something of our own before we go international?

My view is that we need to go back to our laws and undertake massive reforms with the view to creating a reachable, simple and sustainable business ecosystem. We need to revisit old proclamations and abolish those that are not necessary. According to some proclamations, the importation of some animals into Lesotho is still a complex process.  The business community should be consulted in legal and policy reforms to ensure that entry to any industry is affordable to all Basotho.

 Better Policies

Wealthy nations are what they are because of their wealth of good policies. National policies promote good governance and eventually good business ecosystem because they promote the very pillars of governance.

They promote Responsibility – clarifying roles of each unit or person so assigned to undertake a function or duty; promote Accountability – clarifying reporting responsibility and penalties to the unit or person assigned to undertake a function or duty.

They also promote Fairness as they ensure a win-win (equity) for all; promote Transparency in which case there is increased certainty and predictability of the results.

The lack of or low quality policy frameworks leave decisions to be made by ministers or senior government officials. The ministers and officials enjoy operating with cards close to their chests and this increases opportunities for vengeance, corruption, fraud and delays. Businesses require a lot of certainty and predictability to reduce their business risk.

Government should immediately look to create policies that will promote domestic business, in particular the Small to Medium Enterprises (SMEs).

Two years ago the cabinet took a good step by approving the SME policy.

However, stakeholders were not invited for their input and there was no implementation plan.

The SME policy should promote the following critical issues: 1) Government should give priority to the SME sector in terms of procurement for services, works and goods and at a higher category require Foreign suppliers to join with domestic SMEs; 2) Foreign Investors must be made to undertake linkages with domestic SMEs and to engage in supplier development programmes; 3) ensure Meaningful local ownership stakes as well as local management stakes.


Better Organisation

Each ministry is a government of its own with massive powers and resources under its control.

Coordination among ministries is extremely poor, and worse there is massive rivalry, duplications, and redundancies.

Government must restructure ministries to ensure that each ministry remains simply an organ of the bigger body undertaking its function and only its function.

Ministries are about development and monitoring of polices and not operations. It is government agencies that should undertake operations, not ministries competing with own agencies or even the private sector.

We have conflicts between LTDC and its ministry, BEDCO and its ministry, LNDC and its ministry as well as conflict among the LNDC, LTDC, and BEDCO.

Government institutions such as LNDC, BEDCO, LOIC, LTDC, LEWA, and LCA should be completely restructured to ensure direction and effectiveness. The questions that remain are whether they are still implementing their mandates, whether they are properly funded, whether they are accountable, whether they provide value for money, or whether some of their activities cannot be done by private sector.

There are also questions about the effectiveness of the central bank in regulating banks, insurances; in the localisation and promotion of domestic business and reducing costs to business.

Are there efficiency and effectiveness in the performance of LEC and WASCO and whether utilities are offered at quantities, quality and costs that promote business?   Lastly, are all these governed and managed by the right people and this also speaks to quality and composition of boards.

People should be appointed purely on merit and government officials should not lead state-owned entities. That should be done by competent and independent individuals who should comply with the dictates of good corporate governance.


The old thinking has reached its sell-by- date. We need to be courageous and go radical if radical results are expected. The politicians, the civil society, church, and business society need to be forward looking and results orientated.

It is not merely about one prime minister handing over the baton to another, but it is about this generation, handing over the baton to the next.

What will we offer the next generation- will it be hatred, corruption, a dead economy, lack of forgiveness and reconciliation?

Mr Likhang FICS, ACMA, CGMA, CA (L) – is a principal at accounting and advisory firm RL Consulting & Chartered Accountants (www.yourfd.co.ls)



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