Investment Opportunities in Lesotho
Trade & Investment Opportunities in Lesotho
Lesotho’s key growth sectors over the medium term are manufacturing, tourism, textiles and apparel, services, mining, high-value agriculture and small/medium and micro enterprises.
Lesotho has undergone significant industrial expansion in the past years, with numerous international textile and garment firms having successfully established their manufacturing concerns in the country. Further development in this sector has been prioritised due to its ability to create sustainable employment opportunities, thereby contributing substantially to poverty alleviation.
While Lesotho is very strong in the clothing, textile and footwear sector, there are also investment opportunities in the following emerging sectors:
- Knitted Fabric Mill, Accessories and Packaging
- Leather and Footwear
- Assembly of consumer electrical and electronic appliances
- Food Processing
- Water Bottling
- Plastic Products
- Resources-based Projects e.g. ceramic ware, brick-making, sandstone and mining of minerals
- Environmental Projects e.g. Waste Recycling
- Development infrastructure in the tourism sector including amongst others: accommodation and hospitality facilities, tour operation and guiding, boating and water related recreational activities, health retreats, and high altitude sports training facilities.
Textile and Apparel Industry
Lesotho is a country paving a new path for development, one that successfully takes into account social as well as economic factors. With duty and quota free access to regional and global markets, the successful development of its apparel and textile industry and an upcoming branding initiative to make 'Made in Lesotho' a global trademark, Lesotho is fast becoming an African investment destination of choice, while still maintaining fair and ethical labour standards.
Lesotho garment firms specialize in the production of denim garments (mainly jeans and garments made from cotton knit fabrics, such as t-shirts and leisure wear). It is estimated that Lesotho's 42 apparel firms each year make 90 million knitted garments, 26 million pairs of jeans per year! The Formosa denim mill uses African cotton to make a minimum of 6,300 tons of denim fabric a year, and about 10,800 tons of cotton (and cotton blends) yarns which is suitable to make knit fabrics.
The industry is now the largest formal sector employer in the country, employing more than 38,000 people.
Lesotho continues to remain the largest sub-saharan exporter of garments to the USA, with an estimated 85% of total exports going there. Purchasers of Lesotho's garments include well known brands such as: GAP, Reebok, Levi Strauss, Ralph Lauren, Walmart, Calvin Klein Jeanswear and J.C. Penney, amongst others.
The Edun clothing line, a socially conscious clothing company created by Ali Hewson, Bono and New York clothing designer, Rogan Gregory, operates in Lesotho. Hewson's goal is to build a business that makes beautiful clothing in developing countries, giving sustainable employment and providing trade potential.
A good news story for consumers in Ireland is that denim products manufactured in Lesotho are now on the shelves in Penneys (Primark) stores in Ireland. Check out the shelves the next time you are shopping there.
Water is Lesotho's most important natural assest as well as being the country's largest single source of foreign exchange earnings and otherwise known as 'White Gold'. Lesotho is one of the most important catchment areas in southern Africa. Rainfall together with winter snowfalls provides an estimated 5.5 billion cubic metres of water annually, and renewable groundwater resources some 340 million cubic metres a year.
Since 1984, efforts have been focused on developing these resources for export through the Lesotho Highlands Water Project, which today, provides the country with a steady stream of royalties.
Supplying the Republic of South Africa with millions of cubic metres of water per year, the Lesotho Highlands Water Project (LHWP) is the largest and most ambitious long term water scheme of its kind in the continent, and has done much to develop the region's water supply. The Lesotho Highlands, with its high rainfall and surface area of high basalt mountains - the Maloti - is an outstanding catchment area.
The project aims to address the needs of South Africa's rapidly expanding Gauteng province, which generates almost 60% of the country's industrial output and 80% of its mining output, and where over 40% of South Africa's population lives. The province needs more water than its main source, the Vaal River, can provide.
The Lesotho Highlands Water Project captures most of the excess water from rainstorms in the Orange/Senqu River catchment and transfers it to the Vaal River system, at the same time ensuring the sustainability of life forms dependent on flows downstream of its storage dams.
Construction on phase 1A of the project began in 1984, and the first dam, Katse, began delivering water in 1998. Construction on phase 1B of the project began in 1998, and comprises the 145 metre high Mohale Dam on the Senqunyane River, the 32 kilometre Mohale Tunnel linking Mohale Dam to Katse Dam, and the 6 kilometre Matsoku weir and tunnel, which diverts flood water from the Matsoku River into the Katse reservoir.
In 2005, Lesotho and South Africa signed an agreement for a R53 million feasibility study for Phase II of the LWHP, which will include a major dam on the Senqu River.
Water Bottling Investment Opportunities
As referred to above, Lesotho's major natural resource is water and it is considered one of the most pure in the world with very little microbiological and chemical contamination which does not require intensive treatment. With increasing fears of water borne diseases, people are voting with their wallets when they buy bottled water.
Bottled water is also considered a food product internationally, thus investment in water bottling is necessary since this would result in a positive impact on public health in the region, by providing safe drinking water and soft drinks in areas with poor water supply quality.
Sandstone Deposits are found all over Lesotho and can be exported in different forms and thicknesses. The whole industry is in the capable hands of small artisans with limited investment capabilities.
In Lesotho, sandstone is extensively used in the construction of residential houses, office buildings, commercial complexes, hotels, restaurants and special monuments. The demand for sandstone slabs and tiles as well as veneering stones has been increasing and different applications and designs are being made. For example, sandstone fireplaces are a very attractive furnishing option.
Joint venture partnerships are encouraged with local companies, which cannot only create value addition, but also generate employment and earn foreign exchange for the country, while reviving the talent of artisans in a significant manner.
In present-day Lesotho, the exploitation of diamonds occurs in the Maluti range of mountains in the north-east of the country. Lesotho has several diamond dealers as well as two diamond cutting enterprises.
The Lets'eng Diamond Mine, jointly owned by the Gem Diamond Mining Company of Africa and the Lesotho government, reopened in 2003 and is the highest diamond mine in the world, at over 3km above sea level. The mine produces the highest proportion of large stones of any mine in the world and is famous for its high quality 100 plus carat stones. In 2006, the biggest diamond to be found in 13 years, the "Lesotho Promise," at 603 carat (120 grams) was found at Lets'eng. This was the 10th largest white diamond ever to be found in the world.
In 2006, an agreement was concluded between the Lesotho Government and Kao Diamond Mine Ltd, regarding a Mining Agreement and Lease diamond operation in one of the largest of several kimberlite pipes in Lesotho, the 20ha Kao pipe. Other diamond mines are also in existence.