The Business Licensing and Registration Act (BLRA) was introduced in Lesotho to streamline the registration and licensing of businesses, promote transparency, and enhance economic growth by creating a conducive environment for investment. Since its enactment, the BLRA has played a pivotal role in regulating industries, fostering formalization, and attracting foreign direct investment. However, its implementation has faced mixed outcomes, particularly due to structural, administrative, and financial challenges.
The BLRA aims to:
- Simplify the Licensing Process : Establishing clear guidelines for obtaining business licenses and reducing bureaucratic delays.
- Promote Economic Inclusivity : Encouraging participation by both local and foreign businesses, including small and medium enterprises (SMEs).
- Enhance Compliance and Regulation : Ensuring businesses meet legal standards, such as tax obligations and health and safety requirements.
- Generate Revenue : Increasing government income through licensing fees and related taxes.
- Progress in Implementation
Since its introduction, the BLRA has yielded several notable achievements:
- Increased Business Formalization :The act has encouraged the formal registration of businesses, particularly in urban areas. Many businesses now operate with proper documentation, making it easier for the government to track economic activities and improve tax compliance.
- Attraction of Foreign Investment: Clear and consistent licensing regulations have made Lesotho a more attractive destination for foreign investors. Industries such as cannabis farming , mining , and textiles have seen increased participation from international firms due to streamlined licensing processes.
- Digital Licensing Systems: Efforts have been made to digitize licensing processes to reduce delays. Online platforms have been introduced to improve efficiency, though their reach remains limited in rural areas.
- Revenue Generation: The licensing fees collected under the BLRA have become an essential source of revenue for the government, particularly in sectors such as cannabis cultivation and construction
Despite its successes, the implementation of the BLRA has faced several challenges:
- High Licensing Costs: Licensing fees remain prohibitively expensive for many small businesses, particularly in rural areas. This has created a barrier to entry for local entrepreneurs, limiting the act’s inclusivity.
- Administrative Inefficiencies : Although digitization has started, manual processes still dominate in many parts of the country. Bureaucratic delays and corruption have occasionally undermined the act’s effectiveness.
- Limited Awareness : Many small business owners, especially in rural areas, lack awareness of the BLRA and its requirements. This has led to low compliance rates outside urban centers.
- Barriers for SMEs : The act’s rigid requirements, such as proof of financial capacity and detailed business plans, disproportionately affect small and informal businesses, which make up a significant portion of Lesotho’s economy.
The government has acknowledged the challenges in implementing the BLRA and has initiated several measures to improve its effectiveness:
- Reducing Licensing Fees for Small Businesses : Proposals to introduce tiered licensing fees are under discussion to make registration more affordable for SMEs.
- Capacity Building : Training programs for local entrepreneurs are being rolled out to increase compliance and understanding of the BLRA.
- Streamlining Processes : Efforts to fully digitize licensing and registration are ongoing, with the goal of reducing bureaucracy and improving accessibility.
- Public Awareness Campaigns : Educational initiatives are being launched to inform citizens about the benefits of formal registration and compliance
For the BLRA to achieve its full potential, the government must prioritize inclusivity and efficiency. Key areas of focus include:
- Decentralization of Services : Bringing licensing and registration services closer to rural communities.
- Reducing Costs : Making licensing affordable for local businesses while maintaining reasonable fees for larger corporations.
- Encouraging Local Participation : Providing incentives for local entrepreneurs to formalize their businesses.
- Collaboration with Stakeholders : Partnering with private sector organizations and NGOs to improve implementation and outreach.
Conclusion
The Business Licensing and Registration Act has laid a strong foundation for regulating and formalizing business activities in Lesotho. While its implementation has seen progress in terms of attracting foreign investment and improving compliance, significant challenges remain. Addressing these issues will require continued government commitment, stakeholder collaboration, and targeted reforms to ensure the act benefits all segments of the economy, particularly small and local businesses.