Introduction
Two recent diplomatic engagements in the People’s Republic of China are likely to shape the legal and commercial landscape for Lesotho businesses for the next two to five years.
First, the Honourable Minister of Finance and Development Planning, Dr. Rets’elisitsoe Matlanyane, represented the Kingdom of Lesotho at the Third Global Conference on Action-Oriented: Building a Global Community of Development for All. In her address, the Minister set out clear policy priorities: climate resilience, digital transformation, and what she described as “fair, sustainable financing that delivers for our people”. She singled out the partnership with China as one that “continues to bring real results and must be strengthened”.
Second, Her Excellency Ms. Mapaballo Lydia Mile, Lesotho’s Ambassador to the People’s Republic of China, attended the Annual Retreat of the Group of African Ambassadors in China, held in Beijing under the theme “Leveraging China’s 100% Tariff-Free Offer to Foster Development and Prosperity in Africa”.
In addition, the Minister and the Ambassador held a courtesy meeting with the Chairman of TBEA, Mr. Zhang Xin. TBEA is currently implementing the photovoltaic project at Ha Ramarothole in the Mafeteng District. Phase I has been successfully completed, and Phase II is set to commence.
While the headlines are diplomatic, the implications are legal and commercial. This article identifies the practical legal questions that arise for Lesotho businesses, with a particular focus on three areas: (i) the architecture of China’s zero-tariff offer; (ii) the interaction with Lesotho’s existing African Continental Free Trade Area (AfCFTA) commitments; and (iii) the regulatory and contractual framework illustrated by the Ha Ramarothole project.
1. China’s Zero-Tariff Offer to Africa: What the Law Actually Says
Lesotho is already a beneficiary of preferential access to the Chinese market under two distinct (and now overlapping) measures.
The LDC measure (effective 1 December 2024). On 1 December 2024, China extended duty-free access to 100% of tariff lines for thirty-three least developed countries (LDCs) in Africa with which it maintains diplomatic relations. Lesotho, as an LDC, falls squarely within this measure. China notified the World Trade Organization (WTO) of this measure in June 2025, invoking the Enabling Clause and the 1999 WTO LDC tariff waiver (most recently extended until 30 June 2029) as the legal bases for granting preferential tariffs to LDCs without extending them, on a most-favoured-nation basis, to all WTO members.
The expanded measure (effective 1 May 2026). With effect from 1 May 2026, China extended the same 100% tariff-free treatment to all 53 African countries with which it maintains diplomatic relations, the sole African exception being a country that recognises Taiwan. The measure currently runs from 1 May 2026 to 30 April 2028. For Lesotho, which already benefited from the LDC measure, the practical effect is continuity rather than expansion; the broader strategic significance is that Lesotho exporters now compete on equal tariff terms with larger African economies such as Kenya, Nigeria and Egypt for access to the Chinese market.
The legal conditions that matter to business. Two points deserve emphasis.
First, the zero-tariff treatment is conditional on the maintenance of diplomatic relations between China and the beneficiary state. It is not a treaty right of the exporting business; it is a unilateral preference that may, in principle, be modified or withdrawn. Lesotho exporters should plan on the basis that the preference is presently available, but should not structure long-term arrangements as if it were an immutable entitlement.
Second, the practical use of the preference depends on rules of origin and certification. Goods do not enter China duty-free merely because the exporter is established in Lesotho; the goods must be shown to originate in Lesotho in accordance with the applicable rules of origin, and that origin must be certified through documentation acceptable to Chinese Customs. Businesses contemplating exports to China should obtain advice on the origin requirements at the outset, rather than after a shipment has been detained for non-compliance.
2. AfCFTA: Lesotho’s Other Market Access Framework
Lesotho ratified the African Continental Free Trade Area Agreement on 2 November 2020, and its tariff schedule has been gazetted, placing Lesotho among the countries that can presently trade preferentially under the AfCFTA framework.
The AfCFTA architecture is broader than tariff elimination. It encompasses the Protocol on Trade in Goods, the Protocol on Trade in Services, the Protocol on Rules and Procedures for the Settlement of Disputes, the Protocol on Investment, the Protocol on Intellectual Property Rights, the Protocol on Competition Policy, and the more recently concluded Protocol on Women and Youth in Trade.
For Lesotho businesses, the practical questions are:
- Whether the goods produced or services rendered qualify as originating in Lesotho for AfCFTA purposes;
- Whether the destination market has gazetted its tariff schedule and is therefore in a position to extend preferential treatment;
- Whether contractual arrangements with counterparties in other African states should expressly anticipate the AfCFTA Dispute Settlement Mechanism, or should retain conventional arbitration provisions;
- Whether intra-African trade arrangements remain subject to existing regional integration frameworks (such as the SACU and SADC frameworks, in Lesotho’s case), and how the interaction between those frameworks and the AfCFTA is to be managed in a particular transaction.
These are not abstract questions of policy. They are operational legal questions that determine, in practice, whether a given consignment crosses a border at a preferential rate or at the most-favoured-nation rate.
3. The Ha Ramarothole Precedent: Foreign Investment in Lesotho’s Energy Sector
The TBEA photovoltaic project at Ha Ramarothole is instructive as a case study in the legal architecture of Chinese investment in Lesotho’s energy sector.
Phase I (30 MW) was financed through a concessional loan from the Export-Import Bank of China, with Lesotho contributing in kind. Implementation has been undertaken through the Lesotho Electricity Generation Company (LEGCO), in collaboration with the Ministry of Energy. The transmission infrastructure (a 132 kV substation and a 55 km transmission line connecting Ha Ramarothole to Mazenod) was developed as part of the project, with grid integration involving the Lesotho Electricity Company (LEC) as the established transmission utility.
For practitioners advising on similar projects, the legal questions that arise on a project of this type include:
- The structuring of the sovereign financing arrangement and any associated guarantees;
- The contractual framework between the project company and the off-taker (typically a power purchase agreement, the terms of which will govern tariff, dispatch, force majeure and termination over the life of the project);
- Regulatory approvals from the Lesotho Electricity and Water Authority (LEWA), including generation licensing and tariff approvals;
- Environmental impact assessment under the Environment Act 2008 and associated regulations;
- Land rights and community engagement under the Land Act 2010 and customary land tenure principles;
- Tax structuring, including the availability of incentives under Lesotho’s investment promotion framework;
- Local content, employment, and skills transfer obligations;
- Dispute resolution provisions (typically arbitration under the rules of an established institution, with seat and governing law selected to balance enforceability and the interests of both sovereign and investor).
With Phase II of the project to commence, and with renewable energy likely to remain a priority sector under successive national development plans, these legal questions will recur. Lesotho businesses contemplating partnerships, sub-contracts, or supply arrangements connected with such projects should engage on the legal framework at the structuring stage, not after contracts have been signed.
4. Practical Implications: What Lesotho Businesses Should Be Considering Now
The strategic message from the Beijing retreat, that “the zero-tariff offer presents a major opportunity, [but] its benefits depend on strategic action”, translates into a number of concrete legal and compliance steps for Lesotho businesses:
- Origin and certification capacity. Businesses contemplating exports to China or to other African markets should ensure that their production records, supply chain documentation, and certification arrangements are adequate to demonstrate originating status under the applicable rules.
- Standards compliance. Standards compliance was identified by the retreat as a determinant of whether market access is converted into actual trade flows. This entails compliance with Chinese technical regulations and conformity assessment procedures, and, separately, with the standards required in destination markets under the AfCFTA framework.
- Value-addition and the move up the supply chain. The Minister’s emphasis on value addition, agro-processing and light manufacturing reflects a recognition that unprocessed commodity exports capture only a small share of the value created. Businesses positioning themselves to move up the value chain should consider the legal vehicles, joint-venture structures, intellectual property protection and tax-incentive frameworks available under Lesotho law.
- Contractual readiness. Cross-border trade and investment transactions require careful attention to choice of law, choice of forum, currency, force majeure and dispute resolution. The growth in trade with China, in particular, raises questions about the enforceability of judgments and arbitral awards between Lesotho and the People’s Republic of China that are best addressed at the contracting stage rather than after a dispute has arisen.
Conclusion
The strategic priorities articulated by the Minister and the Ambassador, climate resilience, digital transformation, fair and sustainable financing, are policy goals. Their translation into commercial reality, however, depends on the legal frameworks that govern trade, investment, regulatory compliance and dispute resolution. The opportunity is real; so is the work required to access it.
Mayet & Associates advises businesses on cross-border trade and investment matters, foreign direct investment, energy sector projects, regulatory compliance, and dispute resolution. Should your business wish to explore any of the matters discussed above, please contact the firm.
Mayet & Associates · www.zmayetlaw.co.ls
This article is provided for general information only and does not constitute legal advice. Readers should obtain specific advice in respect of their particular circumstances before acting on any of the matters discussed.