The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the ICS, visit the U.S. Department of State Investment Climate Statements website.

The Government of the Kingdom of Lesotho (GOKL) remains open to and actively seeks foreign direct investment (FDI). In recent years, it has made significant progress in improving the business environment, particularly in licensing, business registration, and access to water and electricity. Following the formation of a new government in October 2022, the GOKL reaffirmed its commitment to strengthening the private sector and attracting FDI focused on job creation, market diversification, and local capacity development.

While the GOKL recognizes the importance of FDI and has taken steps to facilitate foreign investment, it has also introduced measures to protect local entrepreneurs from foreign competition in certain sectors. Beginning in 2020, the government implemented regulations restricting foreign participation in designated small-scale sectors—such as retail food sales and basic auto repair—traditionally dominated by local small and micro enterprises. Although these restrictions may discourage some foreign investors, their overall impact on FDI remains limited, as most affected businesses are relatively small. However, the government’s decision to require foreign investors to renew business licenses annually, rather than every three years, has drawn criticism from investors who cite significant bureaucratic hurdles.

Ongoing policy debates over proposals to mandate minimum levels of local ownership in certain sectors have raised additional concerns. In February, the government removed some restrictions in the used car dealership sector, allowing greater foreign participation, but uncertainty persists regarding the implementation of similar regulations in other industries.

Lesotho’s economy and FDI inflows were negatively impacted by the COVID-19 pandemic in 2021 and 2022, with several foreign-owned textile factories downsizing or closing due to reduced global demand. The government introduced measures to mitigate the pandemic’s impact on the private sector. Other challenges include corruption—Lesotho ranks 99 out of 180 countries on Transparency International’s Corruption Perceptions Index—and labor concerns, particularly reports of gender-based violence and harassment (GBVH) in some textile factories. The government, in collaboration with stakeholders, is working to address GBVH issues. Lesotho’s chronic food insecurity, worsened by the global consequences of Russia’s 2022 invasion of Ukraine, continues to strain household purchasing power, as the country remains a net food importer vulnerable to global price shifts.

Despite these challenges, the GOKL continues to refine its services for foreign investors. Lesotho offers several competitive advantages, including ready access to South African and regional markets, lower labor, electricity, and telecommunications costs compared to neighboring countries, and a government committed to job creation and welcoming foreign investors—particularly those willing to partner with local businesses.

To access the full text of the 2023 ICS, visit the U.S. Department of State Investment Climate Statements website.