Lesotho’s landlocked position—fully surrounded by South Africa—limits its access to global markets, forcing businesses to rely exclusively on South African ports and infrastructure. Given its small economy and geographic constraints, Lesotho would greatly benefit from deeper regional economic integration through SACU and SADC.

Employers cite low productivity, especially in the manufacturing sector, as a key operational challenge. The ongoing impact of the HIV epidemic has also strained both employers and employees; some garment manufacturers have responded by providing onsite medical clinics to reduce worker absenteeism for medical care. In addition, the business community points to inadequate physical infrastructure, including poor road networks and insufficient electricity supply, as barriers to growth.

Although Lesotho does not currently have a dedicated investment law, the Companies Act of 2011, the Financial Act of 2012, and the 2015 National Investment Policy provide some legal framework for foreign investment, while bilateral investment treaties govern the broader entry and treatment of foreign investors.

Foreign investors have raised concerns that the Business Registration and Licensing Act of 2019, frequent government changes, and the absence of standardized business procedures—exacerbated by manual systems—create operational inefficiencies and a permissive environment for corruption, ultimately delaying business agreements. More broadly, the country still lacks comprehensive legal frameworks and sufficient digital infrastructure to support a modern economy.