Lesotho Special Economic Zones Policy: 2024-2029.

The National Special Economic Zones (SEZ) Policy is a sectoral framework aligned with the goals of the Second National Strategic Development Plan (NSDP II), which seeks to promote employment creation and economic growth through the establishment of a strong industrial base in Lesotho. The Policy is intended to contribute to national development objectives by attracting both domestic and foreign investment, promoting exports, generating employment opportunities, and supporting the development of infrastructure. The Policy establishes a transparent and consistent legal and regulatory framework for the development and management of Special Economic Zones (SEZs), aimed at attracting quality investments while ensuring compliance with sound business, social, and environmental standards. It identifies the Special Economic Zone (SEZ) as a geographically defined area equipped with dedicated infrastructure, value-added services, and streamlined investment and trade regulations designed to facilitate business operations. It also operates under a specialized governance framework to ensure efficient site management, service delivery, and regulatory oversight. SEZ designation will be limited to locations with proven market demand and subject to rigorous evaluation criteria to ensure economic viability and reduce the risk of programme failure. The Policy also introduces streamlined licensing and permitting procedures to facilitate business establishment and operations while safeguarding public welfare through effective regulatory oversight. In addition, it provides competitive fiscal incentives and efficient tax administration mechanisms to enhance Lesotho’s attractiveness as an investment destination.
The SEZ Policy sets out long-term strategic objectives aimed at (i) positioning Lesotho as a hub for foreign investment and integration into regional and global value chains through reforms consistent with the country’s trade obligations; (ii) promoting integrated industrial development based on Lesotho’s comparative advantages, strategic opportunities, and natural resource endowments; (iii) creating a more attractive investment climate by introducing reforms that address key constraints to economic growth and by liberalizing economic activities within the zones to unlock new business opportunities; and (iv) stimulating economic growth and employment creation, particularly for communities located in and around the SEZ areas.
The SEZ Policy seeks to use Special Economic Zones as a tool to diversify Lesotho’s economy, expand production into new sectors, and improve access to regional and international markets. A well-designed SEZ framework is expected to address key structural challenges in the economy while contributing to employment creation, poverty reduction, income generation, and export-led growth. The Policy also aims to support business climate reforms in strategic economic growth areas and promote technological upgrading by attracting more advanced industries that can enhance productivity, efficiency, and knowledge transfer. In this regard, SEZs are expected to support industrial development in sectors such as agro-processing, automotive, leather, pharmaceuticals, tourism, and other non-apparel light manufacturing industries. To achieve these objectives, the Policy focuses on (i) establishing clear objectives, processes, and criteria for SEZ designation; (ii) aligning SEZ development with relevant national policies and investment strategies; (iii) proposing incentive packages, ownership structures, and financing models for SEZs; (iv) defining economic, environmental, social, health, safety, and labour standards for SEZ operations; (v) setting criteria for the approval of SEZ developers and tenant companies; (vi) establishing the legal, regulatory, and institutional framework for SEZ governance; (vii) providing a roadmap for the implementation of the SEZ programme. Finally, the Policy promotes Public-Private Partnerships as a key mechanism for developing and managing SEZ infrastructure, utilities, and services through models such as management contracts, concessions, BOT arrangements, and joint ventures. The Policy aims to leverage private sector financing, expertise, and operational capacity to improve industrial infrastructure, enhance competitiveness, and address public resource constraints.