. . . as Chinese traders elbow out Basotho small businesses
MASERU – A loophole in the Ministry of Trade and Industry’s regulations restricts the ministry from curbing the rate at which Chinese nationals have overtaken the small business reserved for Basotho nationals.
Ministry of Trade and Industry public relations officer, Liahelo Nkaota, said this in response to Basotho small business owners who complain that Chinese business people operate small businesses pose unfair competition.
Nkaota noted there are businesses that are strictly reserved for Basotho which, among them, includes butcheries, restaurants, hair salons and general cafes.
These sectors are reserved for the development of Basotho while also contributing to employment creation and poverty reduction.
She said the law forbids Chinese or any other foreigners from venturing into such businesses but there are challenges in executing the law.
On the other hand, she said most foreigners, Chinese included, that compete with local businesses are citizens of Lesotho by naturalisation through the Ministry of Home Affairs’ regulations which means they have equal rights and privileges as Basotho.
“Physically you will identify a person as a Chinese but, according to Lesotho’s laws, you will find out that they are naturalized and when they are naturalised it means they have all the rights a Mosotho person has which include running businesses that are reserved for Basotho.
“The other challenge is of Basotho who rent their shop licences to foreigners and they normally they keep on renewing their licenses which are registered under their names. This makes it difficult to pin down foreigners if found running the business during inspection as they can claim to have been hired by the owner of the shop.
“During inspections, we do find foreigners operating businesses reserved for Basotho but because of lack of sufficient evidence to prove that the businesses belong to them, we fail to take legal action against them.
“They normally claim to be just employees and although we know that they are lying, there is nothing we can do as the businesses are not registered under their names,” Nkaota said.
Inability to take action against foreigners alleged to be operating with Basotho licenses is caused by a loophole in Ministry of Trade’s Law which is silent on the action to be taken (to both the license holder and the foreigner renting) if a foreigner is found operating under a license belonging to a Mosotho.
She, however, emphasised that it is illegal to rent out a license as it must strictly be used by the owner since only the Ministry of Trade and Industry is the authorised to issue trading licenses.
Business competition between Chinese and Basotho small business traders is, among others, caused by Basotho themselves who shoot themselves in the foot by helping foreigners invade their reserved business spaces.
“If it weren’t for Basotho renting out their shops or working as a front for foreigners, there wouldn’t be so many Chinese competing with Basotho for businesses reserved for them,” she said.
Nkaota said her Ministry is working on reviewing the laws to curb the situation which has become a challenge for both the ministry and Basotho at large.
The concern has re-emerged after revelations the Ministry of Small Business Development, Co-operatives and Marketing had hit a hard place in trying to ensure that the Chinese business community in Lesotho abides by trading laws.
In the letter, the ministry noted that in 2017, it sought help from the Chinese embassy to call a meeting between the ministry and the Chinese business community in Lesotho where during the meeting the trading laws were articulated and translated in Mandarin for the Chinese stakeholders.
The letter notes that to date the Chinese business community has not abided by the trading law as a result of which the ministry will take legal action against such offenders.
Bachelor of Arts in Business and Entrepreneurship graduate Motlohi Kabi is one of the vendors who complain about competition between Chinese and small Basotho owned businesses, especially vendors.
“As street vendors, we face lots of challenges that rage from competition with Chinese shops that sell the same products as us at ridiculously lower price, making it very hard for us to survive in the market,” Kabi said.