Lesotho is a member of the South African
Customs Union (SACU) and therefore
enjoys duty and tariff-free access to the
South African market. Customs clearance is
relatively straightforward, and with proper
planning, delays can be minimised.
The South African automotive industry supplies the SACU, SADC, EU and USA markets with vehicles, a market of around
The new South African Automotive
Masterplan (SAAM) aims to increase production volumes to
per annum by 2035 and substantially diversify and
deepen the component supply chain. Lesotho’s automotive
products qualify as originating in South Africa under the SAAM.
Lesotho’s central location makes it ideal as a timely supplier of components to the South African automotive assembly hubs in Port Elizabeth, Durban and Gauteng. Maseru is 499 kms from Roslyn near Pretoria; 542 kms from
Durban; and 702 kms from Port Elizabeth. Road connexions in South Africa with Lesotho are of high quality.
Belo Industrial Park, Butha Buthe.
A total investment of approximately:
comprising fixed assets of LSL 69.1m, pre-production expenditure of LSL 3.14m and initial working capital of LSL 9.57m will be required for the establishment of
the Automotive Component manufacturing enterprise. The graphs below illustrate a financially viable operation with the opportunity expected to generate a profit throughout its operational life.
In addition to the positive NPV and IRR, the initial investment cost of the project is expected to be fully recovered in just over 3 years. The investment opportunity further responds favourably to Lesotho’s developmental objectives through its positive socio-economic impact in terms of employment creation, economic agglomeration and potential forex earning opportunities.
The enterprise’s annual net profit after tax increases from
in year 1 to approximately:
in year 10. Similarly, the projected cash flows of the envisaged project indicate that it will generate positive net cash flows throughout the 10-year operational period.
Automotive Component Factory, Maseru.
Belo Industrial Park, Butha Buthe.
Components investment opportunity is computed over a ten-year period. Revenue and expenditure projections are in line with industry growth prospects and market potential and have been informed by and benchmarked against industry standards and norms. In addition, assumptions relating
to inflation: depreciation and salvage value: and company tax have been worked out based on the existing laws and directives of the country. The figures above represent high level estimates as of January 2021 and are not derived from a full feasibility study. Investors are advised to conduct their own due diligence. The project assumes that the investor will have a viable business case that is driven by international client demand.
For more information please contact:
General Manager: Investment & Trade Promotion
Lesotho National Development Corporation
Email: ip@lndc.org.ls
