Electrical Components
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Invest in Lesotho’s
Electrical
Components
Sector
LESOTHO – Cost-Advantaged Electrical Components Hub. SACU-integrated, OEM-compliant, cross-border just-in-time supply.
Introduction
Shifting components and sub-assemblies to Lesotho lowers unit costs for OEMs and tier suppliers targeting the Southern African market, while opening diversified export routes to the EU, UK, EFTA, MERCOSUR, and North America.
Lesotho offers a cost-advantaged base for electrical components manufacturing and sub-assembly; competitive labour costs, dextrous and English-speaking, and trainable workforce. The location combines SADC and SACU integration, proximity to South Africa’s distribution hubs, serviced factory shells, investor facilitation and aftercare via LNDC, and preferential access to major global markets, including the USA, EU (EU-SADC EPA), and the rest of Africa through AfCFTA.
Strengths &
Opportunities
Young, Trainable, and Reliable Workforce.
Lesotho offers an abundant, youthful workforce known for manual dexterity and trainability, supported by aand 90% English proficiency, and the country maintains stable labour relations.
Incentives
Low corporate income tax:
• 10% on profits from manufacturing
Training:
• Cost of Lesotho citizens allowable at 125% for tax purposes
Withholding tax:
• 10% on service contracts with non-residents
• 25% on dividends distributed from income by resident companies to non-resident shareholders
• No withholding tax on dividends distributed to Lesotho residents
VAT:
• 15% on goods and services sold in Lesotho
• 0% on direct exports
• Duty rebates and drawbacks under the SACU regime for specified materials/goods.
Risk guarantees:
• Partial credit guarantee through the LNDC
• Facilitation support to identify and mobilize labour and skills development partnerships
Support from the LNDC includes:
• Serviced industrial and commercial sites at competitive rentals
• Provision of industrial and commercial buildings at competitive rentals
• Financial assistance on a selective basis
• Investment facilitation services
• Assistance with permits and licenses
• Assistance with company registration
• Assistance with industrial relations issues
• Appraisal of investment projects
• Assistance with preparation of project briefs for the Environment Impact Assessment (EIA) Certification
Lesotho offers tariff-free access to SADC and SACU, as well as the broader African market through the AfCFTA.
It also enjoys duty-free access to the U.S. (under GSP and AGOA), EU (EU-SADC EPA), EFTA, MERCOSUR, China, and other nations under the Generalised System of Preferences (GSP), offering a clear competitive advantage over more developed exporters.
High-level takeaways for investors:
- Demand for HS 8536 (switching/protection) and HS 8544 (wire/cable) is strong across SADC, with South Africa typically the largest market.
- HS 8537 (control/distribution panels) and HS 8504 (transformers/converters) are tied to industrial and construction cycles and utility upgrades.
- HS 8538 (parts) indicates aftersales and assembly activity; mapping these flows supports localisation of sub-assemblies.
- Lesotho exports at these HS lines provide a baseline to build supplier capability.
Competitiveness factors
Reliable short and reliable road links into South Africa’s strategic distribution hubs and markets (Gauteng, Kwazulu Natal, Eastern Cape) and gateway ports (Durban, East London, Gqeberha).
The Sector Focus Includes:
Switches, Fuses, Surge Suppressors, Plugs, Sockets, Lamp-holders Connectors and Junction Boxes Transformers and Static Converters (e.g., Power Supplies) Insulated Wire and Cable Parts for Switching/Protection/Control Boards (HS 8538)
Project Assumptions
LNDC will allocate factory shells/plots (Tikoe, Belo, Maputsoe) with necessary wastewater capacity suitable for dyeing/finishing, and support EIA/permitting and utilities.
SDGs alignment
The project aligns with SDGs 1, 8, 9 and 10.
Financial Analysis
A total investment of approximately:
USD 1.05m
comprising of fixed assets of USD 886k and initial working capital of USD 155k for the establishment of the Electrical 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 9 years. The investment opportunity responds favourably to the Country’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
USD 135.5k
in Year 1 to approximately:
USD 194k
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.
Financial Analysis
NOTE
The financial analysis of the Electrical 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 October 2025 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 or Lesotho-based business sector demand.
Disclaimer
This web page provides a strategic overview. All financial figures are based on a high-level investment opportunity model and should be used as an indicator of potential only. Investors are strongly encouraged to conduct independent due diligence and a full feasibility study with the support of the LNDC to validate all assumptions under current market conditions.