Lesotho is currently experiencing a moment of relief following the announcement of a 90-day suspension of the sweeping 50% tariffs, which are the highest in Africa. This temporary reprieve has sparked discussions about the future of U.S. investment in the country, particularly in relation to the controversial Starlink project led by Elon Musk. Prime Minister Samuel Matekane is advocating for the removal of barriers that hinder U.S. investments, positioning the approval of Starlink’s license as a key component of this strategy.
During the Third Public-Private Dialogue National Conference held on April 9 in Maseru, Matekane emphasized the importance of attracting U.S. investment, framing the approval of Starlink’s network services license as a critical step in this direction. However, this perspective has not been universally accepted. Critics argue that the proposed tariffs are unrelated to Starlink’s operations and that the opposition to the company is primarily due to its 100% foreign ownership, which raises significant concerns regarding national interests. These critics have called for a more transparent discussion surrounding the issue, urging the government to separate the Starlink debate from the tariff discussions.
The Lesotho Communications Authority (LCA) confirmed that it received Starlink’s application for a network services license back in February. However, the proposal has encountered substantial local resistance during public consultations. Key stakeholders, including Vodacom Lesotho and Section Two, a constitutional advocacy group, have insisted that Starlink should establish local shareholding before it can be granted approval. They pointed to existing telecommunications companies, such as Econet Telecom Lesotho and Vodacom Lesotho, as successful examples of foreign investment that align with national interests through local ownership structures.
The potential approval of Starlink’s license, seen by some as a bargaining chip in the context of the Trump tariffs, could have broader implications for Lesotho’s diplomatic relations with South Africa. South Africa previously rejected Starlink’s application due to similar concerns regarding foreign ownership, and Lesotho’s decision to approve it could exacerbate competition with Vodacom South Africa, which holds an 80% stake in Vodacom Lesotho, with the remaining 20% owned by the Lesotho government.
While granting market access to U.S. companies like Starlink could enhance diplomatic and trade relations, it does not guarantee a reduction in tariffs. Trade negotiations are complex and influenced by a myriad of economic and political factors, and goodwill alone may not be sufficient to secure favorable outcomes.
Lesotho’s Trade, Industry, and Business Development Minister, Mokhethi Shelile, expressed skepticism regarding the 90-day tariff reprieve in an interview with South Africa’s public broadcaster, SABC. He remarked, “I do not know what is going to happen after 90 days. It is said that it is done so that we can sit down and negotiate. I do not have a good experience in terms of trying to get meetings with the Trump administration.”
With a GDP of $2 billion, Lesotho’s economy is heavily reliant on exports, particularly in the textile sector, which plays a significant role in its economic landscape. The country exports goods to the U.S. for well-known brands such as Levi’s and Calvin Klein under the African Growth and Opportunity Act (AGOA). Annually, the U.S. imports approximately $240 million worth of goods from Lesotho, in stark contrast to the mere $8 million in exports that flow from the U.S. to Lesotho.
The proposed 50% tariff on Lesotho’s exports poses a significant threat to approximately 12,000 jobs within AGOA-supported factories. Despite the critical importance of the U.S. market, it is noteworthy that South Africa remains Lesotho’s primary trade partner, with textile and diamond exports amounting to $351 million in 2023.
