The government actively encourages foreign investment, particularly investment in manufacturing plants and agricultural projects. The Lesotho National Development Corp. promotes industrial estates, with such attractions as a 15-year discretionary tax holiday or accelerated depreciation allowances, plus LNDC capital participation of up to 25%.
Annual foreign direct investment (FDI) inflow into Lesotho was $269 million in 1997, but declined steadily for the rest of the decade, amounting to $119 million in 2000. For the period 1997 to 2000, net FDI equaled over one-fifth (21.8%) of its GDP, the highest such ratio in the world. Most FDI is concentrated in textiles, garments, and light manufacture.