Transforming Lesotho’s Textile and Apparel Industry

As Africa’s most prolific exporter of garments to the United States (U.S.), the mountain kingdom of Lesotho has generated debate in the foreign press and development arena ever since 2000 when the U.S. passed the African Growth and Opportunity Act (AGOA). The seemingly pro-Africa trade agreement (which was due to expire in 2005 but was renewed) has attracted many new investors to Lesotho, leading to the creation of thousands of much-needed jobs and allowing the country to increase its textile and apparel exports to the U.S. from $321 million in 2002 to $383.5 million in 2007.

During this period, the advertised successes in Lesotho have been challenged by debates about the working conditions of its predominantly Asian-owned factories, as well as the country’s ability to remain competitive in the long term (see http://www.bloomberg.com/apps/news?pid=20601109&sid=aPr_aKu9AogU&refer=home and http://www.economist.com/business/displaystory.cfm?story_id=9516043). More recently, concerns have been raised about the effects of the global recession on the industry due to Lesotho’s dependence on American markets (see http://www.fibre2fashion.com/news/apparel-market-trends-news/newsdetails.aspx?news_id=69366).

To investigate these concerns and the efforts that have been made to increase Lesotho’s competitiveness, Mthente Research and Consulting Services sent a team of researchers to Lesotho last month. The team found that some factories have made significant improvements in productivity, health, safety and environmental standards, thanks to training made possible by agencies like the ComMark Trust, the Lesotho National Development Corporation (LNDC) and the Lesotho Textile Exporters Association (LTEA).

However, our time in Lesotho also revealed that what is at the forefront of discussions with local Basotho, but usually missing from external debates (like those mentioned above), is the need for the greater indigenisation of Lesotho’s textile and apparel sector. As of January 2007, less than 15 percent of the factories operating in Lesotho were Basotho-owned. In addition, very few of the foreign-owned factories have promoted Basotho workers into supervisory and management positions, even though there is evidence of the huge benefits of such inclusion.

In one factory, we spoke with two Basotho managers who noted how their involvement in the HR department has helped reduce the number of dispute cases in the factory. When we spoke with a group of Basotho entrepreneurs, they were eager to expand their SMMEs beyond the confines of limited local markets through linkages with the larger factories. While many were grateful for the jobs created through foreign investment, they were concerned that export and employment figures do not actually reflect any significant contribution to Lesotho’s economy. Instead, most of the profits are channeled to banks in Hong Kong, Singapore and Taiwan, while Basotho workers are still barely scraping by on survival wages.

For true sustainability, Basotho voices, ideas and interests should be at the forefront of debates about the future development of their own industry. This is true for industrialists, as well as development agencies, that need to consider how they can transfer skills, build competencies at a management and ownership level and tap into local expertise.

If this doesn’t happen, the only thing AGOA will have succeeded at doing is providing wealthy manufacturers and clothing labels with another venue where they can exploit low wages and fewer regulations.

Jennie Tsekwa
Programme Manager and Consultant
Mthente Research and Consulting Services