NEW YORK — A contingent of government officials and industry executives from Lesotho visited the U.S. this month on a mission to promote their local industry and learn how to improve their competitive position in light of developments in international trade.
Lesotho is part of the Africa Growth & Opportunity Act, which kicked in in 2000, at the same time the Caribbean Basin Trade Partnership Agreement took effect.
The AGOA program offered duty-free and quota-free access to apparel made in sub-Saharan Africa, home to some of the poorest countries in the world. AGOA also offered a benefit that wasn’t extended to the Caribbean: The least developed countries in the region were allowed to use third-party fabric — meaning textiles that aren’t manufactured in the U.S. or the AGOA region — in qualifying garments.
That loophole brought a surge of textile and apparel investment to the African continent. Now, with quotas lifted among countries belonging to the World Trade Organization, African leaders are hoping to hold on to the nascent industry.
Mpho Malie, Lesotho’s minister of trade and industry, acknowledged that Lesotho’s industry has suffered in recent months, largely as a result of the continuing slide of the dollar.
In December, six of the country’s garment factories closed at a cost of 6,000 jobs — a significant chunk of an industry that employs 50,000 people in a country the size of Maryland that is home to 1.9 million people.
“Those factories had expanded a lot and there were a lot of salary and wage increases. However, the weakening of the dollar took a toll on their sales,” Malie said.
He added that one of the factories has since reopened with government assistance, and two more are expected to resume operations this spring.
Importers said a bigger long-term concern for sub-Saharan Africa overall is that the region is home to few textile mills. Using the third-country fabric provision, many garment-makers in the region imported Asian fabric for garments that were then exported to the U.S. This was a lengthy supply chain and one that importers said could be hard to justify with quotas removed.
Malie said developing a local textile industry is a key goal, adding, “We need to develop our own fabric knitting.”
Last year, Taiwanese firm Nien Hsing invested $140 million to build the country’s first denim factory, as well as a pair of jeans-making plants.
The bulk of Lesotho’s apparel factories, which last year shipped $455.6 million worth of goods to the U.S., are foreign-owned, with Taiwanese, Singaporean and Chinese capital playing a significant role. Jennifer Chen, president of the Lesotho Textile Exporters Association, an industry group representing those investors, said her members’ investments in Lesotho are intended to be long-term.
“We were here well before AGOA,” she said, noting that her group was formed in 1993. “The existing factories have an opportunity to expand and attract new investment.”
Selikane Motseko, a local investor who serves as chief executive officer for business management at Fabric & Print Converters (Pty) Ltd., a factory that currently employs 120 workers, agreed that developing a more vertical industry will be key to Lesotho’s continued growth.
He noted that the industry’s expansion — it has almost doubled its trade with the U.S. since 2001 and nearly tripled employment over that time — is playing a key role in the country’s economic development.
“It has a ripple effect,” he said. “Now there are men who own trucks and drive the containers to the ports, and outside any factory you see a lot of vendors selling things.”