Lesotho’s public service was the main employer in the county until garments and textile factories emerged and surpassed the government in this regard.
Since independence in 1966, unemployment has remained a problem in Lesotho with the uneducated masses suffering the most. Most Basotho men migrated to work in South African mines leaving women and youth unemployed.
Then came enactment of the African Growth Opportunity Act (Agoa) by the US. This gave Lesotho textile and clothing products duty- and quota-free access to the American market.
The country became sub-Saharan Africa’s leading exporter of textiles and garments to the US.
South African retailers are said to be the next biggest buyer of Lesotho garments. Its third largest customer is Canada; followed by EU retailers. Smaller volumes go to member states of the EU, Dubai, Qatar, Chile, Japan and Taiwan.
As factory production increased, women and youth were brought into the fold and a large portion of the uneducated population was accommodated.
“These factories have saved our lives as we can earn at least $86.67 a month, which comes with other benefits to assist in maintaining our families, especially because most of us are not educated to get employment elsewhere,” said one factory worker, Mathabiso Likotso.
The factories specialise in woven and knitted garments, including denims, chinos, tracksuits and fleeces. Known as the “jeans capital of Africa” and producing 26 million pairs of denims a year, the sector has turned into a prominent source of employment and one of the biggest industries in the country.
It created about 40 000 jobs and contributes 45 percent to Lesotho’s overall exports. The Lesotho Textile Exporter Association (LTEA) report of 2011 revealed that the firms employed about 80 percent of the total industry workforce.
Since Lesotho’s textile industry was established in the 1990s, there has been a significant reduction in unemployment due to an increase in foreign direct investment. Its garment and textile manufacturing industry has become one of Africa’s biggest. At its peak in 2008, exports totalled $340 million and last year, the industry accounted for 20 percent of the country’s gross domestic product.
Lesotho has come up with several initiatives to boost this industry. It improved the business environment, made investment promotion campaigns worldwide, and enhanced investment incentives and tax concessions.
According to the LTEA report, Lesotho has also reduced the corporate manufacturing tax rate from 15 percent for firms that export products outside Southern African Customs Union (SACU) countries to zero and to 10 percent for those that sell products within the region. The industrial licensing bill has been revised to ease starting a business by speeding up the process of obtaining a licence.
More jobs are created yearly as more investors come to Lesotho. The government has reduced production costs, which are 30 percent lower than in South Africa, as a payback for all the initiatives made collectively by the government and private sector.
The country is working on diversifying its textile market from SADC-EU Economic Partnership agreement inked in June.
Although the industry is growing significantly, its narrow market base to the US makes it vulnerable to external shocks. The report noted that “80 percent of garments are manufactured for US mega-brands such as Gap, Levi Strauss and Wal-Mart”. The rest is shared among the EU, South African and Asian markets. So, the industry’s stability relies heavily on outside forces. For better results to be achieved, the factories should also produce for local consumption.
The medium-term plan is to build Lesotho as a textile hub. New firms are being built while other projects are still in the pipeline with better infrastructure to accommodate new investors.
“Two firms will be constructed in Berea before the end of this year,” Prime Minister Pakalitha Mosisili said, adding that the designers for the job had already been roped in.