Global recession begins to bite

5

MASERU — Her demise started early last year when she noticed that her profits were shrinking.
For the first time this clothing boutique that Ntaoleng Setho (not her real name) had run in downtown Maseru was showing signs of stress.
For years the little shop had been her source of livelihood, but now it was draining her savings as she battled to sustain it.
In some months the business could not generate enough to pay rentals so she had to dig deeper into her savings.
Her trusted customers who she used to give stock on hire purchase terms started missing their instalments.
They complained that they too were in a financial squeeze.
And when the number of people coming into her shop got less and less every day, she realised the end was near.
By mid-year, she just could not keep pumping money into a business that was not showing any signs of recovery.
She inevitably shut it down.
“Fewer orders came in,” Setho says.
“I lost a lot of money.”
“I struggled to pay my rentals and to buy new stock,” she adds.
“I started injecting more money than what I used to get.
“Customers disappeared, some without paying their credits.”
Now a year later, Setho has not been able to revive the business.
Life has been a struggle for this single mother of two.
Setho did not know it then but she was probably one of the earliest victims of the economic crisis.
The financial crisis that has been ravaging the world economies for months has finally arrived in Lesotho.
It might not have hit local banks like it did in rich countries, but it has certainly been wreaking havoc in households and businesses.
Last week Finance Minister Timothy Thahane officially announced that Lesotho had entered a recession period.
He painted a gloomy picture for Lesotho’s economy for the next three years.
Thahane warned Basotho to tighten their belts because the “road ahead is going to be bumpy”. 
Yet many people have already started feeling the pinch of the economic meltdown.
Many Basotho are already experiencing the tough times that Thahane predicted would come.
Thousands have lost their jobs and dozens have watched their small companies collapse under heavy debts and shrinking margins.
Setho is one of those who are already reeling from the effects of this crisis.
The crisis was triggered when banks in the West started crumbling because the people that they had loaned money could no longer service their debts.
During good times the banks had thrown caution to the wind and started giving loans to undeserving clients.
Armed with huge bank loans which they might not have otherwise afforded, borrowers spent beyond their means.
As the banks went down so did everything else around them – including the creditors.
The crisis has reached Lesotho because people in the West who used to buy locally made goods like textile products can no longer afford because they have either lost their jobs or are battling to settle their debts with banks.
With very few or no one to sell to, companies in Lesotho have had to cut jobs or shut down altogether — leaving thousands of workers in a lurch.
When a textile factory shuts down so does the company that used to repair its sewing machines, for example.
In turn, the people who have lost their jobs no longer have money to buy from shops like Setho’s.
The ripple effects spread until everyone in the country is feeling the pinch.
With no money coming in, Setho says she has had to move from her M2 000 rented flat.
“I could not believe the turn my life had taken,” she says.
“I had to move to smaller two-roomed flat outside town.”
She says adjusting to this new lifestyle has been difficult for her teenage daughters.
In an economic crisis no business is spared — from the conglomerates to the vendor selling fruit along Kingsway Road in Maseru.
In good times, business at Teboho Thetsi’s fruit stall near Sefika bus station was “booming”.
His profits might not have been as big as Setho’s but they were enough to take care of his family.
It’s November 24, the week many people in Maseru are supposed to have been paid, but Thetsi is getting desperate because it’s approaching midday with no decent sales having been made.
He has sold barely half of the stock he bought two weeks ago.
The fruit and vegetables are almost rotting.
He says this year has been the worst he has ever experienced since he started the business six years ago.
Nearly 30 minutes elapse before a single buyer approaches his stall.
“This is the indifference we get every day from potential buyers,” says Thetsi with desperation written all over his face.
“No one is interested in buying.
“Even when one buyer comes, they are just buying a single fruit.”
Two years ago Thetsi’s business was growing so fast that he was thinking of opening more stalls in other parts of Maseru.
At that time, he thought his breakthrough had come.
“I made enough money to buy myself a second-hand truck which made my work easier,” Thetsi recalls.
“I started collecting my supplies from the Free State farms.
“I also sold the stock to other vendors and made a lot of money.”
Thetsi is not at liberty to reveal the amount of money he made from buying and selling fruit and vegetable.
He says early last year he noticed money was no longer coming into the business.
“Vendors stopped buying their stock from me,” he says.
“Customers came in fewer numbers.
“There was a point when I had to drive in and out of town to sell the goods.
“Most of the food rotted because people did not have money to buy.
“I had to give away some free of charge.
“Some were so rotten I had to throw them away.”
When things got tougher Thetsi sold his van.
He regrets never making savings when business was good.
Now he struggles to buy one box of apples.
‘Mathabiso, a Seshoeshoe dressmaker in Maseru, says she has struggled for the past 12 months but this month has been particularly bad.
‘Mathabiso says she has not sold a single dress in three weeks.
A complete Seshoeshoe dress costs between M450 and M600 depending on the design.
She says the past few years have been the worst in her business.
“Business has been so bad in the past few years,” says ‘Mathabiso.
“People are not buying in large numbers and we do not make profit like we used to.”
But if Thahane’s chilling statement to parliament last week is anything to go by, then people like ‘Mathabiso and Setho have not seen the last of their misery yet.
Thahane said life in the kingdom was going to get tougher.
“The message is simple and sombre,” Thahane said.
“Dark clouds hang perilously over our future as a nation.”
He said Lesotho’s share of the revenue from the Southern African Customs Union (Sacu) will be reduced by about M4 billion in the next three years.
Sacu revenues contribute 60 percent to Lesotho’s national budget.
Because of the global financial crisis, Thahane said the government was likely to collect less from taxes, its main source of money.
Labour and Employment Minister Refiloe Masemene told the 98th session of the International Labour Conference in June that the crisis had hit Lesotho hard.
“Unfortunately the current economic meltdown has just added another blow to the challenges posed by the HIV and Aids pandemic,” Masemene said.
“It is well-known that one way of fighting this pandemic is by having proper nutrition and having proper medication.
“The shrinkage of jobs caused by this global financial crisis is therefore adding an extra burden to social safety nets that are available in our countries.”

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