MASERU – The government’s failure to diversify its export base spells disaster for the country, labour and opposition figures have warned.
They said the government had failed to move from rhetoric to action to diversify exports in a country that has prospered on the back of a preferential trade agreement with the United States.
The African Growth Opportunity Act (AGOA) of 2004 allows select sub-Saharan countries, including Lesotho, to export some goods to the US duty-free, giving them advantage over other global competitors.
This has resulted in the local textile industry growing to become one of the country’s biggest employers.
The Central Bank of Lesotho says 91 percent of Lesotho’s textile export is destined to the US, making it Africa’s largest exporter of garments to that country, thanks to AGOA.
However, the treaty expires in 2015, meaning local textile industry should have found new markets by then.
In addition, the government should fulfill pledges to find new economic growth points outside garment trade to avoid a reversal in growth patterns, labour groups say.
Factory Workers’ Union (FAWU) leader Seabata Likoti says up to 40 000 people now working in the textile industry – up from 10 000 in 1999 – face unemployment if AGOA expires before the government finds alternatives.
Value chain downstream industries such as fabric mills, yarn, packaging and printing would be affected.
Likoti said US ambassador to Lesotho, Michelle Bond, told FAWU’s annual congress in February that he was pleading with the US Senate to extend AGOA.
“What if they fail? Surely we must have a plan B,” said Likoti. “The government must work hard to convince other countries to invest and buy from Lesotho,” he said.
Trade Minister Leketekete Ketso last week assured Parliament that the government was tackling the dangers of Lesotho relying almost entirely on money made in the textile industry.
He said trade negotiations to attain enhanced market access under the Southern African Development Community, Southern African Customs Union (SACU), India Free Trade Area as well as through trade agreements between SACU and the US and the European Union-African Caribbean Pacific Economic Partnership Agreements were underway.
“We are studying which products we can be able to produce in abundance. Our country is in the right direction to equally diversify the markets,” Ketso told Parliament as he sought approval for his M46.7 million 2011/2012 budget.
But others, such as Lesotho Workers’ Party (LWP)’s Macaefa Billy, remain unconvinced about the government’s commitment.
The LWP leader accused the government of failing to fulfill its promises.
Billy told the Lesotho Times that “all these years the government copies former trade minister Mpho Malie’s speech with minor adjustments, without actually fulfilling the promises.
“It was in 2004 when former trade minister Malie talked about the approaching expiration of AGOA and urged the nation to be prepared,” Billy said.
“In every budget speech thereafter finance minister Tim Thahane has been mimicking Malie and the trade minister does likewise. They talk but they do not perform. Their talk is just an empty annual rhetoric,” he said.
Billy said AGOA was initially supposed to expire in 2008 but the US government extended it to 2015 “perhaps on the understanding that we will have worked hard to standardise our products so that they can be accepted in other international markets”.
He accused the government of dragging its feet.
“In 2004 Lesotho already had duty-free access to the Australian, Japanese, Canadian and European Union markets but seven years later in 2011 we still do not export anything to those markets,” Billy said.
The government had failed to utilise an opportunity provided under the Joint Bi-lateral Commission on Cooperation which former South African President, Thabo Mbeki, signed with Prime Minister Pakalitha Mosisili in 2002.
Billy said Lesotho could have partnered with South Africa in finding new markets and identifying new products.
“It is true that we are exporting diamonds to Europe but that is not enough,” he said.
“We need to identify other products for export to Europe and Asia and we should be quick because if by 2015 the American government does not extend AGOA many jobs will be lost.”