Lesotho urges textile firms to explore new markets

13 Mar '20

2 min read

Pic: Shutterstock

Lesotho’s trade minister Halebonoe Setsabi recently said the country’s textile factories should urgently explore new markets as the clock ticks towards the end of the African Growth Opportunity Act (AGOA). The future of the textile sector lies in the regional markets, he said. So far only the duty-free facility has kept US companies hooked to Lesotho's textiles.

AGOA, the trade facility for poor countries to export textiles to the United States free of duty, is set to end in 2024 and its renewal is reportedly uncertain.

Without AGOA, Lesotho's apparels will be more expensive than those from Asian countries that have sustained their burgeoning factories with incentives like generous incentives.

Yet the galloping costs of labour, energy and transport have already aggressively whittled down Lesotho's competitive advantage.

The impending end of AGOA is likely to be the last straw for a sector already in decline, according to a report in a website dedicated to news from the Middle East and North Africa.

There is a strong possibility that factories, most of which are owned by Taiwanese companies, might leave Lesotho and render thousands jobless.

Setsabi, however, said there is no need to panic. As he believes the regional and domestic market is a viable option for serious investors that want to remain in the textile business. His worry is that some companies might be too late to diversify from the AGOA market.

He said the government is working on a post-AGOA strategy whose focus is to quickly wean Lesotho off the US market.

He says it will take monumental efforts to push the sector to start focusing on the regional market.

Twenty nine of the 65 factories in the country sell their products under the AGOA and they have 30,000 of the 47,000 jobs in the sector.

Fibre2Fashion News Desk (DS)

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