TRALAC - Trade Law Centre

Africa a focus for US investment

Wednesday, 23 January 2002

Source: Mopheme/The Survivor (Maseru)

Africa Growth and Opportunities Act, an American legislation accessing trading opportunities between African states and the US is likely to be improved for more investment in the continent, it has merged here.

During a one-day visit by the US Congressmen led by US-based Africa Sub-Committee Chairman, Edward Royce, hope flared that AGOA is likely to be improved to allow more access for African countries to increase more access to the US markets in a more flexible manner.

Royce said last week his delegation's visit is to get input from Africa about how AGOA is impacting on the continent's investment deals. The Act is currently being scrutinised by the US Senate for possible more trading opportunities.

"We're trying to put Africa on the map for investment opportunities in the continent," he said during a meeting with Lesotho's Trade and Industry Minister Mpho Malie.

US trade with the Sub-Saharan Africa has increased by 17 per cent in the last six months. Under AGOA, a legislation put in place in October 2000, Lesotho has been certified as one of the 12 African states that have market access to the US. It exports textiles, especially jeans, to the US and Canada.

However, since its relations with Lesotho dating as far back as the 1960s, only one US company, Seaboard corporation has invested in flour mills, a plant producing consumable agricultural products such as maize and wheat.

The other company that manufactured ceramics in Mafeteng district, 60km south of Maseru, has collapsed.

Another US Congress delegate, Eddie Bernice Johnson warned that it takes a lot of task to invest in countries as foreign investors shy away from putting their resources into the unknown. She reiterated that their visit was to assess whether AGOA is working in order to establish whether to improve the Act.

Bernice-Johnson, who enjoys a vast experience in African projects, said small US businesses are highly interested in conducive investment opportunities.

The delegation said although the US was rekindling interest for its private companies, the latter would make decisions whether to invest in foreign countries or not. But, they added, AGOA is offering incentives and expertise to the US companies, noting that the success in textile industry in the Kingdom of Lesotho will likely influence US private companies to change their negative attitude to the region.

They warned against political instability which they said kept potential foreign investors away, advising that political disturbances that riddled the Kingdom in September 1998 should be averted. The forthcoming general election, the delegation keenly urged, would be crucial to creating a peaceful and stable situation.

Lesotho's Trade and Industry Minister, Malie said his country is interested in being included in the US free trade area legislation, but observed that when foreign countries discuss matters relating to trading opportunities within the Southern African Customs Union (SACU), Lesotho is sidelined although being a member of the union.

There is need, he warned, to create jobs and curb rampaging poverty levels.

Lesotho has unemployment rate of 40 per cent, with many jobs losses incurred during the looting and burning of businesses in the city of Maseru and major towns of Mafeteng and Mohale's Hoek during the SADC intervention in opposition political impasse.

He confirmed that Lesotho, an impoverished country, is looking for US companies to invest in Lesotho especially in leather works. He told the delegation that a quota increment for Lesotho's exports to the US have rescued the country as more investment will be lured into the country.

In 1999, 17 000 textiles workers were employed into the industry in which mostly Asian origins have invested millions. Currently, there are 40 000 employees, each earning an average of US$80 monthly.

During his brief meeting with the delegation, Lesotho's Foreign Affairs Minister Thomas Thabane appreciated the US attitude in assisting to create job opportunities in the country. He said Lesotho is making a follow-suit in embracing the democratic principles, adding that the African continent has undergone a struggle against economic insecurity.

"Human rights culture has become tenets of democracy, in which people and individuals should exercise good behaviour towards each other and that can be achieved through regular holding of elections," Thabane said at his offices in Maseru.

Although he adamantly refused to reveal the actual date, he said the general poll will be held in May. He could only say that a date has been set for casting of votes in the National Assembly election.

He said major issues being debated in the country are whether the government has done anything for the people in areas such as health care, infrastructure and job creation as well as whether parties could be trusted.

He said they are compelled to behave as good as possible, saying he was a minister because he was legitimately elected during the national poll.

He appealed for assistance in curbing a manipulation of Lesotho as stepping board into the neighbouring South Africa.