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Big textile investment push into Lesotho

Published date:
Monday, 28 April 2003

Lesotho’s textile industry is one of the most lucrative business sectors in that African country, according to Andrew Gibbs, research intern at the University of Natal’s Centre for Civil Society.

Since gaining independence in 1966, Lesotho has used foreign investment as a springboard for development. It set up the Lesotho National Development Corporation in 1967 to attract investment from abroad, but it was not until the 1980s when economic sanctions started to hit South Africa that investment in Lesotho really started to grow. “With 38 factories and 27 distinct operations, the textile industry certainly is one of the country’s largest growth sectors,” Gibbs says. With only 11% of Lesotho’s textiles industry held in local hands, Taiwan is by far the single-largest foreign investor with a 65% share, followed by Hong Kong (13%), South Africa (5%) Singapore (3%) and Israel (3%).

Large companies such as Nien Hsing, the CGM Group, Fancy Knitting and Shining Century all operate in Lesotho. “Twelve more factories were looking to enter Lesotho’s textile industry in 2001 and, with this sector still growing in the US, it is likely that more textile companies could single Lesotho out in the future as well,” Gibbs adds.

“In the late 1980s Lesotho became a signatory to the Lomé convention – leading to preferential access to European Union (EU) markets. “However, following the phasing out of the Lomé convention and the introduction of the African Growth and Opportunity Act (AGOA), which allows duty-free importation of products into the US, there has been a shift from EU to US markets. “Most of Lesotho’s textile products are exported to the US, with a small amount going to Europe,” Gibbs tells Engineering News. Of all the AGOA countries, Lesotho is reportedly the largest apparel exporter to the US.

The industry is also a prolific creator of jobs and, as of November 2001, 32 233 workers were employed. Employment figures continue to increase and it is expected that a further 5 000 people will be employed when a new textile mill comes into production in 2004. “Most of the employees are Lesotho citizens and female, with only about 1 100 workers being expatriates,” Gibbs reveals.

The country’s textiles firms are mainly made up of ‘cut-and-trim’ operations, where denim fabric is imported and cut into shape, washed, bleached, stitched and finished. Other apparel manufactured in Lesotho includes knitwear and woven garments. Timothy Gibbs, a freelance researcher and Andrew’s brother, comments that further opportunities are beckoning in the Lesotho textile industry. However, it is not all good news for the industry. Engineering News understands that water shortages in the textile industry could have serious repercussions on future investments. “This important natural resource is crucial to the manufacturing process of textiles and something will have to be done to ensure its continued availability,” Gibbs warns. One option, he says, will be to focus on wastewater recycling, which will solve both supply and environmental concerns at once. “It is estimated that some 75% of wastewater can be recycled,” he adds.

Labour relations in the industry is another pressing issue which needs to be stabilised. According to Gibbs, factories have tended to be contemptuous of the Lesotho Labour Law and a strong union movement has risen amid this volatile situation. Nonetheless, it looks like the Lesotho government is now beginning to reform labour legislation and improve implementation of the law.

“Small but significant steps to rectify the labour issue have been made in the past couple of years and it is hoped that, following an agreement between the Lesotho Clothing and Allied Workers Union and the Textile Exporters Association, more agreements will follow this year,” Gibbs concludes. Engineering News did approach the Lesotho National Development Corporation for comment, but had not received any feedback by the time of going to press.

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