Lesotho’s textile sector faces difficulties
According to a report by Lesotho’s local media thepost on May 12, the textile sector, as the second largest employment sector in Lesotho after the government sector, has been severely affected by the epidemic, and the future is full of uncertainty.
Ramaili, CEO of Lesotho National Development Corporation (LNDC), said that at least 10,000 workers in the textile sector have lost their jobs since the outbreak. Increases in wages, freight, port fees and delayed deliveries have further increased operating costs, resulting in reduced revenue, allowing factories to operate at half capacity, exacerbating the reduction and cancellation of orders. It is expected that 640 jobs will be eliminated in the future, and 600 Basotho people will be forced to leave their jobs. In fact, the textile sector had lost its competitiveness long before the epidemic. Exports and employment began to stagnate after 2017, highlighting the problem of “shifting to other markets and shrinking our market share.” The unfavorable investment environment has also exacerbated the decline of the textile sector. Relevant factors include government policies, salary increase decisions, VAT refunds, work and residence permits, etc. Stakeholders in this sector have said that buyers are increasingly diversifying their sources of goods and are increasingly pursuing “short-term” and “flexible” orders and sales to support digital businesses. Solutions should therefore focus on the root of the problem rather than the epidemic, which only weakens an already broken organism.
Ramaili pointed out that Lesotho’s advantage lies in labor costs. Although productivity is not as good as Asia, it is higher than Swaziland, Ethiopia, and Kenya, which provides Lesotho with favorable opportunities. . However, poor technological levels prevent Lesotho from managing the textile sector independently without the help of foreign expatriates. Lack of warehousing facilities in factories, lack of incentive framework for the industry, lack of consistency and negotiability in legislation and extremely slow response to new challenges are hampering the growth of the textile sector. Affected by the epidemic, the Russia-Ukraine conflict, water and electricity bills and port fees, textile costs, especially wages and transportation costs, are soaring. The United States is purchasing textile products from neighboring countries to reduce transportation costs. In addition, workers’ strikes also exacerbate sector risks. In fact, the textile sector is dependent on a few large manufacturers, who in turn subcontract their orders to small and medium-sized manufacturers. There is a production gap as some factory orders are seasonal.
Ramaili emphasized that solving the industry crisis requires strengthening cooperation. There is currently a lack of collaboration among relevant parties such as government, workers, investors and society. They do not have a deep understanding and understanding of the textile sector and therefore cannot achieve development. Nonetheless, Lesotho still has an opportunity to reshape its position as a sourcing location and leader in Africa’s apparel and textile industry.
Lebanese Minister of Trade and Industry Moolabo said that the loss of jobs in the past few months has caused huge losses. Stakeholders should work together with the Ministry of Trade and Industry and LNDC to leverage their unique strengths and create a conducive investment environment to attract and retain investment in the sector. Motebong from the Ministry of Trade and Industry pointed out that many Basotho people are looking forward to working in the textile industry, especially women in small and micro enterprises. The Ministry of Trade and Industry will help them master the management skills of running textile enterprises.
Motebong said that although the main reason for the shrinkage of the textile sector is market transfer, Lesotho still has many opportunities outside the US market and should strengthen its support for the African Growth and Opportunity Act , Southern African Customs Union Trade Agreement, Southern African Development Community Trade Agreement, and the use of the African Continental Free Trade Area. Compared with other countries in southern Africa, Lesotho is highly productive but technologically backward. Schools should also be encouraged to teach necessary skills in relevant courses to help Basotho people learn to manage the textile sector.
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