By ‘Majirata Latela
Lesotho seems to be falling short of ensuring that the country maximises benefits from the United States’ African Growth and Opportunities Act (AGOA), with the country struggling to implement the National AGOA Response Strategy.
The strategy’s main objective is to address the competitiveness constraints facing the country so as to unlock the full potential the country can acquire from AGOA.
The country has only managed to utilise a microscopic portion of the potential benefits from AGOA despite some commendable efforts.
A number of reasons identified by the strategy that have contributed to Lesotho not realising its full potential benefit are supply-side constraints, lack of managerial and technical skills, poor infrastructure coupled with weak firm-level competitiveness and inability to compete internationally. Others are a thin and shallow local and regional value chains resulting in importation of most inputs from Asia resulting in low added value.
In January last year the government launched the National AGOA Response Strategy with the overarching objective of improving and up-scaling the implementation of the Act and establishing a diversified manufacturing sector in response to the anticipated extension of the existing AGOA agreement.
After 14 years of the implementation of AGOA, Lesotho has managed to establish one of the largest textile and garment manufacturing industry in Sub-Saharan Africa (SSA), which turns out to be the biggest private sector employer in the country.
Since 2001, Lesotho’s apparel manufacturers, especially Asians, have been strategically and successfully harnessing AGOA benefits to build one of the largest textiles and garment manufacturing industries in Sub-Saharan Africa. Lesotho accounts for over one-fifth of all AGOA apparel exports to the United States.
The chief executive officer of Private Sector Foundation of Lesotho, Thabo Qhesi has told theReporter that a response strategy that was launched by the Americans in 2015 was geared towards assisting African countries to utilise fully the opportunities that came with AGOA.
Lesotho on the other hand also created its own strategy which was in line with AGOA response strategy. It was launched in 2020 but ever since nothing so concrete has happened.
“The strategy has tried to find potential products which Lesotho can benefit from the market in America, but ever since the launch of the strategy, the government has been dragging its feet to utilize it and its been over a year now since the launch.
“The ministry of trade with the department of industries has even failed to create a steering committee which was going to lead the way into utilising the AGOA strategy. We are very much disappointed in the government because we talk to them every day on when they are going to start giving attention to the situation as time is running out,” Qhesi clearly warned.
“There are not even reasons why the committee is not there or working, Lesotho has potential to secure the market in America through the bilateral relations that the two countries have, however Lesotho is the one that is dragging its feet,” Qhesi mentioned.
On the other hand, Lesotho Chamber of Commerce and Industries’ (LCCI) secretary general Fako Hakane said blame should not only be put on the government for not pushing to secure AGOA agreement. He believed the private sector has a role to play in ensuring that more products enter the American’s market.
“We are not doing enough as the country and as the private sector we are on the other hand to blame for dragging feet because for years the government did not recognise us as we were not unified to speak in one voice to be get due recognition.
“The biggest challenge that the private sector faces for it to be strong is financing. Most of the banks we have are not owned by local people so they are not here to assist the private sector to make sure it grows but are here to make profits,” he thought.
“I do not want to be optimistic, however I do not see Lesotho securing AGOA agreement if there will never be another extension with the pace we are moving because frankly speaking we are all failing to double our efforts when comes to this Agreement,” he said adding that if Lesotho loses the market in America it will still benefit from Africa Continental Free Trade Area.
During the launch of the national response strategy last year, the United States Ambassador to Lesotho, Rebecca Gonzales, said Lesotho should stop thinking about Thetsane and textiles when thinking of AGOA. She said there are products like trout, technology, fruits and vegetables as well as handicrafts that Lesotho can export to the American market duty free.
“We know that Lesotho can also add value to its exports by processing raw materials and moving up the value chain in established sectors. I promised you that my Embassy and my government colleagues based at the Trade Hub will continue to provide support and training to connect Basotho businesses with the Lesotho market,” she said.
The AGOA was signed into law by the government of the United States on 18 May 2000. In its statement of policy, the US government’s objective on AGOA was to increase trade and investment with Sub-Saharan African countries (SSA), reduce tariffs and non-tariffs between the two regions, expand US assistance to SSA‟s efforts on regional integration while strengthening and expanding the private sector in SSA. It was also to facilitate the development of civil societies and political freedom.
Lesotho gained AGOA eligibility on 23 April 2001. It is one of the few Sub-Saharan African countries that have benefited substantially from AGOA through the development of its textile and garment industry.
The strategy has noted that the benefits of AGOA to Lesotho could have been higher had there been enough capacity to supply more of the 6 400 products it had preferential access to the US market.
As a time-bound unilateral preferential trade agreement, AGOA is scheduled to expire in 2025.
