‘We face a harsh re­al­ity’

Lesotho Times - - Big Interview -

Trade and In­dus­try Min­is­ter Joshua Setipa faces a moun­tain of chal­lenges in his ef­fort to en­sure the coun­try’s eco­nomic pros­per­ity. Mr Setipa was ap­pointed to this very crit­i­cal port­fo­lio early this year and in this wide-rang­ing in­ter­view with Le­sotho Times ( LT) reporter, Lekhetho Nt­sukun­yane, spells out his vi­sion for the min­istry.

LT: First of all, could you please tell us the key pri­or­i­ties for your min­istry.

Setipa: as govern­ment, we are guided by a num­ber of pri­or­i­ties and ob­jec­tives that are ar­tic­u­lated in var­i­ous doc­u­ments such as the Na­tional Strate­gic de­vel­op­ment Plan, Vi­sion 2020 and then of course more re­cently, the Coali­tion agree­ment of the seven par­ties that con­sti­tute to­day’s govern­ment. Out of the agree­ment, there are a num­ber of pri­or­i­ties which we, as the Min­istry of Trade, con­sider to be our di­rect re­spon­si­bil­ity. I think top of the list is sus­tain­able em­ploy­ment cre­ation, the eco­nomic em­pow­er­ment of Ba­sotho. With­out em­pow­er­ment, we can­not talk about de­cent jobs; we can­not also talk about em­pow­er­ing Ba­sotho to be eco­nom­i­cally self-suf­fi­cient. Many coun­tries that are at this level of de­vel­op­ment are fac­ing dif­fer­ent chal­lenges. We face a harsh re­al­ity in that the global eco­nomic en­vi­ron­ment is de­te­ri­o­rat­ing. The big economies on whose mar­ket we rely are ex­pe­ri­enc­ing con­tin­ued re­ces­sion. Oth­ers are ex­pe­ri­enc­ing high cases of sov­er­eign in­debt­ed­ness which un­der­mines the abil­ity to grow, which in turn crip­ples the abil­ity to im­port or con­sume most of our prod­ucts. Com­bined with the de­te­ri­o­rat­ing cli­mate in as far as the global mar­ket for com­modi­ties is con­cerned, that means the price of our di­a­mond ex­ports, for ex­am­ple, has gone down quite con­sid­er­ably. That is the global en­vi­ron­ment un­der which we op­er­ate, which of course, has a di­rect bear­ing on our abil­ity to grow our econ­omy.

LT: So what is be­ing done to ad­dress th­ese chal­lenges?

Setipa: There is a whole range of in­ter­ven­tions that govern­ment has to make to fa­cil­i­tate and en­cour­age in­vest­ment. The reg­u­la­tory frame­work has to be im­proved to en­sure that it is sen­si­tive and con­ducive to in­vest­ment. and by in­vest­ment, we wish to be very clear that while we do ad­mit that we have to con­sider for­eign di­rect in­vest­ment, there is a huge un­packed po­ten­tial for do­mes­tic in­vest­ment. We need to look at how we can un­lock that po­ten­tial by putting in place re­forms that fa­cil­i­tate do­mes­tic in­vest­ment; that recog­nise the po­ten­tial that do­mes­tic in­vestors have in shap­ing the fu­ture of our econ­omy. We have to put in place in­ter­ven­tions or in­cen­tives that would un­lock that po­ten­tial. We have a whole range of in­cen­tives for for­eign di­rect in­vest­ment and we need to mir­ror that to do­mes­tic in­vest­ment. We pro­vide in­fra­struc­ture for in­vestors from out­side, so we also need to pro­vide in­fra­struc­ture for do­mes­tic in­vest­ment. Only then can we re­alise the full po­ten­tial of do­mes­tic in­vest­ment. We also need to ad­dress other is­sues which im­pact par­tic­u­larly on lo­cal en­trepreneurs, such as ac­cess to fund­ing. It’s high time that we push and ad­vo­cate for an in­clu­sive fi­nan­cial sys­tem. Right now, on av­er­age, at the top of my head, I would say 35 per­cent of this coun­try does not have ac­cess to the for­mal fi­nan­cial sec­tor. Our banks are not sen­si­tive to that. We need, as govern­ment, to push for that and that’s what we will do. We will start that di­a­logue to say the only way Le­sotho can go is through an in­clu­sive model for ac­cess­ing the for­mal fi­nan­cial sec­tor. We can­not go sus­tain­ably and in­clu­sively if 35 per­cent of the pop­u­la­tion is ex­cluded from the for­mal sec­tor. South africa had a sim­i­lar sit­u­a­tion a few years ago and they took a political de­ci­sion and ap­proached banks to say ev­ery South african, ir­re­spec­tive of his oc­cu­pa­tion, or how small his eco­nomic ac­tiv­ity, has to have ac­cess to the bank. That’s what we mean and that’s what I be­lieve will help us con­sol­i­date ef­forts to em­power Ba­sotho.

LT: How do you hope to achieve this goal?

Setipa: We need to look at how we can use or put in place a very ag­gres­sive pref­er­en­tial pro­cure­ment sys­tem that will help govern­ment, through pro­cure­ment, to em­power Ba­sotho in a man­ner that will also catal­yse in­vest­ment. We want in­ter­ven­tion that will say, here we give you a govern­ment ten­der, for ex­am­ple, but use that to build a busi­ness model that will be sus­tain­able. I don’t think there is any­thing wrong with pos­i­tive dis­crim­i­na­tion - that means dis­crim­i­nat­ing in favour of lo­cal, when it comes to govern­ment pro­cure­ment. Take wa­ter for in­stance. Imag­ine if ev­ery min­istry makes it a rule that no im­ported wa­ter should be con­sumed in govern­ment de­part­ments. We have at least seven lo­cal com­pa­nies that are bot­tling wa­ter. Imag­ine what that will do to their busi­ness. Speak­ing of the wa­ter bot­tling in­dus­try, as a min­istry, we are at a very ad­vanced stage to set up a wa­ter-test­ing fa­cil­ity so that both bot­tling and sam­pling of wa­ter will be done in Le­sotho.

There are some qual­ity is­sues that come with this wa­ter that we buy from out­side. But we are not able to con­firm or even re­ject them be­cause we don’t have a way of ver­i­fy­ing them. So the min­istry, through its Stan­dard divi­sion, is set­ting up that fa­cil­ity as part of ef­forts to build to­wards set­ting up the Bureau of Stan­dards in Le­sotho. So that is al­ready un­der­way. It was al­ready bud­geted for this fi­nan­cial year. I think we are on the right track. As we speak, you will not find for­eign bot­tled wa­ter in the Min­istry of Trade or the LNDC (Le­sotho Na­tional de­vel­op­ment Cor­po­ra­tion), be­ing one of our big­ger af­fil­i­ates. We are push­ing to have this done across the govern­ment. The en­cour­ag­ing thing is there is will­ing­ness and political com­mit­ment to do that. The em­pha­sis, how­ever, is not on wa­ter bot­tling alone. It also ex­tends be­yond wa­ter. If you look at the range of prod­ucts that are made in Le­sotho and the con­tin­ued sale and ex­port of those prod­ucts, it is what keeps Ba­sotho in em­ploy­ment. I think it’s time that we start look­ing at this ur­gently.

as a min­istry, we are start­ing a process where we will build a data­base of ev­ery sin­gle prod­uct man­u­fac­tured in Le­sotho, ir­re­spec­tive of the own­er­ship of the com­pany that man­u­fac­tures it. as long as it is man­u­fac­tured in Le­sotho, it is made in Le­sotho, that’s all we are in­ter­ested in. Start­ing with BIC pens. do you know that BIC pens are made in Le­sotho? Go­ing up to over­alls and other prod­ucts? We are go­ing to Ba­sotho and the govern­ment at large to say look, if you have the Min­istry of Works, for ex­am­ple, and we need to buy work cloth­ing for staff, why not go to Ma­put­soe and buy that di­rectly from the com­pany that man­u­fac­tures it in­stead of buy­ing from a re­tailer in South africa, be­cause by do­ing that you are keep­ing Ba­sotho jobs? If we can be­gin to change that, then we are on the right track in sus­tain­ing the in­vest­ment that we have and also en­cour­ag­ing oth­ers to come be­cause we would be sup­port­ing busi­nesses that are here al­ready.

We maybe a small mar­ket, but we can sup­port the in­vest­ments. at the end of the day, we are con­sum­ing the same prod­ucts that are made here. That’s how we want to use pref­er­en­tial pro­cure­ment to drive job cre­ation and em­pow­er­ment.

LT: So do you mean you will be more con­cerned about do­mes­tic in­vest­ment and not for­eign di­rect in­vest­ment?

Setipa: No. We are very much aware that at the end of the day, for­eign di­rect in­vest­ment, like in any other coun­try, will con­tinue to be a crit­i­cal fac­tor of what we are try­ing to do. No other coun­try in the his­tory of mankind has ever de­vel­oped as a closed econ­omy. We need to en­gage po­ten­tial in­vestors and part­ners from abroad to see how best can build re­la­tion­ships. We re­cently went to In­dia to look at how we can co­op­er­ate with the govern­ment of In­dia on a range of other in­dus­tries, in­clud­ing man­u­fac­tur­ing com­pa­nies. There is com­mit­ment from the In­dian govern­ment to sup­port this ini­tia­tive and also pro­vide fi­nanc­ing to catal­yse this co­op­er­a­tion. So we spoke to a cou­ple of In­dian com­pany lead­ers about the pos­si­bil­ity of set­ting up an IT (In­for­ma­tion Tech­nol­ogy) park, for ex­am­ple, which will help un­lock the po­ten­tial we have, es­pe­cially from a knowl­edge ba­sis. We also looked at man­u­fac­tur­ing op­por­tu­ni­ties to see if we can bring one of them to assem­ble agri­cul­tural equip­ment in Le­sotho. We are also look­ing at how we can en­gage the In­dian govern­ment to ac­cess the line of credit that is be­ing made avail­able to Le­sotho to build en­trepreneur­ship, for ex­am­ple, and to also pro­vide fi­nanc­ing for Ba­sotho-owned start-ups that just re­quire cap­i­tal to be­gin with.

We are also look­ing at how we can at­tract new in­vest­ment and to con­sol­i­date, or build on what we have al­ready achieved in as far as the au­to­mo­tive com­po­nent is con­cerned. We be­lieve that we will be able to se­cure na­tional in­vest­ment in that re­gard. But the big­gest and most am­bi­tious pro­gramme, I be­lieve, that we are pur­su­ing right now in as far as in­vest­ment and in­fra­struc­ture is con­cerned, is what we want to do in Butha-buthe, where we will build the first spe­cial eco­nomic zone for Le­sotho. We be­lieve that we have the po­ten­tial to build a state-of-the-art fa­cil­ity that will put Le­sotho up there with the best in the world. and then we will try and make sure that we bring the heavy in­dus­try to Le­sotho. We want to build man­u­fac­tur­ing in­vest­ment that will change the face of our econ­omy. So that’s what we are do­ing in Butha-buthe. We also re­cently went to Malta as part of the del­e­ga­tion of the right Honourable Prime Min­is­ter, to en­gage with the Com­mon­wealth busi­ness fra­ter­nity and see how we can in­ter­est po­ten­tial in­vest­ment. I don’t think the av­er­age per­son on the street to­day knows that for ev­ery Ford ranger Wild­cat ve­hi­cle you see on the road in Le­sotho and South africa, their seats are made in Le­sotho. I don’t think any­one is aware that we man­u­fac­ture 20, 000 BIC pens per day here. If we had started ed­u­cat­ing and en­light­en­ing peo­ple about that, you would see pos­i­tive change to­wards buy­ing and sup­port­ing lo­cally pro­duced prod­ucts.

LT: So when are you start­ing the aware­ness cam­paign?

Setipa: What we are do­ing now is first build the data­base of ev­ery­thing pro­duced here. and then we will launch our cam­paign. I am hop­ing be­fore the end of the first quar­ter, which is be­fore the end of March next year, we would have launched it.

LT: And the IT hub; where is it go­ing to be es­tab­lished?

Setipa: We want to put it next to Maseru Mall. Yes­ter­day (Mon­day this week) I par­tic­i­pated at the launch of the Vo­da­com In­no­va­tion Park, which I be­lieve is a com­mend­able de­vel­op­ment on the part of Vo­da­com. We need to build more on that. We also want to

LT: How true is it that for­mer fi­nance min­is­ter, Dr Ti­mothy Tha­hane, is ear­marked to chair this com­mit­tee?

Setipa: He is one of the peo­ple I am think­ing of re­quest­ing for their sup­port. I can’t say he is in be­cause the process has not been con­cluded.

LT: We also heard about a trans­port ini­tia­tive in­tro­duced by a Ma­put­soe tex­tile fac­tory by the name of Jon­s­son. We also hear that govern­ment is in­volved in this. What is this all about?

Setipa: Jon­s­son em­ploys about 4000 peo­ple, I think, in Ma­put­soe. It has 10 or so fac­to­ries in Ma­put­soe. One of the chal­lenges they face, like most com­pa­nies, is that they can­not run, for ex­am­ple, three shifts a day be­cause their work­ers live far away from the firm. So, as a demon­stra­tion of their com­mit­ment to Le­sotho, they have de­cided to build a cam­pus, ba­si­cally, at the cost of M100 mil­lion. That cam­pus will in­clude liv­ing fa­cil­i­ties for staff while also con­sol­i­dat­ing all Jon­s­son fac­to­ries un­der one roof. We hope it will change the face of the man­u­fac­tur­ing in­dus­try in Le­sotho and also set an ex­am­ple to other com­pa­nies about what a com­mit­ted in­vestor can do. That pro­ject has al­ready been pre­sented be­fore cab­i­net which loved it and ap­proved it. We are hop­ing to start it within the first quar­ter next year. at the end of the day, it is not govern­ment’s obli­ga­tion to pro­vide trans­port to work­ers, but where there is a pos­si­bil­ity to pro­vide that high level of sup­port by any com­pany, we will en­cour­age them and see how best we can as­sist.

LT: Lastly, there are con­cerns over the re­newal of the African Growth and Op­por­tu­nity Act (AGOA), which pro­vides a plat­form for African coun­tries, in­clud­ing Le­sotho, to ex­port their prod­ucts to the US duty-free, thereby al­low­ing those coun­tries to grow. Some peo­ple have raised con­cern that due to the pre­vail­ing un­sta­ble political en­vi­ron­ment in Le­sotho, the coun­try could be struck off from the list of ben­e­fi­cia­ries of the leg­is­la­tion and leave over 35 000 tex­tile fac­tory work­ers job­less, since Le­sotho mostly ben­e­fits from the Act through its tex­tile in­dus­try. Can you re­as­sure Ba­sotho that this will not be the case?

Setipa: I am at a loss be­cause I don’t think those who say that know what agoa is all about. Those are the peo­ple who want to im­pose con­di­tions that are sim­ply not there. I mean, agoa was re­newed for 10 years but even af­ter the re­newal, there was a re­view, the way it hap­pens ev­ery year, of Le­sotho’s con­tin­ued el­i­gi­bil­ity. That re­view was done by the US Congress and Le­sotho passed. So Le­sotho con­tin­ues to en­joy the ben­e­fits of agoa. There is ab­so­lutely no need for us to worry about agoa, we have had so many meet­ings in the US about agoa. We are go­ing to the WTO (Word Trade Or­gan­i­sa­tion) sum­mit next week where I will be chair­ing and ne­go­ti­at­ing on be­half of african trade min­is­ters in that fo­rum. We are go­ing to dis­cuss a whole lot of is­sues, in­clud­ing the fu­ture of agoa, and how we can en­sure that our bi­lat­eral re­la­tions will not be un­der­mined by the WTO process.

Trade and In­dus­try Min­is­ter Joshua Setipa.

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