Textile in­dus­try on the brink

Lesotho Times - - News - Bereng Mpaki

Le­sotho’s textile in­dus­try faces col­lapse un­less for­eign buy­ers re­sume do­ing busi­ness with lo­cal firms as a mat­ter of ur­gency, trade union lead­ers warned this week.

the warn­ing comes amid mas­sive re­trench­ments by com­pa­nies due to dwin­dling or­ders from the Amer­i­can mar­ket, which has tra­di­tion­ally been the pre­ferred des­ti­na­tion for Le­sotho’s textile prod­ucts be­cause of con­ces­sions pro­vided by the African Growth and op­por­tu­nity Act (AGOA).

Un­der AGOA, which was en­acted by the Amer­i­can Congress in May 2000, vir­tu­ally all goods pro­duced in el­i­gi­ble sub-sa­ha­ran coun­tries en­ter the United states (Us) mar­ket duty-free.

How­ever, the US Pres­i­dent each year de­ter­mines whether a coun­try still qual­i­fies for AGOA ben­e­fits based on a num­ber of is­sues, among them its re­spect for the rule of law, eco­nomic poli­cies to re­duce poverty, and ef­forts to com­bat cor­rup­tion.

AGOA was ex­pected to ex­pire in septem­ber last year but on 25 June 2015, the US Congress ex­tended the legislation to 2025 “as a strong sig­nal that busi­nesses can and should in­vest with con­fi­dence in Africa”.

But de­spite this as­sur­ance, Le­sotho’s textile com­pa­nies are strug­gling to secure or­ders from the US, leav­ing man­age­ment with no choice but to down­size oper­a­tions or tem­po­rar­ily close shop un­til they get busi­ness.

the textile in­dus­try is Le­sotho’s big­gest pri­vate sec­tor em­ployer with an es­ti­mated 35 000 work­ers, most of them women who are sole bread­win­ners for their fam­i­lies.

Ac­cord­ing to Lentsoe la Sech­aba trade Union gen­eral sec­re­tary, Mon­a­heng Mokaoane, the textile in­dus­try is in “real dan­ger” of go­ing un­der if the or­der sit­u­a­tion does not im­prove “as a mat­ter of ur­gency”.

“We are very con­cerned with this sit­u­a­tion as our work­ers are in real dan­ger of los­ing their jobs for good if the cur­rent short­age of or­ders per­sists. It would be a dis­as­ter if our textile in­dus­try was to col­lapse be­cause of the sheer num­bers the fac­to­ries em­ploy, and how Ba­sotho have be­come so de­pen­dent on this sec­tor,” Mr Mokaoane told the Le­sotho times this week.

“some of the fac­to­ries have been qui­etly re­trench­ing work­ers sim­ply be­cause there is no work, while oth­ers tem­po­rar­ily sus­pend oper­a­tions with the hope that the sit­u­a­tion is go­ing to im­prove soon. this means their work­ers are sent home and if they get or­ders, re­call them. But if they don’t get the or­ders, the work­ers lose their jobs for good.”

United textile Work­ers Union (UNITE) sec­re­tary gen­eral Bahlakoana Le­bakae echoed Mr Mokaoane’s sen­ti­ments and said the dire sit­u­a­tion was due to a com­bi­na­tion of fac­tors.

“the sit­u­a­tion is very se­ri­ous for our textile sec­tor and I sus­pect it could be be­cause of a num­ber of rea­sons, among them de­lays in ex­tend­ing the AGOA legislation when it was about to ex­pire in 2015. this cre­ated un­cer­tainty among US buy­ers, lead­ing to de­lays in plac­ing or­ders with our com­pa­nies,” Mr Le­bakae said.

Ini­tially, AGOA was set to ex­pire in 2008, but the United states Congress passed the AGOA Ac­cel­er­a­tion Act of 2004, which ex­tended the legislation to 2015. the Act’s ap­parel spe­cial pro­vi­sion, which per­mits lesser-de­vel­oped coun­tries like Le­sotho to use for­eign fab­ric for their gar­ment ex­ports but still ben­e­fit from the duty-free pro­vi­sion, was to ex­pire in Septem­ber 2007, but Congress ex­tended it to 2012, and then 2025 as part of the gen­eral AGOA ex­ten­sion last year.

Ac­cord­ing to Mr Le­bakae, the other pos­si­ble rea­son for the drop in de­mand for Le­sotho prod­ucts by the Us mar­ket is the coun­try’s pre­vail­ing po­lit­i­cal un­rest.

Mr Le­bakae said: “You will re­call that or­ders are placed nine months ahead of pro­duc­tion, so be­cause AGOA’S re­newal was prob­lem­atic last year, this led to de­lays in the place­ment of or­ders from the Us.

“The is­sue of lack of or­ders is also in­flu­enced by the coun­try’s po­lit­i­cal and se­cu­rity sit­u­a­tion which some buy­ers could have seen as un­sta­ble and there­fore a threat to busi­ness.”

the gov­ern­ment and op­po­si­tion re­main di­vided over the state of the coun­try’s se­cu­rity, which saw three op­po­si­tion lead­ers — thomas Tha­bane, Th­e­sele ‘Maserib­ane and Keketso Ran­tšo of the All Ba­sotho Con­ven­tion, Ba­sotho Na­tional Party and Re­formed Congress of Le­sotho re­spec­tively — flee­ing the coun­try for south Africa in May last year. the three lead­ers claimed they had been alerted of an al­leged plot to as­sas­si­nate them by some mem­bers of the Le­sotho De­fence Force (LDF) and still live in ex­ile in south Africa. the mil­i­tary re­jects these claims.

Mean­while, Mr Le­bakae also re­vealed the re­trench­ments had brought with them “a unique chal­lenge” to em­ploy­ers.

“these lay­offs are ac­tu­ally against the law be­cause they are not rec­og­nized un­der the Labour Code due to the way they are be­ing done. For in­stance, some em­ploy­ers re­trench work­ers and within four weeks, re­call them and ac­cord­ing to the law, this means they were never re­leased from work and should there­fore be paid for the time they spent at home,” Mr Le­bakae said.

“so what this ba­si­cally means is if a worker has been in­structed by his em­ployer to go home be­cause there are no or­ders, the com­pany is sup­posed to pay that per­son for that month ac­cord­ing to Sec­tion 85 and 86 of the Labour Code.

“so em­ploy­ers who have tried to re­sist pay­ing such work­ers have been made to pay af­ter their cases had been taken to the au­thor­i­ties, but as you can see, this is pre­sent­ing the in­dus­try with a unique chal­lenge.”

In­de­pen­dent Demo­cratic Union of Le­sotho (IDUL) deputy gen­eral sec­re­tary, Se­abata Likoti, also said the textile in­dus­try was ex­pe­ri­enc­ing one of its worst pe­ri­ods in re­cent years.ars.

“our mem­bers have been told by their em­ploy­ers to re­turn to work this week, so we don’ton’t know what will hap­pen once they y are back,” Mr Likoti said.

“How­ever, the sit­u­a­tion is not look­ing good for the in­dus­try as a whole.”

Le­sotho tex­tile­ses ex­porters As­so­ci­a­tion vice-chair­man man Ricky Chang did not im­me­di­ately re­spond to ques­tions emailed to him this his week re­gard­ing the sit­u­a­tion, whilele an eco­nomic ex­pert said Le­sotho should look for al­ter­na­tive mar­kets ets be­fore it’s too late.

The an­a­lyst, whoho re­quested anonymity, said: id: “There is more com­pe­ti­tionon for the Us mar­ket es­pe­cial­lyially by coun­tries that haveve com­par­a­tive ad­van­tage ge over Le­sotho.

“For in­stance, there is no mod­ern­iza­tion on in our textile in­dus­try, try, where the machin­nery is very old andd or­gan­i­sa­tional sys­tems have not im­proved de­spite the chang­ing times.

“this means Le­sotho’s pro­duc­tiv­ity and qual­ity have re­mained static while the other com­pet­ing coun­tries con­tinue to im­prove.

“Again, there is no pro­mo­tion of lo­cal own­er­ship of the fac­to­ries, which could help in the takeover of the com­pa­nies when their for- eign op­er­a­tors re­lo­cate.

“Another chal­lenge Le­sotho faces is its cur­rent po­lit­i­cal and so­cial cli­mate, which does not en­cour­age new in­vest­ment.

‘That’s why I am say­ing the sit­u­a­tion is not look­ing good for Le­sotho as far as the textile sec­tor is con­cerned.”

Textile com­pa­nies are strug­gling to secure or­ders from the US mar­ket. –– File pic

UNITE Sec­re­tary-gen­eral Bahlakoana le­bakae.

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