Lesotho should seize trade opportunity
LESOTHO and five other southern African nations last Friday signed an Economic Partnership Agreement (EPA) with the European Union (EU) last Friday in Botswana after negotiations dragged on for 10 years. Apart from Lesotho, the SADC EPA group also includes Botswana, Mozambique, Namibia, South Africa and Swaziland.
The EPA guarantees the countries duty-free, quotafree access to the European market under conditions similar to the African Growth and Opportunity Act (AGOA) among other provisions. Trade and Industry Minister Joshua Setipa signed the agreement along with his SADC EPA colleagues, while EU Commissioner for Trade Cecilia Malmström represented the 28-nation bloc.
Among the merits of the agreement, which comes into force in October, is that it provides for a number of protective measures, for instance for nascent, fragile industries or for food security reasons.
Already many economic commentators across the region are hailing the agreement as a boon for their countries, especially in light of dwindling Southern Africa Customs Union (SACU) revenues. For his part, Mr Setipa yesterday said the EPA was predictable and not susceptible to unilateral decisions by one party among other advantages.
This was in reference to the United States’ African Growth and Opportunity Act (AGOA) which also provides trade preferences to Lesotho and other eligible African countries. AGOA obligates the American president to designate countries eligible to benefit from the trade facility on an annual basis after undergoing a review process.
However, the US government has already expressed “serious concerns” about the Lesotho government’s alleged failure to adhere to AGOA governance criteria, with the renewal of the facility now up in the air.
Mr Setipa also said the textile, food canning and diamond industries among others stood to benefit from the EPA. Lesotho also has an opportunity to benefit from technical assistance from the EU to support the growth of production in our industries.
In her remarks during the signing ceremony in Botswana, Ms Malmström echoed the minister’s upbeat sentiment, saying the EPA had “enormous potential” to improve people’s lives all across the region by connecting people to the global economy. However, she was also keen to stress that it could only do that if all the countries worked together to turn opportunities into realities.
Without an attractive business environment, said Ms Malmström, the SADC EPA would not be able to take up the opportunities the agreement provides. She said the facility needed the right policies to allow entrepreneurship to flourish, adding that these covered everything from industry policy, streamlined customs, to policies that promote investment.
We are in total agreement with Ms Malmström’s remarks. Lesotho needs to create an attractive business environment in order to accrue the benefits of the agreement. Otherwise it will become another example of missed opportunities.
Without addressing issues that the private sector is continually complaining about, among them lack of skilled manpower, political instability and a policy framework that does not foster the growth of budding industries, the benefits of the agreement may yet again elude us.
We can no longer afford to rest on your laurels and let opportunities to develop and diversify this nation’s economy pass us by. The government and local businesses should also bear in mind that other regions, such as east and West Africa, are getting similar deals, which will in turn present intense competition.
Turning our back on AGOA would also be ill-advised because we need all the preferential trade facilities we can get. After all, there is no wisdom in putting all our eggs in one basket given the volatile global economic environment.
Political posturing should be the last thing on our priority list given all the socio-economic challenges Lesotho is facing as a result of poverty. The government and Basotho in general should get to work.