Le­sotho shows AGOA’S suc­cess, lim­its

Lesotho Times - - Business - Ryan Lenora Brown

MOST months, Mamole­bo­heng Mopooane’s pay­check passes through her hands like wa­ter.

There are her chil­dren’s school fees and gro­ceries, rent, win­ter jack­ets, and the open palms of un­em­ployed rel­a­tives back home ask­ing again and again if she can spare just a lit­tle some­thing, any­thing, to help them get by.

All of that is a lot to ask of the $100 she earns ev­ery month stitch­ing seams into Amer­i­can blue­jeans at a gar­ment fac­tory here, and most of the time, the days trail out long af­ter the money is gone, a qui­etly tick­ing count­down to the next pay­check and the next set of de­mands.

“There’s no life in these fac­to­ries,” she says.

And yet, she knows, they have com­pletely trans­formed hers.

She runs her own house­hold now, with­out the sup­port of any of the men in her fam­ily. Her two chil­dren are on track to be­come the first peo­ple in their fam­ily to fin­ish high school. And thanks to that small pay­check, there is al­most al­ways enough to eat — even for fam­ily back home whose crops have shriv­eled to dusty stalks in the worst drought in south­ern Africa’s re­cent his­tory.

Like some 32 000 other work­ers in Le­sotho Ms Mopooane’s chang­ing for­tunes are hitched to a trade deal inked 16 years ago and 8 000 miles away from the cav­ernous fac­tory where she spends her work­ing days. It’s called the African Growth and Op­por­tu­ni­ties Act (AGOA) and since it was signed into law by then-pres­i­dent Bill Clin­ton in May of 2000, it has cleared the way for dozens of sub-sa­ha­ran African coun­tries to be­gin ex­port­ing a wide va­ri­ety of goods — among them oil, cars, and tex­tiles — duty-free to the United States.

Le­sotho has be­come one of its great­est suc­cess sto­ries. The gar­ment in­dus­try here — among the con­ti­nent’s largest — has boomed to be­come the largest pri­vate em­ployer in the coun­try. Two dozen fac­to­ries hud­dled in the Thet­sane in­dus­trial district of the cap­i­tal Maseru now ex­port nearly a quar­ter bil­lion dol­lars’ worth of goods an­nu­ally for US megabrands like Levi’s, Wal­mart, and Old Navy.

And in a coun­try where wages have his­tor­i­cally been brought home by men work­ing across the bor­der in South Africa’s mines, 85 per­cent of fac­tory work­ers are women, ac­cord­ing to the Le­sotho Tex­tile Ex­porters As­so­ci­a­tion.

“If you look at the eco­nomic ef­fects of AGOA, they are eas­ily traced and dra­matic, but there are also real changes hap­pen­ing in our so­cial dy­nam­ics as well,” says Lehlo­honolo Chefa, ex­ec­u­tive di­rec­tor of the Pol­icy Anal­y­sis and Re­search In­sti­tute of Le­sotho (PARIL). “We see, for in­stance, that AGOA has em­pow­ered women by giv­ing them eco­nomic free­dom and the abil­ity to make fi­nan­cial de­ci­sions for their fam­i­lies. This is a ba­sic thing, but it means a lot.”

But Le­sotho’s case also il­lus­trates how frag­ile and pre­car­i­ous Africa’s in­dus­trial strides un­der AGOA have been. A decade and a half into the trade deal, Le­sotho’s gar­ment in­dus­try re­mains en­tirely for­eign owned — much of it by highly mo­bile Tai­wanese in­vestors — and heav­ily de­pen­dent on its pref­er­en­tial trade po­si­tion for sur­vival.

Po­lit­i­cal sta­bil­ity at stake And AGOA it­self is no cer­tain bet, even in the short-term. The cur­rent it­er­a­tion of the deal ex­pires in 2025 and is un­likely to be re­newed, but in­di­vid­ual coun­tries can also be axed from the pro­gram at any time if they fail to progress to­ward gov­er­nance stan­dards and other bench­marks laid out by the United States.

A sud­den end to AGOA el­i­gi­bil­ity has al­ready gut­ted nascent tex­tile in­dus­tries in Swazi­land and Mada­gas­car, for in­stance. Now, a 2014 at­tempted coup and its po­lit­i­cal fall­out have put Le­sotho on warn­ing as well. Its el­i­gi­bil­ity for next year cur­rently hangs in the bal­ance.

“On the one hand, the US has in­vested so much ef­fort in strength­en­ing democ­racy in this coun­try, and it’s a highly ap­pre­ci­ated re­la­tion­ship, but on the other hand, you’re threat­en­ing the same fun­da­men­tal re­la­tion­ship and un­rav­el­ing it [if you cut AGOA ben­e­fits],” says Trade Min­is­ter Joshua Setipa, who re­cently re­turned from a trip to Wash­ing­ton to lobby law­mak­ers there.

His pitch was sim­ple: In a coun­try where more than half of its cit­i­zens live be­low the poverty line and of­fi­cial unem­ploy­ment hov­ers near 30 per­cent, po­lit­i­cal sta­bil­ity is de­pen­dent on eco­nomic sta­bil­ity. And eco­nomic sta­bil­ity means one thing — AGOA. “This is a very se­ri­ous re­al­ity for us. It’s not an aca­demic ar­gu­ment,” he says.

Beyond Le­sotho’s borders, too, AGOA’S ben­e­fits have been far from cur­sory. Since the pro­gram was in­sti­tuted in 2000, non-oil ex­ports from sub-sa­ha­ran Africa to the US have tripled, from $1.4 bil­lion in 2001 to $4.1 bil­lion in 2015, ac­cord­ing to US govern­ment fig­ures. Much of that growth has come from re­gional pow­er­house South Africa, which used AGOA to build a thriv­ing car ex­port in­dus­try and has cre­ated some 62,000 new jobs, ac­cord­ing to the coun­try’s Depart­ment of Trade and In­dus­try. Last year, South Africa ex­ported about $1.7 bil­lion of goods to the US un­der the deal.

But if South Africa has made the most money from AGOA, it’s the con­ti­nent’s less de­vel­oped economies that have the most to gain from the deal.

Tra­di­tion­ally, for in­stance, land­locked Le­sotho has had lit­tle to ex­port but its peo­ple, who have gone by the tens of thou­sands to neigh­bor­ing South Africa to work in min­ing and other in­dus­tries. Re­mit­tances still to­tal nearly a fifth of the coun­try’s GDP, ac­cord­ing to 2013 data from the World Bank — the most re­cent avail­able, and the coun­try im­ports some 90 per­cent of the goods it con­sumes from South Africa.

Open­ing to Asia But Le­sotho has also long had an odd ad­van­tage in the tex­tile in­dus­try — its po­si­tion on a map. In the 1980s, Tai­wanese cloth­ing firms op­er­at­ing in South Africa be­gan flock­ing to the tiny coun­try inside of it in or­der to avoid sanc­tions on apartheid-made goods. And from 2000, any tex­tiles stamped “Made in Le­sotho” could en­ter the US with­out tar­iffs, mak­ing them 15 per­cent cheaper than sim­i­lar gar­ments man­u­fac­tured in East Asia. New Tai­wanese com­pa­nies fol­lowed, and the in­dus­try boomed. By 2004, it ac­counted for nearly half of all Ba­sotho (as the peo­ple of Le­sotho are called) em­ployed in the for­mal sec­tor.

But the foun­da­tions were al­ways rick­ety, says Nkopane Monyane, a busi­ness­man and diplo­mat who spent sev­eral years as the re­gional man­ager of Pre­cious Gar­ments, a tex­tile firm here.

“Le­sotho never had an in­dus­try, it only had in­dus­tri­al­ists,” he says. Though the num­ber of East Asian gar­ment com­pa­nies shot up, they have never grown lo­cal roots, he ar­gues, in­stead fly­ing in ex­pat staff from Tai­wan and main­land China to run their op­er­a­tions and man­age the fac­tory floors. With one ex­cep­tion — a mas­sive denim com­pany called Nien Hs­ing Tex­tile Co – they have also never built lo­cal fab­ric mills, pre­fer­ring to im­port roll af­ter roll of cheap Asian-made fab­ric to be stitched to­gether by lowskill work­ers in Le­sotho.

“The US came in with the African Growth and Op­por­tu­ni­ties Act and we turned around and made it the Asian Growth and Op­por­tu­ni­ties Act,” Mr. Monyane says.

But the big­ger prob­lem may be that most AGOA ben­e­fi­cia­ries, in­clud­ing Le­sotho, have so far failed to use its pro­vi­sions as a spring­board to some­thing big­ger. Work­ers like Ms Mopooane still oc­cupy the same low rung on the global gar­ment pro­duc­ing chain that they did a decade ago — mak­ing sim­ple cuts and stitches on cheap, mass pro­duced items of cloth­ing. And the mo­ment AGOA goes, their jobs likely will too, shipped off to some­where with a lower bot­tom line.

“Uni­lat­eral trade agree­ments can be very dan­ger­ous, par­tic­u­larly for small coun­tries,” says Charisma Ncube, a vis­it­ing scholar at the South African In­sti­tute of In­ter- na­tional Af­fairs and an eco­nomic diplo­macy ex­pert. “It’s easy to be­come too re­liant.”

Hold­ing on to AGOA For Le­sotho’s work­ers them­selves, the coun­try’s in­dus­trial revo­lu­tion doesn’t seem to be point­ing them any­where in par­tic­u­lar. Most have never had an­other for­mal job, and can’t imag­ine what they would do if they didn’t work here, amid the con­stant clat­ter of sewing ma­chines and whirring in­dus­trial wash­ers.

In­stead, for them, the ben­e­fits of the tex­tile in­dus­try re­main firmly rooted in the here and now. The com­ing pay­check will mean the rent gets paid. It will mean the 50 kilo bag of maize meal gets sent home to the village. It will mean chil­dren and grand­chil­dren and sib­lings and cousins go to school — for this year, any­way.

In his of­fice high atop one of Maseru’s tallest build­ings, mean­while, Mr Setipa is still wait­ing for news from the US on whether Le­sotho will still be part of AGOA next year. The coun­try des­per­ately needs the re­main­ing nine years un­til AGOA’S ex­pi­ra­tion, he says, to pre­pare for the mor­tal blow of los­ing its trade pref­er­ences.

Across town, Ms Mopooane is walk­ing back to the fac­tory gates af­ter her lunch break. Around her, the wind picks up a frothy cloud of dust, swirling Sty­ro­foam car­tons and dis­carded news­pa­pers into a tiny garbage tor­nado. She’s wor­ried ev­ery day, she says, that her po­lit­i­cal lead­ers have squan­dered the one chance she’s had in her adult life to wrench her fam­ily out of poverty.

“We don’t know how to solve these po­lit­i­cal prob­lems — they’ve got noth­ing to do with us,” Ms Mopooane says. “All we know is that if AGOA goes, we are in big trou­ble.”

— Cs­mon­i­tor

On the one hand, the US has in­vested so much ef­fort in strength­en­ing democ­racy in this coun­try, and it’s a highly ap­pre­ci­ated re­la­tion­ship, but on the other hand, you’re threat­en­ing the same fun­da­men­tal re­la­tion­ship and un­rav­el­ing it [if you cut AGOA ben­e­fits]

Work­ers at the TZICC gar­ment fac­tory in Maseru, Le­sotho, sew ac­tivewear for ma­jor Us re­tail­ers like Wal­mart and Costco.

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