Crit­i­cal ar­eas to lift Le­sotho out of suf­fer­ing

The Star Early Edition - - INSIDE -

THE King­dom of Le­sotho is a coun­try of ex­tremes: breath-tak­ing beauty and wide­spread poverty. It’s clas­si­fied by the UN as one of the least de­vel­oped coun­tries in the world.

It is the only coun­try, apart from the Vat­i­can, that is com­pletely sur­rounded by an­other. It is re­liant on South Africa for all im­ports and ex­ports, while a few com­modi­ties sup­ple­ment its in­come.

The bulk of its fis­cal in­come, about 37%, how­ever, comes from the South­ern African Cus­toms Union (Sacu), the old­est cus­toms union in the world, which Le­sotho joined in 1910.

Po­lit­i­cally, Le­sotho has suf­fered in re­cent years. It has stum­bled from elec­tion to coup, to coali­tion gov­ern­ment to col­lapse in a de­struc­tive cy­cle.

Elec­tions have taken place again af­ter a mo­tion of no con­fi­dence suc­ceeded against Prime Min­is­ter Pakalitha Mo­sisili, af­ter only two years in of­fice.

Tom Tha­bane’s All Ba­sotho Con­ven­tion won the elec­tions with 48 of the 120 seats, still short of the 61 seats needed for an out­right ma­jor­ity.

Tha­bane will prob­a­bly form a coali­tion with the same par­ties that helped him win the mo­tion of no con­fi­dence.

With a new gov­ern­ment, Tha­bane should fo­cus on the fol­low­ing crit­i­cal ar­eas in or­der to en­sure peace, sta­bil­ity and pros­per­ity for Le­sotho:

1. Work closely with the World Bank to en­sure that the Fresh Fruit and Veg­etable (FFV) sec­tor en­joys the ser­vices of a Bu­reau of Stan­dards. Pri­ori­tise the en­act­ing of the Stan­dards Bill.

Le­sotho’s ex­port earn­ings come from cloth­ing (40%), di­a­monds (22%), water, wool and to­bacco. Its main ex­port part­ners are the US (35%) and South Africa (30%).

EU econo­met­ric modelling on the po­ten­tial im­pact of the SADC-EU Eco­nomic Part­ner­ship Agree­ment, in 2016, shows that there should be in­creased trade between the two par­ties for to­bacco, tex­tiles, veg­eta­bles and fruit.

Le­sotho should fo­cus its at­ten­tion on the po­ten­tial of the coun­try to be­come a sig­nif­i­cant FFV ex­porter.

It has re­ceived sup­port from the World Trade Or­gan­i­sa­tion and World Bank to de­velop its FFV sec­tor via two schemes that have dis­trib­uted green­houses to small farm­ers.

The re­sults have been en­cour­ag­ing but much more needs to be done to or­gan­ise farm­ers, gear them to­wards ex­ports and up­scale pro­duc­tion.

En­sur­ing that Le­sotho es­tab­lishes a Bu­reau of Stan­dards that can cer­tify prod­ucts as safe is a cru­cial link in the FFV ex­port value chain. The nec­es­sary Stan­dards Bill has been stuck in par­lia­ment for years due to the fre­quent changes in gov­ern­ment.

2. Re­duce rev­enue depen­dency on the Sacu rev­enue pool by fo­cus­ing on tighter tax col­lec­tion and en­cour­ag­ing greater eco­nomic ac­tiv­ity.

The in­come Le­sotho has gained from the Sacu rev­enue pool has been in steady de­cline. Un­for­tu­nately there are not many al­ter­na­tives to sup­ple­ment this in­come, apart from tight­en­ing tax col­lec­tion and guard­ing against il­licit fi­nan­cial out­flows.

A 2017 Unu-Wider work­ing pa­per es­ti­mated that Le­sotho lost about $20 mil­lion (R259.7m) to tax rev­enue losses.

There could be im­me­di­ate im­pacts for gov­ern­ment rev­enue if a small im­prove­ment is made in tax col­lec­tion and gov­ern­ment fo­cuses on il­licit prac­tices that sees rev­enue leav­ing the coun­try.

3. Work closely with the US Em­bassy in Le­sotho so their fears around hu­man rights and re­gional rec­om­men­da­tions are al­layed.

Le­sotho’s re­la­tion­ship with the US is of para­mount im­por­tance as it has de­vel­oped its strong ex­port-ori­en­tated tex­tile in­dus­try on the back of the African Growth and Op­por­tu­nity Act (Agoa), which gives 38 sub-Sa­ha­ran African coun­tries pref­er­en­tial ac­cess to the US mar­ket for about 6 000 prod­uct lines.

To qual­ify coun­tries must ad­here to and aim to im­prove its rule of law, hu­man rights pro­tec­tion mech­a­nisms and must re­spect in­ter­na­tional labour stan­dards.

In 2015 Le­sotho ex­ported more than US$330 m worth of tex­tiles to the US. The fac­to­ries em­ploy about 44 000 peo­ple, mostly women. Their chil­dren rely on this in­come for school fees and bal­anced meals. It is there­fore of grave con­cern that Le­sotho’s Agoa eli­gi­bil­ity has come un­der scru­tiny due to a de­clin­ing hu­man rights record fol­low­ing the vi­o­lent 2014 at­tempted coup.

The US wants the im­ple­men­ta­tion of the SADC Com­mis­sion of En­quiry rec­om­men­da­tions, which has not been done.

Form­ing a new gov­ern­ment will give Le­sotho an op­por­tu­nity to re-en­gage the US on th­ese points, but firm ac­tion on the hu­man rights front will help en­sure the con­tin­u­a­tion of its Agoa ben­e­fits un­til 2025.

4. Up­skill Le­sotho women work­ing in tex­tile fac­to­ries to en­sure their trans­fer­abil­ity to other fac­to­ries. In­vest in their dig­i­tal ed­u­ca­tion to kin­dle en­trepreneur­ship.

Agoa ex­pires in 2025. So far Le­sotho’s gov­ern­ment has done lit­tle to pre­pare its tex­tile in­dus­try for a fu­ture with no pref­er­en­tial mar­ket ac­cess to the US.

It is feared that tex­tile fac­to­ries in Le­sotho will be closed down and thou­sands of women will be left with­out an in­come. Le­sotho has to up­skill its tex­tile labour­ers to take over man­age­rial roles and other higher-end jobs.

Most women work as ma­chin­ists where the fo­cus is on rep­e­ti­tion and speed of pro­duc­tion. Th­ese me­nial jobs are un­der threat from au­to­ma­tion, but ro­bots are still years off from be­com­ing de­sign­ers and in­no­va­tors.

The gov­ern­ment should work with women who are in­no­vat­ing with African de­signs and Seshoeshoe fab­rics for the lo­cal and South African cloth­ing mar­ket.

It is feared that tex­tile fac­to­ries in Le­sotho will be closed down

Talitha Ber­tels­mann-Scott is head of the South African In­sti­tute of In­ter­na­tional Af­fairs’ Eco­nomic Diplo­macy Pro­gramme

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