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Textile sector in trouble



MASERU – THE textile sector, which is the second biggest employer after the government of Lesotho with 40 000 workers, is facing an uncertain future as the effects of the Covid-19 pandemic begin to be felt.

That is according to the Lesotho National Development Corporation (LNDC) Chief Executive, Molise Ramaili. Ramaili was speaking at an indaba for the textile industry in Maseru last Friday.

The industry saw at least 10 000 employees sent packing in the last two years following the outbreak of Covid-19, he said. Exports and employment have stagnated since 2017, Ramaili said.

He said the country should brace for more woes in the immediate future. Ramaili said the major cause of this stagnation shows “a shift to other markets and shrinkage of our market share”.

He further said the effects of the 37.4 percent wage increase in 2020 also played a major role.

“The industry’s loss of competitiveness goes far before the Covid-19 pandemic,” Ramaili said.

“Therefore, solutions need to be focused on the root causes not responding to the pandemic which merely crippled an already weakened organism,” he said.

He said about nine firms closed their doors and 10 056 jobs were lost. He said the potential job closures sit at 640 while 600 Basotho might be retrenched very soon. He said the major reasons for the closures and retrenchments are the declining and cancellation of orders.

He said this has been triggered by high costs which include increased wages, increased logistics, increased port charges and delays in delivery. Ramaili said this has led to declining revenues where the companies are currently operating at 50 percent capacity.

He said a non-conducive investment environment has also contributed to the downfall of the industry. He explained that this includes government policy, slow decisions on wage increases, Value Added Tax (VAT) refunds, work and residence permits.

Ramaili said in 2021, they held a roundtable with relevant stakeholders in this industry. He said among the challenges which were mentioned include buyers’ diversification of their sources of procurement of goods such as near-shoring production and material sourcing.

He said it was also raised that the buyers had changed their procurement structure and had changed their selling and ordering techniques to short term and agile orders to support their digital businesses.

Ramaili said although Lesotho is competitive in labour costs, the quality of skills is not good enough to manage the industry without expatriates. He said Lesotho’s productivity is lower as compared to Asia, however, better than eSwatini, Ethiopia and Kenya.

He said this gives Lesotho better opportunities. However, lack of warehousing facilities for factories and the absence of an industry specific incentives framework are barriers to the growth of this industry.

Ramaili said the legislative environment had become inconsistent and non-consultative, and very slow to respond to emerging challenges. He said the costs increased especially on wages, transportation due to Covid-19 and Russia-Ukraine war, water, electricity, and international ports’ charges.

He said United States markets are currently buying from their neighbouring countries to minimise the costs of transportation too. He said the regular strikes by workers also fueled the crisis.

“The industry is dependent on a few large manufacturers that subcontract their orders to the medium and small manufacturers,” he said.

Ramaili said some factories’ orders are seasonal hence the production gaps. He said this is a crisis which requires collaborations. However, there is a lack of cohesive vision and collaboration amongst stakeholders such as government, labour, investors, and civil society.

“Stakeholders vilify each other,” he said.

He further said there are not enough local skills to fully domesticate the industry. He said there is no deep understanding and knowledge of the sector to be able to develop and reinvent it further.

“There are trade issues with SARS holding Lesotho-bound orders’ containers for too long,” he said.

However, Ramaili said although the damage is huge, we still stand a chance to resolve this matter. He said trade facilitation needs to be streamlined with both physical and soft infrastructure.

He said we can still rebuild and rebrand Lesotho as a sourcing location and leader in the African textiles and apparel manufacturing industry. He said this can be achieved by expansion of standards auditing to local manufacturers and pursuing joint stakeholders’ orders sourcing.

The Minister of Trade, Thabiso Molapo, said over the past several months, we have witnessed several headlines on more job losses looming. He said it is fair to say that the effects of these losses have proved devastating to many.

Molapo said relevant stakeholders should work closely with the Ministry of Trade through the LNDC to contribute to the efforts to attract and retain investment in the textile and garment industry.

“Each stakeholder has a unique opportunity in creating a conducive investment climate for prospective investors, both local and foreign,” Molapo said.

He said each stakeholder is operating in different areas of government service delivery and regulation from revenue collection, water and electricity distribution and financial sector.

“However, they are all geared towards developing Lesotho and building her into a prosperous nation,” he said.

“Let us collectively gear towards developing systems that will move us in that direction,” he said.

Mary Motebang from the Ministry of Trade said more Basotho are keen to venture into this industry. She said they discovered about 4 000 SMEs, especially women in dress making businesses, who were willing to do so.

She said this group of SMEs needs to be equipped with skills to run the textile firms with the ministry assisting them with management skills. Motebang said although the major concern on the industry shrinkage include market shift, Lesotho has more market opportunities besides the US market.

She mentioned the African Growth and Opportunity Act (AGOA), Southern African Custom Union (SACU) trade agreement, Southern African Development Community SADC trade agreement and African Continental Free Trade Area (ACFTA) which need to be utilized.

“Lesotho is underutilising the export markets we have,” she said.

One of the participants, Lehlonoholo Chefa, said ‘‘our productivity is so high as compared to other countries in sub-Saharan Africa, however, when it comes to skills transfer, we are still behind”.

He said institutions such as Limkokwing University of Creative Technology and Lerotholi Polytechnic which already have such programmes in their curriculum should be encouraged to provide necessary skills which will enable Basotho to run this industry.

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