As Mafeteng textile firm closes shop next month after govt reneges on bailout promise
Lekhetho Ntsukunyane
Leading textile firm, Precious Garments, has announced the closure of its Mafeteng subsidiary, P and T, next month, leaving 407 breadwinners in the cold.
According to Precious Garments management, the decision to shut down the factory on 16 April had since been communicated to the workers and followed government’s failure to honour an agreement the two parties signed on 28 May 2012.
Under the deal, government was supposed to inject money into the firm, which had been shut down in 2010 due to viability challenges. Following the signing of the agreement, the company, which manufactured t-shirts and jeans for export mostly to the United States of America, was immediately reopened, with government holding 49 percent shares, while P and T owned the remaining 51 percent.
Reads part of the agreement signed by then Trade and Industry, Cooperatives and Marketing and Finance and Development ministers, Leketekete Ketso and Timothy Thahane respectively, on behalf of government, with Pai Yun-Hsin and Tzai Chung-Hsia representing Precious Garments in the deal: “The shareholding held by the government of Lesotho through its agencies, will escalate over a period of three years to 100 percent by the third year. Precious Garments undertakes to extend support to P and T Textile through placement of orders and provision of both technical expertise and management of the company.
“The contribution of the government of Lesotho, and its agencies, to the share capital will be through the buildings, while P and T Textile will contribute through its machinery. In addition the government of Lesotho undertakes to provide, on an annual basis, financial support to P and T Textile at levels to be determined by both parties for a duration of up to three years to cover operational costs.”
However, according to Precious Garments regional manager, Lengana Gerald Tšepe, government had not met its end of the bargain, hence the decision to close shop once again.
“This agreement is very clear that the government undertook to provide annual subsidies to cover the company’s operational costs. However, since the deal was sealed way back in 2012, government has not put anything into the company. I met with LNDC (Lesotho National Development Corporation) officials, as the government agency involved in the partnership, and learnt that as per the agreement, Precious Garments was only supposed to provide training and supervision at P and T so that government would then takeover skilled and experienced staff,” he said
The LNDC, Mr Tšepe further explained, had played its part by not collecting rent for the buildings P and T Textile has been using since the reopening.
“The LNDC honoured its part of the agreement, but government did not fulfill the funding arrangement. You see, the other reason why Precious Garments closed P and T in 2010, was because of the high costs involved in operating a factory in Mafeteng, when most of the services the company needed to operate profitably, such as customs, were in Maseru.
“Again, for instance we pay extra to transport goods from Mafeteng to Durban via Maseru, and when the factory reopened in 2012, government had agreed to take care of these expenses.”
Meanwhile, the Sunday Express has obtained a copy of a letter the previous Precious Garments regional manager, Nkopane Monyane, wrote to Dr Ketso on 26 February 2013, pleading with government to honour its deal lest the company closed shop, leaving many leaving stranded.
The letter reads: “Further to the agreement between the Lesotho government and ourselves regarding support to P and T Textile, we wish to highlight the following: The agreement was entered into in May 2012 for urgent implementation. The said undertaking has not progressed, and there appears no indication that it will soon be implemented. In the meantime, the company has continued to carry unaffordable expenses and huge losses.
“The situation is unfortunately burdening Precious Garments and could affect 4000 workers at the latter factory. Under the circumstances, we humbly call upon your leadership to relieve us of this situation through the facilitation of this agreement. A continuance of the current situation will only force us into an inevitable business decision of terminating operations in Mafeteng, however undesirable this might be. We therefore, hope you will be in a position to take the necessary steps that should benefit the country, Honourable Minister.”
However, according to Mr Tšepe, this letter was never responded to, prompting management’s decision to cease operations next month.
The Sunday Express yesterday contacted Dr Ketso, who said government did not honour the agreement because Precious Garments management was not “cooperative, particularly a certain lady from Taiwan”.
He added: “As government, we undertook to provide finances for the factory to sustain its operations. You will notice that Dr Thahane, who was then finance minister, was a signatory to the deal. This means there wasn’t going to be any problem from the government side, but we could not proceed when some managers at the company were not cooperative.
“There was one lady, apparently from Taiwan, who seemed to have a problem with the agreement and was very difficult to deal with.”
Dr Ketso added government had a “vision to own a factory that would see us developing into a better country economically and be self-reliant”, and only failed to honour the P and T deal because of the management’s hardline stance.
Meanwhile, speaking on behalf of the workers, Mr Bahlakoana Lebakae of the United Textile Employees, said government had failed to grab an opportunity to own a firm “for the benefit of us all.”
“Countries like China are where they are today economically, because their governments have invested in textile firms. Why can’t our leaders do the same?”