Lesotho underutilizing AGOA: US govt
WITH more than 7 000 product lines, the African Growth and Opportunity Act (AGOA) offers eligible African countries, including Lesotho, vast opportunities for trade and economic development that are being under-utilised- a scenario the outgoing United States Ambassador to Lesotho, Matthew Harrington hopes the country will rectify.
AGOA provides for duty-free entry of goods into the US from designated sub-Saharan African countries, including Lesotho, and applies to both textile and non-textile goods. The legislation, which was approved by the US Congress in May 2000 is meant to incentivise African countries to open their economies and build free markets.
It was renewed for another 10 years in June 2015 as the AGOA Extension & Enhancement Act and amended to allow the US to withdraw, suspend or limit benefits if designated AGOA countries do not comply with its eligibility criteria. The new AGOA legislation provides the administration greater flexibility in reviewing countries on an ongoing basis, including by initiating “out-of-cycle” reviews at any point during the calendar year
AGOA eligibility criteria is related to respect for human rights, rule of law and due process among others.
So far, the United States government has deemed Lesotho eligible for AGOA in 2017 to give the country time to meet the facility’s benchmarks which include the implementation of constitutional, governance, media, public and security sector reforms to ensure lasting stability in the country.
Lesotho’s textile and garment industry, which is anchored on AGOA, employs more than 40 000 people, in addition to other downstream sectors.
But as noted by Ambassador Harrington in a recent interview with Business Journal, the textiles sector is the only product line that Lesotho is taking advantage of under AGOA and yet there are at least another 6999 product lines whose exploitation could facilitate greater trade volumes and ultimately facilitate the growth of Lesotho’s economy.
“Lesotho has been a remarkable success story,” Ambassador Harrington said of the country’s achievements in terms of AGOA.
“A country of two million people, very small geographically and yet is the second largest textile exporter to the US under AGOA. 40000 jobs are dependent on AGOA eligibility and more than 100 000 family members depend on those employees plus all the vendors, taxi operators and all other downstream businesses that benefit from those factories.
“So it is a huge success story and a very important part of Lesotho’s economy.”
But that was as far as the praise went from the ambassador who remains concerned by Lesotho’s failure to take advantage of more opportunities offered under AGOA.
“I want to praise Lesotho but AGOA allows 7000 product lines duty free to the United States and that is a lot.
“Lesotho has only taken advantage of a very small number of those product lines related to textiles and I would love to see the country expand the range of products that it manufactures and exports to the United States.”
Apart from textiles, other product lines available under AGOA include agricultural products, natural resources, renewable energy and tourism.
In view of this, Ambassador Harrington encouraged the government and private sector in Lesotho to do more to expand its product lines in order to reap more benefits from AGOA.
“Lesotho has a lot of potential in the area of economic investment, foreign direct investment and trade.
“One area in particular is that of renewable energy, Lesotho could be self-sufficient in energy production.
“Commercial agriculture is another area with potential as almost all of Lesotho’s agriculture is at subsistence level.”
He further said that tourism was another area that needed attention.
“Lesotho is a beautiful country but I hear stories of people that come in and spend the day hiking in Lesotho before going back to South Africa where they eat in the restaurants and stay in the hotels.
This is because we don’t have that tourist infrastructure in Lesotho and that is not something for government but you want the private sector to make those investments.
“People will come here from all over the world for ecotourism but there has to be infrastructure development.”
Ambassador Harrington promised to work closely with the American organisation, Corporate Council on Africa (CCA), to disseminate information to American companies on Lesotho’s economic potential.
He however, said that Lesotho had to play its part by creating a stable political environment to reassure investors of their security in the country.
“There have been a number of US companies that have contacted us over the last three years that are interested in investing in Lesotho but they are scared away by the political instability.
“So if this government stays in place there is a restoration of political stability, then I think we will start seeing a lot more investments,” Ambassador Harrington said.
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