THE Lesotho National Development Corporation (LNDC) is strengthening support to local enterprises, targeting among others, the textile sector in an effort to boost the inclusion of local players.
This emerged during a one-day workshop facilitated by experts from the United States Aid for International Development (USAID)- supported Southern Africa Trade and Investment Hub (SATIH), which took place in Maseru last Friday.
Although Lesotho is one of the major garment exporters to the United States of America, under the African Growth and Opportunity Act (AGOA) trade preference, much of the benefits goes to foreign investors who dominate the textile sector.
Following its participation in the AGOA as of 2001, the Government of Lesotho has realized the need to roll-out interventions that seek to localize the garment manufacturing industry through schemes that will build the capacity of local investors to participate fully in the sector before the trade agreement ends in 2025.
To date, only one Basotho-owned company has indirectly exported products to the USA, although there are a number of locally-owned enterprises that produce for the domestic as well as the regional markets.
These enterprises include, Johane Garment Manufacturers, Seshoeshoe Productions and Afro Expo Textiles, which has exported to the USA at sub- contract level.
Participants of the workshop, who included local business people, held discussions that reviewed the country’s performance under AGOA to identify areas that needed strengthening.
The need for increased skills capacity, access to finance and information on how local enterprises can also export their products through the AGOA facility featured strongly in the discussions.
In his opening remarks, the Lesotho National Development Corporation (LNDC) chief executive officer Mohato Seleke said capacity development of local enterprises in the garment manufacturing sector was a priority before 2025.
“Since inclusion of Lesotho into AGOA, the country has experienced a dramatic expansion of its manufacturing sector, stimulated by the inflow of foreign direct investment (FDI), mostly from South Africa and Asia,” Mr Seleke said.
This influx, he explained brought about a considerable growth in Lesotho’s textile and clothing sectors and contributed significantly to the Gross Domestic Product (GDP) and employment creation.
“In terms of export performance, the country’s balance of payments (BOP) has improved due to substantial increase in the total exports. The impact of AGOA in Lesotho’s economy cannot be underestimated.”
However, he said more efforts are needed to maximise the benefits of locals in the garment manufacturing sector.
LNDC Domestic Investment Promotions Manager Semethe Raleche said the Corporation had started implementing the supply chain finance intervention launched earlier this year.
“This scheme is working to strengthen government support to local enterprises. In addition, through the infrastructure development programmes, we are currently developing factory shells for local investors at Tikoe Industrial site,” Mr Raleche said.
He said owing to a high demand of operating space, the Corporation will build more factory shells at an industrial site set to be established at Ha Belo in Butha Buthe.
To support local manufacturers competitiveness, the Corporation will soon unveil other incentive packages targeted at local enterprises.
One of the local investors and owner of Afri-Expo Textiles, Teboho Kobeli welcomed government’s efforts in attempting to localize the textile sector.
Speaking to Sunday Express, Mr Kobeli said it was unfair that for more than two decades, local investors have been sidelined from entering an industry operating in their own backyard.
“For a long time, information regarding AGOA was not forthcoming to local investors in the manner that the Corporation is now reaching out to local enterprises. This dialogue is a step in the right direction because it shows that the government has finally realised that local investors have a crucial role to play in the AGOA beneficiation. I have been expecting this initiative for a very long time,” Mr Kobeli said.
He also cited limited access to capital finance as one of the hindrances to the promotion of local participation in AGOA, adding this puts them at a disadvantage against more moneyed foreign counterparts.
“LNDC has to ensure that local investors have access to capital so that they can procure quality production equipment as well as importing technical skills necessary to operate firms. I welcome efforts to provide factory space support to local investors as they are doing to foreign investors.”
He said the textile industry was a relatively cheaper to break into than other capital-intensive industries like construction, yet it was easier for local construction investors to get finance than textile investors.
“Specific interventions targeted to grow the capacity of locals to competitively participate in the manufacturing industry are essential in the development of a sustainable and locally-driven-sector.”