July 3, 2006

Textiles no longer hanging by a thread

Lesotho's single largest employer, the textile industry, has made a remarkable comeback, setting an example for the region and giving thousands back their jobs.
"All the factories that were closed have been reopened - the number of jobs that had shrunk from just over 50.000 to below 40.000 has now climbed back to around 47.000," Andy Salm, Regional Textile and Apparel Specialist at ComMark Trust, an NGO that monitors the industry in Southern Africa, said.

Lesotho’s industry had suffered from cheap Chinese exports to the key US market when the World Trade Organisation's 30-year old Multi-Fiber Agreement (MFA) expired in 2005. The MFA was established to protect smaller textile industries in developing countries by insulating them from Chinese competition. But the industry was now "significantly picking up and a lot more orders are now being placed in Lesotho again", Salm said. One of the reasons large retailers and brands have returned to Lesotho is that the "government has been working hard to become a destination of ethical choice, and this has started to pay off".
"We have seen a strong increase of demand from the US and more recently from Europe," said Bahlakoana Shaw Lebakae, deputy secretary-general of the Lesotho Clothing and Allied Workers Union.

According to Lebakae, Lesotho was also benefiting from the MFA forum, a network of companies, trade unions, NGOs and international institutions working to mitigate the negative impact of the MFA phase-out: "Lesotho and Bangladesh are part of an ethical trade agreement through an MFA forum pilot programme that aims to attract large brands and retailers to source in Lesotho." According to Salm, however, the industry's revival could not be attributed to a change in consumer consciousness alone, and noted when comparing Lesotho to other countries in the region that there were "a number of lessons learned", which others might want to consider.

One of the key factors was that "the cost of employment is much lower than in other countries, such as South Africa", he said, where the textile industry was in dire straits.
"Companies are showing increased interest in Lesotho because they appreciate the engagement of the government - the minister of trade and industry is very receptive to working with the industry and comes together with key players every two weeks to work out any issues that there might be. The government is very actively fighting to keep the industry and to grow it," he pointed out. Lesotho has also made concerted efforts to develop strong relationships with buyers and "clear bureaucratic red tape", a significant contribution to turning around the industry.

But Lebakae cautioned that with "100 percent of the textile industry foreign owned", mostly by Asian investors who were struggling to compete with mainland China, there was room for improvement. Lesotho had welcomed foreign textile industry investors when officials thought the African Growth and Opportunity act (AGOA), which granted duty-free access to the lucrative US market, would give the country a chance of establishing a sustainable a textile industry. "But they [foreign investors] all left," Lebakae said. However, Salm expected foreign investment to stay: "around 95 percent of Lesotho's textiles go to the US, and there is new interest in Lesotho as anticipation grows that AGOA [due to expire in 2007] will be extended." "It's early days, but it is clear that these influences have brought big brands to Lesotho, and the there is a lot of trickle-down: the freight industry, the transport industry and everything around the textile industry will benefit - 17 million US dollars is paid to textile workers a year," Salm said. (IRIN)

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