The poor performance of the apparel factories at Maputsoe in Leribe due to chronic water shortages has triggered renewed calls for Lesotho to reduce its over-dependence on the Chinese-controlled textile sector if it is to optimise its prospects of benefitting from the African Growth and Opportunity Act (AGOA).
AGOA is a piece of legislation that was approved by the U.S. Congress in May 2000. The purpose of this legislation is to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region.
The textile industry is dependent on water in virtually all steps of manufacturing. Dyes, specialty chemicals, and finishing chemicals used to produce clothing are all applied to fabrics in water baths. This means that huge amounts of water are used to dye, finish, and wash clothes. The textile industry uses millions of litres of water daily and approximately 500 gallons of water are used in the production of just one pair of jeans.
The protracted water shortages at Maputsoe which have become synonymous with the industrial town for many years now, is reported to be taking a toll on the financial sustainability of the factories which are sometimes forced to purchase water from neighbouring South Africa to maintain operations.
The situation is affecting a range of businesses, health centres, industrial firms and other service providing agencies in the town that serves a shared population of over 300 000 with Hlotse, the administrative capital of the Leribe district, as per the 2016 population and housing census.
Textile and Export Association’s secretary, ‘Malikhabiso Majara, indicated during the launch of the new AGOA Strategy last month that they have had meetings with Maputsoe investors about the impact of the shortage of water, where they confirmed that it does indeed affect production and, consequently, the factories are suffering financial losses.
“Due to the absence of running water in the factories at Maputsoe some factories have resorted to digging boreholes, an intervention that is proving to be costly, while those that do not have boreholes sometimes have to buy water from South Africa in order to keep their factories running. They sometimes rely on water delivered by the Water and Sewage Company (Wasco) tankers.
“Some investors have told us that sometimes when they request Wasco to deliver water, the water utility’s tankers never show up, leaving them with no option but to cross the border to buy water.
“The current drought that has hit the country has also led to underground water sources shrinking considerably, such that water is only abundant on the morning hours.”
During this publication’s visit to Maputsoe, tankers were seen delivering water to different places in the town. Some factory workers who spoke to us said the situation is so dire that they have to carry buckets of water from outside when they need to use the bathroom. This eats into production time.
The textiles and garments industry in Lesotho exports at least M1.6-billion worth of products to the United States, making it the country’s largest private-sector employer as the nation reaps big from AGOA.
The country is one of the African nations benefiting from the trade pact signed in 2000, allowing at least 6,000 products from 38 sub-Saharan African to enter the United States market duty free.
About 80 percent of the nation’s textiles and garment exports go to the US, according to the Lesotho Textile Exporters Association. The sector currently supports over 44,000 jobs.
According to a previous AGOA Response Strategy for Lesotho report, the economic performance of Lesotho before AGOA had been dominated by two sectors, namely, agriculture and manufacturing.
“However, agricultural performance has been characterised by large fluctuations and a declining value- added. The manufacturing sector on the other hand, has since the mid-1990s been growing quite strongly owing to the relocation of many Asian industrialists in the apparel sub-sector from South Africa to Lesotho.
“Export diversification has been and continues to be one of the main challenges faced by Lesotho. The main reason is the predominance of cut, make, and trim (CMT) types of investments in Lesotho’s apparel industry. Most of these firms work on sub-contract basis and simply take orders from their headquarters in the Far East or main suppliers whose policy is to supply entry level garments to the US mass market. This kind of manufacturing relationship thwarts innovative product upgrading.”
In the light of these observations, it goes without saying that the problem of water shortage is not doing Lesotho’s textile industry any good and something needs to be done urgently to arrest the problem, given the country’s over-reliance on the sector.
According to local economist, Robert Likhang, this over-dependence on the sector does not bode well for the country.
“We should seriously look into export diversification. There over 6 000 different products that Lesotho can export and benefit from AGOA. Lesotho needs to focus on other products and explore the possibility of not restricting itself to the United States alone. It is important to have a broader market line such as South Africa. For example, some of the Maputsoe factories export to South Africa, and people should take advantage of this alternative market and make full use of it.
“It is high time Basotho took charge and owned factories so that Lesotho does not have to overly depend on foreign investors. Lesotho should work towards making use of AGOA in the true sense, instead of leaving the opportunity to foreign investors like it is the case now.
“Due to Lesotho not having proper requirements and terms for foreign investors coming into the country, important details such as where they should bank their money are always overlooked, and these are some of the reasons why the country does not benefit fully from AGOA.”
These sentiments were echoed by National University of Lesotho master of economics students and coordinator of Phutha Lichaba Savings and Credit Cooperative, Tebello Tjapela, who called for laws compelling foreign investors to invest their profits in local banks.
He further attributed Lesotho’s inability to make full use of AGOA to lack of investment in the innovative ideas of Basotho. “Basotho youth are constantly coming up with different innovations which need investment so they can produce in large enough quantities to meet the AGOA quotas.”
Meanwhile, Wasco says it is in the process of installing boreholes around Maputsoe in a bid to augment water supply to factories.
Wasco’s director of operations and maintenance, Thejane Thejane, says plans are also in the pipeline to erect a package treatment plant in the next two years.