Despite the African Growth and Opportunity Act (AGOA) facilitating a business platform for textile factories employing an upward of between 40 000 and 50 000 Basotho, Minister of Trade and Industry Dr Thabiso Molapo says AGOA does not benefit Basotho.
Speaking at a road organised by the Lesotho National Development Corporation (LNDC) in Mafeteng on Monday, Molapo pointed to AGOA as one of the many agreements the government has signed for which do not benefit Basotho.
“AGOA was meant for Basotho but when you look at it, it does not benefit them. Some might claim that it is benefiting Basotho because it has facilitated employment for the 40 000 to 50 000 Lesotho citizens,” he said.
“But of the money amounting to US$500million and more available on the platform, Lesotho is said to benefit around only US$100million which is very low. And the remaining balance goes straight to China,” he said.
He indicated that, the situation needs to change so that Lesotho can benefit from AGOA. “The situation needs to be changed, the money has to come into the country so that the country can benefit. It is through you citizens of Lesotho we can change the situation. Factories are not only made for Chinese citizens, Basotho have to start owning them too. LNDC is there to assist people who want to own factories in the country,” he said.
Meanwhile, in an interview with Newsday, an independent business observer the Independent Observer Thabo Qhesi pointed out that AGOA is a trade preference that America made because they wanted to help African countries to increase their level of trade by ensuring that products from African countries do not pay tax.
“America provided more than 6000 line of products even though Lesotho exports less than 10 line of products to America. Even when the market is so huge,” he said.
Qhesi indicated that Lesotho does not only benefit via unpaid taxes to the American market but in many other ways.
“Let us take an example, let’s assume the textile industry sector has 45 000 Basotho employees in it, and take them at average where we say one earns M2 000. So M2000 by M45 000 equals to M90 million. So this means that into the market of Lesotho M90 million is circulating. Of the M90 million not only factory workers benefit but also, public transport operators, landlords, telecomms sector and the financial sector also benefit,” he said, adding AGOA has indirect spill-overs to other sectors.
According to Qhesi, for the country to benefit more from AGOA, there should be scaling-up of market standards.
“The government should avail the financial resources and other interventions to the sectors the country has potential in. The government also needs to capacitate BEDCO because it is the institution meant to help producers, by helping them to produce quality products so that they can end up meeting the requirements of the markets. So that Lesotho’s products can be exported into the global market without restrictions or questions over them,” he said. “Unfortunately covid-19 has affected the market. Orders for textile products have decreased while some of them were completely cancelled. That means the impacts of that will be seen when some factory workers lose work,” he said.