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Dark cloud on horizon if govt fails to address U.S. concerns

U.S. ambassador to Lesotho Rebecca Gonzales

Nov. 17, 2020 3 min read

3 min read

LOCAL trade unions have piled pressure on government to address issues of human trafficking, police brutality and other human rights violations or risk losing out on the African Growth and Opportunity Act (AGOA) and the second compact of the Millennium Challenge Corporation (MCC).

The United States has given Lesotho an ultimatum to have addressed these issues by the end of February next year.

If not addressed, the country could lose on both AGOA and MCC, resulting in the loss of 45 000 jobs and the ultimate collapse of the textile industry.

AGOA is the USA cornerstone trade initiative with sub-Saharan Africa and strong symbol of U.S partnership with the region. Since 2001, Lesotho’s apparel industry has harnessed AGOA benefits successfully and strategically and accounts for more than one-fifth of all AGOA apparel exports to the USA.

With AGOA’s support, the apparel industry generates about a third of Lesotho’s gross domestic product.

Through the project, Lesotho exports textiles products, apparel, footwear, handicrafts, organic products and leather accessories to the U.S.

The Act offers duty-free access to the USA for over 1 800 product lines, in addition to the over 5 000 products eligible under the Generalized System of Preferences (GSP).

To avoid the disastrous situation, local trade unions have urged government to address the U.S concerns as soon as possible.

“If we fail, it would mean the end of the textile industry in Lesotho. It means 45 000 jobs would be on the line.

“So we have to do everything in our power to push government to address these issues as soon as possible,” National Clothing Textile and Allied Workers Union (NACTWU) General Secretary Sam Mokhele said during a media briefing on Monday.

In 2019, the Ministry of Trade and Industry reported that Lesotho was experiencing a sharp decline in exports to the United States market under AGOA as investment in the sector is moving to other economies in the Sub-Saran Africa.

Political instability, lack of security and a recent hike in salaries and wages in the sector are some of the challenges affecting Lesotho’s position internationally, hence a continuous decline in US exports.

The apparel and textile industry in Lesotho occupies close to 95 per cent of total exports to the US under AGOA.

Furthermore, the country could also lose on the second compact of the Millennium Challenge Corporation (MCC).

Created by the U.S Congress in January 2004, the MCC is a U.S government agency that provides five-year grants and assistance to selected countries that meet rigorous standards for good governance, from fighting corruption and respecting democratic rights to investing in health and education.

MCC’s mission is to reduce global poverty through economic growth.

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In its first compact with Lesotho, completed in 2013, MCC invested $362.5 million to increase economic growth and reduce poverty by improving water supply, increasing access to essential health services and removing barriers to private sector investment.

The compact resulted in over 140 rehabilitated clinics and outpatient departments, 2 300 household water connections and the construction of the Metolong Water Treatment Plant as well as the independent or joint land tittles for over 17 000 women.

The U.S ambassador to Lesotho Rebecca Gonzales said in 2019 that the second compact will work towards those same goals through improved planning and delivery of public goods and services to enable private sector investment.

She emphasised back then that it was vital to understand that there was still a long way to go before the compact between the two countries could be signed.





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