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.