Agoa: the stitch that holds Lesotho

Agoa: the stitch that holds Lesotho

Shakeman Mugari

MASERU – IT happened so fast. Within a year she had dropped out of high school, got married and had her first child.

By the time Mammello was 18 two old women of the village were telling her to “push harder” as she writhed from the pain of delivering her second-born, who eventually arrived in the small hours of the morning.

She had given birth at home and it was ‘the’ boy her husband had always wanted. But when he let out his first cry the father was not there to hear it for he was somewhere under a mine a South Africa, having left home just as Mammello’s morning sickness was starting.

For three years he didn’t come home but kept his promise to send them money every month.

When he eventually came — in the fourth year– his mission was to bury his father.

He spent only a week.

Occasionally, he would write short letters that were delivered by fellow miners coming home.

Then both the money and the letters suddenly stopped.

Thus begun her battle to eke a living in the wretchedly poor village in Semonkong, some 60km of a bumpy drive from the capital.

“Some said he had a wife in the mines but I never got to know the truth,” Mammello recalls.

Food came from a small plot behind their rickety hut. Three chickens in the fowl run and two sheep are all she had to her name.

“Eventually, I got tired of waiting for him or his money while I lived miserably. Some said I should leave his home and get married but I was done with that.”

In January 2005 Mammello borrowed money from an uncle and took a bus to Maseru, leaving her children with her mother.

“They had told me there were jobs for uneducated people like me.”

Two weeks later she was hired as a packer at a textile factory that had just been recently established.

The pay cheque was small but life-changing for woman whose family was on the brink of starvation a month earlier.

Half of her wages went to her mother and her two children while the rest was spent on rent, food, a new blanket and a new dress.  Her mother-in-law got some for maize seed.

For the first time Mammello had money she could call her own.  “It was a relief,” Mammello says.

Across Lesotho there were thousands of women who shared her story: No longer were they mere housewives waiting for what the husbands brought home.

Shut away from other jobs because they had no qualifications thousands of Basotho women flocked into the flourishing textile industry.

How those jobs came about, few of those women know.

What they knew though is how those jobs pulled them from abject poverty and weaned them off their dependence of their men.

The jobs in the factories did not put them on an equal footing with men but it pulled them a bit closer. It gave them a freedom they never had.

If the contraceptive pill, arguably one of the most important inventions, gave women control over the reproductive decisions, then factories in Lesotho gave Basotho women an opportunity to earn a living and decide how to spend their money.

They could put food on the table, buy clothes and put their children through school. For most that was transformative enough especially those like Mammello who were coming from the rural areas where men still wield the strings of the family purses.

A few years back many of those who now hunkered over sewing machines who have been dragging hoes in maize fields across the country.

The emancipation had begun on April 23, 2001 when Lesotho qualified for the United States (US)’s African Growth Opportunities Act (Agoa), a law that allows the poorest countries in Africa to export some products to the United States market without paying duty, thus making them cheaper and competitive.

Agoa was meant to help African countries grow their industries and fight poverty. Nowhere was it needed more that Lesotho where around 60 percent love in the rural area and survive on tilling the land.

Classified as one of the poorest countries in the world, Lesotho was facing a double jeopardy: it was fighting poverty as HIV and Aids ravaged its people.

Agoa might not have turned that tide but, at least, it created the much needed income for thousands of Basotho, especially women.

Asian-owned factories came to Lesotho in droves, instantly changing what was a fringe industry into the biggest employer in the country. In the first three years the textile sector added 15 000 more jobs, two thirds of which went to women.

Twelve new factories had come into Lesotho in the first three months of 2002 alone and by the following year 2003 Lesotho was Africa’s biggest exporter of apparel to the US under Agoa.

Lesotho’s textile exports to the US grew at a breakneck speed, leaping from US$129.6 in 2001 to US$447.6 million in 2004 when the number of workers reached its peak of 52 000 in more than 60 companies.

A nation waits

Company closures, competition from factories in other countries and economic problems have since combined to bring the levels of employment to around 43 000, according to figures from the Ministry of Trade.

Yet what has not changed is that the textile industry remains the biggest private employer in Lesotho. Its impact on the lives of women has remains vitally important and its contribution to the economy unmatched.

That explains the anxiety that has gripped Lesotho about Agoa’s renewal for 2017.

A decision on Lesotho’s eligibility is due this month.

The renewal is due at a time when Lesotho has fallen foul of some of Agoa’s prerequisite conditions.  To remain in Agoa a beneficiary country has to respect rule of law, respect human rights, strive to foster peace and stability and adhere to fair labour rules. Lesotho has struggled with the first three over the past three years.

The political crisis that culminated in the death of an army commander mid last year now threatens Agoa’s renewal as international pressure mounts on Lesotho authorities to bring the alleged killers, who are soldiers, to justice.

The government’s dithering in acting on the SADC recommendations like the removal of Army Commander Lieutenant General Tlali Kamoli as well as the implementation of political, security and constitutional reforms had not helped matters.

Lieutenant General Kamoli, who is seen as the mastermind behind an attempted coup in August 2014 after he refused to be fired, is considered one of the biggest threats to the Agoa’s renewal.

The pleading

Trade Minister Joshua Setipa says the prospect of Lesotho without Agoa gives him “sleepless nights”.

For the past four months he has been shuttling across continents to lobby for Lesotho’s Agoa eligibility to be renewed. He has sent letters asking for support from influential people.

At 10 am on August 22 Setipa faced a sub-committee of the US Trade Representatives to make the case for Lesotho’s eligibility.

In a sombre testimony Setipa promised that the Lesotho government was implementing the SADC reforms and the process to replace Lieutenant General Kamoli was underway. He was repeating the same promises Prime Minister Pakalitha Mosisili had made to both the parliament and SADC leaders a few weeks earlier.

The questions he faced at that public hearing were a window of sorts into what the US government wants done before extending Lesotho’s eligibility. One panellist wanted to know how far Lesotho had gone on removing the army commander as recommended by SADC. Another asked which of the political, security and constitutional reforms can be made quickly.

And in what might have sounded like a subtle warning another asked if there had been efforts to diversify the textile sector so it doesn’t overly rely on Agoa.

Setipa said seven in every ten of the 32 000 jobs in Lesotho factories dependent on Agoa are held by women.

He noted that close to 45 percent of the women in the textile factories were, infected with HIV and if Agoa goes Lesotho’s battle against the pandemic would be set back half a decade.

“Five years back” is when only 25 percent of those infected where on life-prolonging medication and not much progress had been made in making people see the value of getting tested.

He explained that the implications of losing Agoa would be felt in the sub-region, especially in South Africa to which many Basotho will go to look for jobs.

That fear is hardly overdone given that Lesotho is completely surrounded by South Africa and the borders between the two countries are notoriously porous.

An economic crisis here would trigger an exodus into South Africa.

The bread and barter

Yet as scary as what Setipa said might be, it pales when you dig deeper into what is likely to be the impact of Lesotho losing Agoa.

Thus far the common trend among Lesotho’s policymakers, government functionaries and the opposition parties has been to literally brandish the number of jobs to be lost as the real catastrophe facing Lesotho if it loses Agoa.

But the number of jobs alone doesn’t tell the full story.

“If you do the numbers you will see that we will have a disaster, a complete disaster,” says Peete Molapo, who was recently hired by the government to conduct a research on how Lesotho can derive more benefits from the Agoa facility.

Molapo can be considered an expert on Agoa because he was once the chief executive of the Lesotho National Development Authority, a parastatal whose mandate has been to attract new investors into the textile industry and keep those who are already here from relocating.

What he produced after the research is “The Agoa Response Strategy for Lesotho”, a highly instructive report that makes a compelling read.

Molapo’s report was not talking about the aftermath of Agoa’s exit but the numbers it mentions are useful in illustrating the perils Lesotho faces without that preferential trade deal. He uses the assumption that each factory worker sustains a household of six people to show the importance of the jobs.

That means 43000 people in the factories support 258 000 people, nearly 14 percent of the population of 2.1 million.

“It is those people who will suffer if there is no Agoa,” he told thepost in an interview this week. The average wage in the factories is around M1400, meaning factories workers bring M722,4 million into the economy by way of wages every year.

A huge chuck of that amount goes towards food, which workers buy from huge retail shops like Shoprite, a South African behemoth, and the vendors like those who have small stalls on the streets.

In the villages are mom and pap grocer shops that will be history if Agoa ends.

Part of the wages go to landlords and taxi owners while another portion goes to clothing shops, salons, micro financial institutions and a host of other outlets from which factory owners buy goods and services.

“Remove those wages from the economy and you will have a catastrophe,” Molapo adds. “The impact of losing Agoa is too ghastly to contemplate. It will have a dynamic impact on the while country, from the man selling trinkets to the man selling houses.”

Retsilisetsoe Thamae, an economist from the National University of Lesotho, says without Agoa government revenue will take a huge knock, especially on value added tax.

He estimates that a household supported by a textile worker uses around 40 percent of the monthly income on food. “That means the government will lose just over M40 million in VAT revenue every year if those wages stop,” he says.

This is money government could use to support its poverty reduction programmes or improve national infrastructure.

Nearly 57 of Basotho live under the World Bank’s poverty datum line of US$1.25 per day and almost always need government’s and donors’ help.

“The consequences of having 40 000 more people without jobs are dire. Some of those people will turn to crime to survive. I think the chaos will be felt in the economic, social and political spheres of Lesotho. There could be political chaos because there is a relationship between social-economic stability and economic stability,” Thamae says.

About US$300 million (M4.2 billion0 of the US$771.4 million (M10.8 billion) Lesotho generated in exports last year came from Agoa-linked factories.

To appreciate the importance of foreign currency to Lesotho you have to understand that the country is a net importer. It relies on imports for its food, medication, machinery, agricultural inputs and other essential goods.

Without foreign currency Lesotho would not be able to get electricity, petrol and maize meal.

With a shrinking agriculture base, Lesotho now imports even tomatoes, cabbages and potatoes.

“If we lose that US$300 million we generate from textile exports the effect will be felt right down to the breakfast tables across the country,” Thamae explains.

In an opinion article in a local newspaper a few weeks ago Setipa painted a bleak picture for Lesotho without Agoa.

“The World Bank, in an AGOA scenario, anticipates a 2017 growth rate of 3.7 percent, and 4 percent in 2018.  Looking ahead, the IMF predicts that GDP growth could even be lower than estimates depending on the severity of the current drought. Withdrawing AGOA at this stage, and through 2017/18, would exacerbate the existing drought crisis,” he said.

“The unemployed would be unable to buy bare necessities such as food; and, due to prevailing climatic conditions, they may not be able to grow food to feed themselves.  It would be difficult for them to generate agricultural surpluses that could be sold to raise income to buy food and other basics.”

The manufacturing sector contributes around 12 percent to the Gross Domestic Product, the sum total of the country’s wealth.

Over 70 percent of that contribution from the manufacturing sectors comes from the textile industry.

“Without the textile factories there is no manufacturing industry to talk about in this country. We will not be known for making any thing. Remember we are known for making jeans only now,” says Molapo.

The story of Nien Hsing

Nestled in the middle of the Thetsane Industrial Area is the Nien Hsing Group, a Taiwanese textile company that owns four textile factories in Lesotho.

The four factories C&Y, Nien Hsing International Lesotho, Global Garments and Formosa employ a combined 11 000 people, just over a quarter of the total number of people in the textile industry.

What keeps the companies in Lesotho is Agoa.

C&Y, Nien Hsing International Lesotho and Global Garments buy 70 percent of Formosa’s total denim production.  The remaining 30 percent is exported to African countries.

Formosa is the biggest consumer of African cotton.

Using Molapo’s assumption that each employ sustains six people it means Nien Hsing alone provides a livelihood for 66 000 people.

Formosa was one of the companies to come to set up shop here when Lesotho joined Agoa, according to the former principal secretary of Trade Mohlomi Rantekoa.

Rantekoa was appointed principal secretary in 1998, a time when Lesotho was working to enter Agoa. He would remain in that position until he was appointed Ambassador to the US in 2008. He recalls how “tough” it was get the Nien Hsing Group invest in Lesotho and how every year, for the next ten years, he would “burn the midnight oil to keep them here by fighting to get Agoa renewed”.

“I felt apprehensive every time we went for the presentations on Agoa. We knew we carried the hopes and livelihoods of thousands of people,” Rantekoa recalls.

“And when it’s renewed you always knew there was always some country trying to steal your big investors like Nien Hsing”.

Now with Lesotho’s Agoa status hanging in balance no one can say with certainty that the company will remain.

The significance of Nien Hsing Group goes far beyond the wages and the livelihoods it supports.

Every morning taxis stream to the gates of its four factories to drop off workers. Those are the people who have been buying Mojakesane Bereng’s buns for the past ten years. From that informal business Bereng has managed to feed and send his three children to school. The oldest is now in university and it is money from the same buns that pays for his lodgings and food.

His fate and that of Nien Hsing are tide to Agoa, he says. “They close today and I start starving today,” he says.

The only difference is that Nien Hsing can simply ship off to other countries.

Nien Hsing Group’s contribution goes far beyond its gates.

Last year about 8 percent of the Lesotho Electricity Company (LEC)’s annual revenue came from the Nien Hsing Group.

In the same year Formosa alone paid M39 million in electricity bills, contributing 5 percent to LEC’s revenue.

Nien Hsing Group’s contribution to the Water and Sewerage Company (Wasco)’s revenue last year was even bigger, at 18 percent.

If the Nien Hsing Group leaves the power and water companies will certainly struggle.

The same could be said to banks in which the factory workers have accounts and micro finance companies whose business is to give short-term loans to the workers.

When the men came home

Rantekoa says when Agoa came in 2001 he and other technocrats in the trade ministry who had worked to bring it had not anticipated the magnitude of its impact on Lesotho.

“We thought we were just boosting employment and investment. We did not know it will become the mainstay of the economy,” he says.

One of Agoa’s immediate contributions was to minimise the impact of Basotho men losing jobs in South African mines.

As the textile factories were adding jobs the South African mines were haemorrhaging them.  In 1987 about 130 000 Basotho men were working in South African mines while Lesotho’s fledgling textile industry employed a miserly 10 000.

Yet by the end of 2002 the tables had turned: the mines were employing 55 000 while the factories had nearly 40 000 on their collective wage bill.

“That shifted the cultural dynamics because women were now breadwinners. Their husbands could not find jobs when they came home but their wives could easy get jobs in the factories. The factories emancipated women,” says Rantekoa.

The factories therefore provided a soft-landing for many families that would have otherwise been ruined when their breadwinners lost their jobs in the mines.

The mines have continued to retrench since them, sending more Basotho men back home to a country where unemployment is around 28 percent.

One winter night in 2010 Mammello, who was now a supervisor at the factory, was startled by a knock on the door.

Standing outside was Teboho, the husband she had not met in five years. He had just lost his job.

“He said he wanted a place to sleep for one night before he goes home to Thaba –Tseka but when morning came he didn’t leave. Our lives as a married couple had resumed. We brought our children from home and he started looking for a job.”

“He has never held a steady job since then. Sometimes he goes for months without working.”

And so Mammello remains the breadwinner, a role she embraces stoically. “What can I do? Cry? To who?”

Sweatshops again?

Agoa came with other benefits like better working conditions, improved safety regulations and better pay.

American buyers like Levis Strauss, Gap, The Children’s Place, Wal-Mart and Dress Barn and many others created a code of conduct for their suppliers.

“The result was that the working conditions became much better. Agoa changed the way things were done,” says Daniel Maraisane, a seasoned trade unionist and an officer at Unite, a trade union.

A trade unionist since 1981, Maraisane describes the conditions in the factories before Agoa as “appalling”.

Now the factories are forced to follow strict regulations to protect the rights and safety of employees, he says.

“Because of the stringent conditions from Agoa the ability of factories to supply to America companies is not linked to the way they treat their workers”.

Now some observers fret that if Agoa goes those standards it has established would be thrown out of the window as those factories that will remain push for profits.

But Maraisane thinks so much has been achieved in making the factories better places to work that it will be impossible to regress overnight.

“Agoa has changed things for the better. Those standards are now part of the culture in the factories,” he says.

Health

 For several years now officials from the Ministry of Health and aid organisations have been constant visitors to the textile factories. Their mission is to teach people about HIV and Aids, encourage them to test and enrol for early treatment.

This happens almost every month and for a good reason: factory workers are one of the most vulnerable groups. Nearly half of the women in the factories are infected with HIV.

The only places to reach them are the factories.

There they can be tested, counselled and their adherence to medication closely monitored.

“If the factories shut down these people will scatter across the country and it will be difficult to monitor them,” said a medical doctor who used to work for an organisation that deals with factories workers living with HIV.

“Beside those incomes they earn also help to feed relatives who are living with HIV or have been affected by Aids.

The government is already struggling to get those positive to start on life-prolonging medications and get those who have already started avoid defaulting.

Avert, a charity organisation, says there are 310 000 people living with HIV and Aids in Lesotho.

The factories also make it easy to spread the message to about the disease, get people tested and distributed free condoms.

The little they earn from the factories put food on the table and helps them maintain a healthy lifestyle, the doctor says.

This is crucial for a country that has the second highest HIV prevalence rates in the world.

Agoa is no panacea to Lesotho’s problems but it does make things a little easier. If renewed there will not be a sudden economic boom that will nudge the workers into middle class and absorbs the thousands of jobless people.

Agoa is like a tooth: the only time you feel it is when it’s aching or has been removed.

Take away Agoa and there might be a disaster; keep it here and it will be more of the same.

For the factory workers more of the same daily struggle of working for small wages is far much better than not having.

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