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Living on borrowed time



MASERU  – IT is lunch-hour in Thetsane Industrial Area and thousands of factory workers have trooped out for a bite and breather.
Here, there is no scrumptious meal but the odd morsels that a meagre minimum wage can buy.

Fat cakes, buns, popcorn and packed lunches are the staple in these streets. For others, it is board games and gossip that keep hunger at bay.
There are nearly 20 000 factory workers in the Thetsane Industrial Area and most of them have the African Growth and Opportunity Act (AGOA), to thank for their jobs. For nearly 20 years AGOA has allowed poor sub-Saharan countries like Lesotho to export apparels to the United States duty-free.

That has given Lesotho a leg up to what is otherwise a dog-eat-dog global textile market dominated by bigger economies like China, Bangladesh, Vietnam and Cambodia. It is that concession that has kept 46 000 Basotho, mostly women, sweating it out on the factory for what looks like miserable wages but is hugely important income to them.

The wages might be below the United Nations’ poverty datum of US$2 a day but they help them keep their heads above water. Without those jobs many will face starvation, as will their dependents. But the trouble is that AGOA was never meant to be a permanent economic arrangement.

Passed in 2000, the Act was originally supposed to last until 2008 but amendments in 2004 extended it to 2015. The extension should have been a boon for Lesotho but it has turned out to be a curse of sorts.
Instead of diversifying its economy Lesotho has become more reliant on the AGOA factories for jobs.

Textiles remain the biggest private sector employer, even as growth in the sector has stalled and factories are shutting down.
The sector has lost nearly 10 000 jobs since 2003 and there are no signs that the trend will change.

Its anything, the uncertainties surrounding AGOA‘s renewal could mean that the sector will continue to shed jobs. There has been no new factory in the sector in the past two years.

Instead, some factories have either shipped out or shutdown altogether.
Yet despite these ominous signs that we are living on borrowed time Lesotho has remained beholden to AGOA. Little wonder there was much squirming and apprehension when AGOA was due for renewal in 2015.
Lesotho and other countries told the US congress that their economies will be doomed without AGOA.

The congress extended it to 2025, giving Lesotho a temporary relief.
But it was clear that AGOA was not going to be there forever.
Even as Lesotho and other countries pleaded for what many industry insiders thought was the last renewal, their textile factories were already squirming.
Orders had dried up as American buyers waited for the renewal. They moved their orders to other countries and some never returned.

That should have served as ample warning to Lesotho that it has to look for new markets outside AGOA or diversify its economy but that doesn’t seem to have happened. Lesotho doesn’t seem to be in a hurry to prepare for the post-AGOA era.

The model of the textile sector has remained largely unchanged for the past three decades. Taiwanese companies have maintained their grip on the sector by hogging access to the AGOA market.

There has been little local participation in the ownership of the textile firms.
The value chain has remained narrow, with companies focusing on basic garments that have low markets and are more susceptible to minor swings in the market. Such garments are the cheapest and easiest to make but also come with the dirtiest jobs.

The average amount a Lesotho factory is paid for a basic garment has remained largely unchanged in the past ten years, even as production costs have continued to gallop.

Inflation has been gobbling their margins. Each year has brought a new round of wage increases that factory owners say they cannot afford.
Trapped in the basic garment market, most factories are unable to graduate into the niche market where the margins are better.
In the meantime the chances of AGOA’s renewal in 2025 are vanishing as the US seeks more “reciprocal” deals with African countries.

Janet Hienzen, a Deputy Assistant of US Trade Representatives, was clear about that policy shift at Cape Town manufacturing conference in June.
“As of now, AGOA is not a permanent answer and it was never meant to be a permanent answer. So what we’re looking for permanent reciprocal trade partnerships,” Hienzen said.
Such words should have shaken the Lesotho government from its slumber but they didn’t.

Instead, it appears to be business as usual. But time is running out for Lesotho to look for other ways to at least conserve those AGOA-based jobs. In five years Lesotho’s textiles should have found new markets or at least found new products to sell to the US. Under AGOA Lesotho can export more than 6000 products to the US but is currently only exporting textiles.

To understand the calamity that will befall Lesotho’s textile industry if AGOA ends you have to look at the numbers. According to 2017 figures there are 65 firms in the textile, clothing and footwear industry.

Of those factories 29 rely on AGOA to sell their products to the United States while 33 have their markets in South Africa. Only three have local customers.
It might look like the sector is gravitating towards the South African market but a deeper look at the numbers reveals a sector that remains dangerously anchored by AGOA. The 29 factories under AGOA have nearly 30 000 jobs compared to the 17 000 in those that sell to South Africa. Those that rely on the local market have a measly 100 jobs.
A look at the main subsectors tells an equally worrying story of a sector that has put its proverbial eggs in one basket.

The denim sector is controlled by three factories owned by Nien Hsing, a Taiwanese owned company, which accounts for nearly 17 million of the 23.3 million of Lesotho’s annual export of jeans to the US.

That means six of the nine factories making denim garments for the South African market have a combined annual production of just over six million pieces.

The story is the same with the employment numbers in the demin factories, with the three AGOA-oriented Nien Hsing firms employing providing 9 500 of the 13 000 jobs. The Nien Hsing factories supply American buyers like Levis Strauss and VF Corporations, which owns the Lee and Wrangler denim brands. Some of their products go to The Children’s Place and Gap Inc, all US retailers.

Factories that rely on AGOA also dominate knit garment manufacturing, with 18600 of 24 500 jobs shared among 21 of the 33 firms in the subsector. That leaves 6200 for the 12 factories that export to South Africa. That bias is also reflected in the annual production figures, with United States importing about 94 million of the 115 million pieces Lesotho produced in 2017. South Africa bought 21 million.

In other words Lesotho has allowed the sector that employs the largest number of people in the private sector to rely heavily on a trade deal that has an expiry date and whose renewal is not guaranteed.
Without AGOA 62 percent of the textile jobs will be history and nearly half of the firms will close.

Maseru alone will lose 25 500 jobs while Maputsoe will shed about 3500, to bring the total carnage to 29 000 jobs. Apart from emptying hundreds of thousands into the streets and shoving them into abject poverty, the demise of the AGOA factories will have ruinous effects on sectors like retail, banking, microfinance and transport.

Nearly every sector will feel the pinch.
Even before the AGOA expires there are signs that Lesotho’s textiles sector is losing its competitive advantage. Asian countries are using their economic muscle to doll out incentives to factory owners. A combination of tax holidays and other sweeteners have made them cheaper destinations for textiles companies.

That they make their own fabric, are closer to ports, have kept the lid on wages and their factories have superior efficiency levels has only strengthened their hand in the battle for investors. The net result is that their textiles are cheaper.

Desperate for better margins in a congested sector, America’s fashion giants and brands are increasingly turning to Asian countries.
Even African countries benefiting from AGOA have upped their game as well. South Africa, Kenya, Mauritius, Kenya and Ethiopia are dangling fat carrots to factory owners and are slowly plucking textile factories from Lesotho.
And it’s not that tough for Lesotho’s factories to move. Since they don’t own the factories they simply pack their sewing machines into containers and hit the road, leaving workers high and dry.

Most of them are controlled from Taiwan and Lesotho is just the ‘factory’.
The finances and orders are controlled from Taiwan where the head offices directly receive the payments for products made in Lesotho. What they have in Lesotho are transactional bank accounts to pay wages and other small running costs.

These arrangements make it easy for factories to move countries without much risk. Some textile companies, like the CGM Group, have long been alive to the dangers of over relying on AGOA.

CGM Group which employs 4000 people at its two factories in Thetsane Industrial area started moving out of the US market in 2012. Today the company doesn’t make a single pair of jeans under AGOA.
Instead, it is focusing on the South African and regional markets.
It customers include the Edcon Group, EXACT, Dona Claire, Milady’s and FIX.

“The answer to AGOA lies in the local and regional markets,” said Madhav Dalvi, the company’s chief executive. It is Dalvi who drove the strategy to wean the company off the AGOA market. Yet he remains worried “about the catastrophe that is likely to happen if AGOA is not renewed”.

Lesotho, Dalvi says, “is sitting on a time bomb”.
He says what has kept AGOA factories in Lesotho is the weak Rand that makes wages cheaper in United States Dollar terms and helps factories make more in Rands.

“If our currency appreciates to around R12 against the US dollar then there will be trouble because our wages will become expensive and AGOA factories will not have reason to remain here,” Dalvi says.
He explains that when the currency appreciates Lesotho’s factories will instantly feel the impact of the 37 percent minimum wage increase that the government pushed through last year. “Our only advantage so far is the wages whose impact is determined by the currency.”

Chaba Mokuku, the project manager of the government’s Economic Diversification Support Project, says Lesotho should be in a rush to reform its business environment to attract new investors and help those already here.
For more than ten years the project has been working on reforms to remove obstacles to business. The main goal is to make it easier to start, operate, sustain and even dissolve a business in Lesotho.

The idea, Mokuku says, is to remove barriers that hinder business.
He calls the reforms “soft interventions that immediately transform the way Lesotho is perceived by both local and foreign investors as an investment destination”.

“It is pointless to go on a drive to attract investors when there are regulations and policies that frustrate the same investors when they come here,” he says.
Mokuku believes that the regulatory reforms are a crucial step towards diversifying its economy.

“We should get rid of the myth that investors need Lesotho. Lesotho should remove obstacles to investment if it wants to grow and diversify its economy,” he says. “The idea is not to diversify way from textiles but open new markets, build business linkages, empower local entrepreneurs and build a strong business ecosystem.”

He however says all these changes will not amount to much unless Lesotho invests in its people by giving them the right skills that prepare them for the coming economic transformation. Lerata Pekane, the principal secretary of the Ministry of Small Business, believes that Lesotho is already steadily diversifying its economy. Although his ministry’s initiatives are not informed by AGOA they might just be what Lesotho urgently needs to prepare for the post-AGOA era.

Pekane says the starting point for Lesotho is to make products for local consumption. “The focus is to grow small and medium companies so that we make things for the local market before they look at the international market. There is a huge market for local products here. We must start by feeding ourselves,” Pekane says.

He is encouraged by the inroads some local companies have made into the South African and regional market.
“We have to strengthen the linkages between small and big companies.”

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Lawyer in trouble



A local lawyer, Advocate Molefi Makase, is in soup after he flew into a rage, insulting his wife and smashing her phone at a police station.

It was not possible to establish why Adv Makase was so mad at his wife. He is now expected to appear before the Tšifa-li-Mali Magistrate’s Court on Tuesday.

Earlier on Tuesday, he was released from custody on free bail on condition that he attends remands.

Magistrate Mpotla Koaesa granted Advocate Makase bail after his lawyer, Advocate Kefuoe Machaile, pleaded that he had to appear for his clients in the Court of Appeal.

Advocate Makase is facing two charges of breaching peace and malicious damage to property.

According to the charge sheet, on October 5, 2023, within the precincts of the Leribe Police Station, Advocate Makase allegedly used obscene, threatening, or insulting language or behaviour, or acted with an intent to incite a breach of the peace.

The prosecution alleges that the lawyer shouted at his wife, ’Mamahao Makase, and damaged her Huawei Y5P cell phone “with an intention to cause harm” right at police station.

During his initial appearance before Magistrate Koaesa, Advocate Makase expressed remorse for his actions and sought the court’s leniency, pleading for bail due to an impending appearance in the Court of Appeal.

His lawyer, Advocate Machaile, informed the court that an arrangement had been made with the police to secure his release the following day, as he had spent a night in detention.

Advocate Machaile recounted his efforts to persuade the police to release him on the day of his arrest.

He noted that the police had assured them of his release the following day, which indeed came to fruition.

Following his release, he was instructed to present himself before the court, which he dutifully complied with.

Advocate Machaile underscored Advocate Makase’s standing as a recognised legal practitioner in the court.

Notably, he was scheduled to appear in the Court of Appeal but had to reschedule his commitment later in the day to accommodate his court appearance.

Advocate Machaile asserted that Advocate Makase presented no flight risk, as he resides in Hlotse with his family and has no motive to evade his legal obligations.

He respectfully petitioned the court for his release on bail, emphasising that he had demonstrated his ability to adhere to the court’s conditions.

The Crown Counsel, Advocate Taelo Sello, expressed no objection to the bail application, acknowledging that the accused had a forthcoming matter in the Court of Appeal.

Consequently, the court granted Advocate Makase bail without any financial conditions, with the stipulation that he must not tamper with state witnesses and must fully participate in the trial process until its conclusion.

’Malimpho Majoro

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Trio in court for killing ‘witches’



THREE elderly women were all stabbed to death with a spear during a deadly night after they were accused of being witches.

Three suspects, all from Ha-Kholoko village in Roma, appeared in the High Court this week facing a charge of murder.
They are Jakobo Mofolo, Oele Poto, and Pakiso Lehoko.

They accused the elderly women of bewitching one of Poto’s relative who had died.

The stunning details of the murder was unravelled in court this week, thanks to Tlhaba Bochabela, 32, who is the crown witness.

Bochabela told High Court judge, Justice ’Mabatšoeneng Hlaele, last week that he had been invited to become part of the murder group but chickened out at the last minute.

Bochabela said in March 2020, he was invited by Rethabile Poto to come to his house in the evening.

He said when he went there, he found Mofolo, Poto, and Lehoko already at the house. There were two other men who he did not identify.

“I was told that the very same night we were going to do some task, we were going to kill some people,” Bochabela told Justice Hlaele.

He said he asked which people were going to be killed and was told that they were ’Malekhooa Maeka, ’Mathlokomelo Poto, ’Mampolokeng Masasa.

They said the three women had successfully bewitched Rethabile Poto’s uncle leading to his death.

Bochabela said after he was told of this plot, he agreed to implement it but requested that he be allowed to go to his house to fetch his weapon.

He said Lehoko was however suspicious that he was withdrawing from the plot and mockingly said “let this woman go and sleep, we can see that he is afraid and is running away”.

Bochabela said the only person he told the truth to, that he was indeed going to his home to sleep instead of going to murder the three elderly women was Mofolo who also told him that he was leaving too.

He said he told Mofolo that he felt uncomfortable with the murder plan.

Bochabela said he left and when he arrived at his place he told his wife all about the meeting and the plot to kill the women.

He said his wife commended him for his decision to pull out.

“I told my wife to lock the door and not respond to anyone that would come knocking looking for me,” Bochabela said.

He said later in the night, Rethabile Poto arrived at his place and called him out but they did not respond until he left.

Bochabela said in the morning they discovered that indeed the men had carried out their mission.

The village chief of Ha-Kholoko, Chief Thabang Lehoko, told Justice Hlaele that it was between 11 pm and 12 midnight when he received a phone call from one Pakiso Maseka who is a neighbour to one of the murdered women.

Chief Lehoko said Maseka told him to rush to ’Mampolokeng Masasa’s place to see what evil had been done to her.

“I rushed to Masasa’s place and on arrival I found Pakiso in the company of Moitheri Masasa,” Chief Lehoko said.

He said he found the old lady on the bed, naked with her legs spread wide.

“I was embarrassed by the sight of the old lady in that state, naked and covered in blood,” the chief said.

He said he went out and asked Maseka what had happened but Maseka referred him to Moitheri Masasa.

Chief Lehoko said Masasa told him that there were people with spears who had threatened to kill him if he came out of the house.

He said Maseka said he knew that Masasa’s neighbour, ’Malekhooa Maeka, was a light sleeper and she could have heard something.

The chief then sent one Patrick Lehoko to Maeka’s house to check if she had heard anything but Patrick came back saying Maeka was not at her house.

“I immediately stood up and went to ’Malekhooa’s place,” Chief Lehoko said.

He said when he arrived, he knocked at her door but there was no response so he kicked the door open, went in and called out ’Malekhooa Maeka by name.

Chief Lehoko said he then lit his phone and saw her lying in bed covered in blankets.

He said he then went closer to her and shook her but she was heavy.

Chief Lehoko said he tried to shake her again one last time while still calling her out but he touched blood.

He said he immediately left and went back to tell others that Maeka seemed to be dead too.

“I decided to go and buy airtime from the nearest shop which I had passed through near ’Matlhokomelo Poto’s home.”

He said on his way he met one Sebata Poto who asked him who he was.

Chief Lehoko said he only replied by telling him that the two women, Masasa and Maeka, had been murdered.

He said Sebata Poto told him that “’Matlhokomelo has been stabbed with a spear too”.

Chief Lehoko said he rushed to ’Matlhokomelo Poto’s house where he found her seated in the middle of the house supported by her children with blood oozing from her chest, gasping for air.

“I stepped out and went to get airtime, but I found her dead when I returned from the shop,” the chief said.

The case continues.

Tholoana Lesenya

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Opposition fights back



THE opposition is launching a nasty fightback after Prime Minister Sam Matekane defanged their no-confidence motion by roping in new partners to firm up his government.

Matekane’s surprise deal with the Basotho Action Party (BAP) has trimmed the opposition’s support in parliament and thrown their motion into doubt.

But the opposition has now filed another motion that seeks to get Matekane and his MPs disqualified from parliament on account that they were elected when they had business interests with the government.

The motion is based on section 59 of the constitution which disqualifies a person from being sworn-in as an MP if they have “any such interest in any such government contract as may be so prescribed”.

Section 59 (6) describes a government contract as “any contract made with the Government of Lesotho or with a department of that Government or with an officer of that Government contracting as such”.

Prime Minister Matekane’s Matekane Group of Companies (MGC) has a history of winning road construction tenders. Other Revolution for Prosperity (RFP) MPs, most of whom were in business, had had business dealings with the government.

It is however not clear if the MPs were still doing business with the government at the time of their swearing-in.
Matekane’s MGC Park is housing the Independent Electoral Commission (IEC), which is a government institution established by the constitution, getting its funds from the consolidated funds.

The motion was brought by the Popular Front for Democracy (PFD) leader Lekhetho Rakuoane who is a key figure in the opposition’s bid to topple Matekane.

The motion appears to be a long shot but should be taken in the context of a political game that has become nasty.
Advocate Rakuoane said the IEC’s tenancy at the MGC is one of their targets.

“The IEC is one of the government departments,” Rakuoane said.

“It is currently unethical that it has hired the prime minister’s building.”

“But after the motion, he will have to cut ties with the IEC or he will be kicked out of parliament.”

The Democratic Congress (DC) leader, Mathibeli Mokhothu, said although the IEC is an independent body, it can still be regarded as part of the government because it gets its funding from the consolidated fund.

The Basotho Covenant Movement (BCM)’s Reverend Tšepo Lipholo, who seconded the motion, said the Matekane-led government “is dominated by tenderpreneurs who have been doing business with the government since a long time ago”.

“Now they have joined politics, they must not do business with the government,” Lipholo said.

He said some of the MPs in the ruling parties are still doing business with the government despite their promises before the election to stop doing that.

“Those who will not abide by the law should be disqualified as MPs,” Lipholo said.

“Basotho’s small businesses are collapsing day-by-day, yet people who are in power continue to take tenders for themselves.”

He applauded the Abia constituency MP Thuso Makhalanyane, who was recently expelled from Matekane’s RFP for rebellion because he withdrew his car from government engagement after he was sworn in as an MP.

“He set a good example by withdrawing his vehicle where it was hired by the government,” Lipholo said.

Rakuoane said during the past 30 years after Lesotho’s return to democratic rule, section 59 of the constitution has not been attended to even when it was clear that some MPs had business dealings with the government.

“This section stops you from entering parliament when doing business with the government. Those who are already members will have to leave,” he said.

Rakuoane said they are waiting for Speaker Tlohang Sekhamane to sign the motion so that the parliament business committee can set a date for its debate.

“The law will also serve to assist ordinary Basotho businesses as they will not compete with the executive,” he said.

“There are many Basotho businesses in business these MPs are in. They must get those tenders instead.”

The new motion comes barely a week after a court application aimed at disqualifying Mokhothu.

The government-sponsored application sought the Constitutional Court to declare Mokhothu unfit to be prime minister because he was convicted of fraud in 2007.

Mokhothu has been suggested as Matekane’s replacement should the motion of no confidence pass in parliament.

Nkheli Liphoto

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