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The gloves are off



MASERU – THE government’s decision to push the factory workers’ minimum wage to M2 000 a month was against advice and warnings that it will trigger a catastrophe in the sector.
thepost can reveal that the government flatly rejected concerns from the Lesotho National Development Corporation (LNDC) and textile companies to stagger the increases over years to avoid saddling companies with unsustainable costs.

In the end, the controversial decision seems to have been motivated by a desperate need to placate factory workers who are a key constituency of the coalition government.
The violent demonstrations that left a trail of damage at the factories in Maseru and Maputsoe could have triggered a kneejerk reaction from a government keen to be seen to be living up to its electoral promises.

Now as the unions and workers celebrate what they see as a major victory, factory companies are squirming at the eye-watering costs, with some already warning that they might be on the way out of Lesotho.
Nein Hshing Group, the biggest textile company in Lesotho by jobs, is reported to have put its expansion plans on ice.
Sources in the industry say the company will no longer open its new factory in September as scheduled unless there is a significant change on the minimum wage.
Nein Hsing’s factory was going to create 1 600 jobs.

In the meantime the other factories are desperately trying to block the new wages that the government says should be backdated to April 1.
This week the Lesotho Textile Exporters Association (LTEA) pushed back with an interim court order to block the government from issuing the gazette to announce the new minimum wage.
That means that the government will not gazette the new wages until the case is finalised.
The association is challenging the cabinet’s authority to set the minimum wage, arguing that it is the Minister of Labour who is supposed to make the decision based on recommendations from the Wages Advisory Board.

The unions say they have been proposing the M2 000 figure since 2010 but the employers have always pressured the Wages Advisory Board and the Ministry of Labour to reject it.
Although it is the International Labour Organisation (ILO) that suggested the M2020 as the living wage, it would seem that it is the campaign promise by Prime Minister Thomas Thabane that could have emboldened the unions to aggressively push for it this time.

The wage negotiations started earlier this year with the unions demanding a M2000 minimum wage plus a 15 percent increase across the board.
The Wages Advisory Board rejected both proposals after employers argued that they will be too steep.
Following protracted negotiations, the board recommended a seven percent increase that the labour minister accepted and gazetted.
The unions however rejected the increase and pressured the minister to reconsider. After another round of negotiations the employers acceded to a 9 percent increase which the board approved and the minister gazetted again.

The unions however still insisted on M2 000 as the starting point before any review. And last month the workers handed Thabane a petition, saying they will not take anything below the M2000.
Thabane then set up a committee of ministers to advise the cabinet on the issue.
The committee was made up of the Minister of Trade Tefo Mapesela, Minister of Small Businesses Chalane Phori and Minister of Gender Mahali Phamotse.

It is that sub-committee that made the M2 000 recommendation to the cabinet despite grave concerns from the LNDC and the textile companies.
thepost has documents showing that the LNDC strongly advised against the proposed minimum wage.

The LNDC is responsible for courting investors to Lesotho. Its major success thus far has been in the textile industry to which it has brought investors from Taiwan.
It has pitched Lesotho as an investor-friendly destination with low wages, benign laws as well as cheap rentals, water and electricity.
In the submission to the subcommittee the LNDC warned that Lesotho is already losing its competitive edge to countries like Ethiopia and Kenya that have incentives for textile companies.
The gradual loss of competiveness over the years, the LNDC said, “reinforces the need to re-look into our basket of incentives and structural transformation of the economy.”
The corporation said increasing the minimum wage at once would hurt the sector that is already struggling to stay afloat.
It proposed that the wages be increased by 9.3 percent over the three years.

That meant that a general worker’s salary would increase from M1 372 to M1 500 this year before moving to M1 639 in 2019. The idea was that the general workers would earn M1 790 by 2020.
The LNDC noted that Lesotho’s textile companies do not have much room to wiggle in negotiations with the buyers because they are in the ‘Cut, Make and Trim’ business where prices determine who gets the order.
It said because of stiff competition from other countries Lesotho’s exports to the United States under Agoa have been dropping.
Part of the reason, the corporation reasoned, is that the local sector is not diversified enough to produce value-added textile products that would fetch better prices on the international market.
Despite its limitations and overreliance on the United States market the textile industry remains the mainstay of the economy, providing 92 percent of jobs in Lesotho’s manufacturing sector.
The crux of the LNDC’s submission was for the sub-committee to be cautious when deciding the minimum wage.
While the corporation was advising restraint the textile companies were pleading with the sub-committee to consider other less painful ways to reach the M2 000 mark.
In several meetings, the LTEA told the ministers that a minimum wage of M2 000 will force the companies to either retrench or close shop altogether and empty a significant chunk of the 40 000 factory workers onto the streets.

LTEA officials say they told the ministers that companies were not hostile to the proposed minimum wage but were concerned that implementing it at once would affect their viability which is already subdued because of low orders and shrinking margins.
“It didn’t look like they were prepared to listen. They just said you have to find a way to make it happen,” said an LTEA official who said he did not want to be named because “the ministers might come after me”.

“The numbers were very clear that M2 000 would not work but the ministers said we should find a way.
We even proposed that they should give us until 2020 to get to M2000 but they said we should do it now.”
He said during the negotiations the LTEA asked the ministers for some incentives to cushion them against the “shock wage increase”.
“The ministers said we could get subsidies on water, electricity and rentals. But in the next meeting the bosses of Wasco, LEC and LNDC said they were not able to give us any subsidy.”
“Instead water and electricity tariffs have increased. Lesotho is the only country that doesn’t have incentives for textile companies. Kenya, South Africa and Ethiopia have incentives that make the textile business better.”

He however said despite the impending gazette and the court case the LTEA remains in negotiations with the subcommittee because the “consequences are dire”.
“Putting the minimum wage at M2 000 means that we increasing the wage bill by about M30 million. There is no way we are going to get that amount especially under the current economic conditions. Companies will leave this country and thousands will lose their jobs.”

“We are saying give us time to increase the wages because we cannot do it at one go. It’s too heavy for us,” he said.
Minister Phori said the government is not hostile to negotiations but demands that the companies disclose their profits before they start pleading poverty.
Phori said there is evidence that some textile factories are not complying with local financial and tax regulations. (See the Phori story on Page 6).
Former finance minister Dr Timothy Thahane said the government should remember that Lesotho is not an island.

“We cannot run away from the fact that the textile industry is a low-wage sector. What determines who gets the orders is the price. The prices are a function of the costs of doing business and the incentives that might be provided by government,” Thahane said.
“If our garments are more expensive than other countries buyers will move. The question is whether we are in a position to lose some companies to those countries. I doubt that we can afford any job losses especially in this economy.”

He said while he understands that people have to earn decent wages he doesn’t believe it should be at the expense of the survival of the very companies that create jobs.
“The danger here is that the next sector might want the same rate of increase. We could open an open season for more wage demands that might hurt companies and the whole economy.”

Staff reporter

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Mahao, PS in big fight



PRIME Minister Sam Matekane this week summoned the Basotho Action Party (BAP) executive committee in a bid to defuse simmering tensions within the party.
This comes amid fears that Professor Nqosa Mahao’s fallout with his principal secretary at the Ministry of Energy, Tankiso Phapano, could threaten the unity in the BAP and the government’s stability.

thepost can reveal that Mahao has hinted that he would resign if Matekane doesn’t fire or reassign Phapano.

But there are strong indications that Mahao doesn’t enjoy the backing of his executive committee and MPs in his fight with Phapano.

Inside sources this week told thepost that some members of the BAP’s executive committee and MPs are openly siding with Phapano and have been secretly lobbying Matekane to reshuffle Mahao from the Ministry of Energy to Sports.

A source said Mahao is aware of these manoeuvres, including a clandestine meeting in Maputsoe, and has said he would rather resign than be the subject of a humiliating reshuffle instigated by people he leads.

The source of the bad blood between Mahao and Phapano is not clear but it is understood that they have disagreed over tenders and the ministry’s direction.

The source said Matekane was first briefed of the running battles at the ministry some three weeks ago just as matters were coming to a head.

It is the second briefing which revealed a complete breakdown in the relationship that triggered Matekane’s meeting with the BAP’s executive committee and MPs on Monday.

Three people who were in that meeting said Matekane told the BAP officials to deal with the crisis before it affected the ministry and threatened the coalition government’s stability.

The BAP’s executive committee, including MPs and Mahao, then had a marathon meeting to discuss ways to make peace between Mahao and Phapano.

A source who was in that meeting said “it was clear to Mahao that the majority of the committee and the MPs were on Phapano’s side”.

“Mahao quickly realised that he did not have the backing of the majority and took a conciliatory approach. It was clear that the committee would rather have him resign than get Phapano removed from the ministry,” the source said.

“In the past Mahao had flatly refused to reconcile with Phapano because of seniority. But this time he appeared to be open to a meeting to discuss reconciliation.”

Both Mahao and Phapano told thepost last night that their relationship was still cordial. ‘“We are still in good books with Phapano until further notice,” Mahao said.

“However, we cannot predict the future.”

Mahao denied ever discussing Phapano’s dismissal or transfer with Matekane.

Phapano also insisted that he was working well with Mahao.

“We are still on good terms,” Phapano said, adding that the allegation that they were fighting was “baseless”.

The fallout between Mahao and Phapano has been quick and spectacular.

The two had been almost inseparable months before Mahao agreed to join the coalition government.

Phapano would use his car to drive Mahao around. They would attend party meetings together. Some party insiders saw Phapano as Mahao’s right-hand man and adviser.

Mahao allegedly strongly pushed for Phapano to be appointed as his principal secretary when he became energy minister.

But sources said Mahao started having second thoughts days after recommending Phapano and tried to get his appointment reversed but it was too late.

A source says within weeks Mahao was telling cabinet colleagues that Phapano had captured the ministry and he was unable to function as the minister.

“He started pushing to oust Phapano within days because they were already clashing. It’s been war from the first days,” said the source.

Staff Reporter

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How chicken import ban hit vendors



MALESHOANE Pakela used to work at small backyard chicken farms where she was paid with chicken heads, necks, legs, and offals that she would roast and sell to factory workers at the Thetsane Industrial Area.

Her job was to clean and pack chicken.
The profit wasn’t much but just enough for the 37-year-old widow to feed and keep her four children in school.

“It also covered her monthly rental of M150 for a room in Ha-Tsolo Sekoting.

Her life was however shattered last October when the government imposed a ban on chicken imports from South Africa following an outbreak of bird flu.
Without day-old chicks the farms quickly shut down, cutting Pakela’s supply of heads, necks, legs, and offals.
Within a few days, her family was starving.

Pakela had been struggling even for months before the ban. The closure of the factories and retrenchments of thousands of workers has severely hit her sales. She was behind on her rent and could barely feed her children.

The partial lifting of the chicken ban has not helped Pakela because her former employers still cannot import day-old chicks or live birds.
Pakela and a family were kicked out of their rented room in November when their arrears were about M1 000.
She has found another room nearby.

A ‘Good Samaritan’ has allowed her to use a room for free until she can afford the rent. But Pakela says she still feels obliged to pay something because she understands that things are hard for everyone.

“Here the rent is still M150 but the landlord accepts every amount that I give her,” Pakela says.
There are days when her children go to bed hungry.

“I have told them (children) that if I have nothing they should accept (the status).”

She now survives on handouts from neighbours and other well-wishers. Pakela’s poverty is apparent.

Barefoot and holding her small child in a seshoeshoe dress, Pakela says her two children usually go to school without eating.
The other child has dropped out of school because she doesn’t have shoes.

’Mako Lepolesa, 44, who has been running a chesanyama (meat grill) at the Maseru West Industrial Estate since 2018. The father of three says his clients are mainly taxi drivers and factory workers.

Chicken was her main product until last October when the ban was imposed. It wasn’t long before his business started wobbling.

“I thought it would be just a short-lived problem (chicken import ban) but it passed on this year,” he says, adding that it might take months for his business to recover.
Moshe Ramashamole, 42, who also owns a chesanyama in the Maseru West Industrial Estate, tried to remain in business by sourcing chicken from local farmers.

It was a stopgap measure that however lasted a few weeks because the farmers also ran out of stock. He resorted to bad chicken but they were double the price of a full chicken before the ban.
Yet Ramashamole thought he could make it work by increasing the price of his plate from M35 to M55. The customers however resisted the new price and Ramashamole had to take the losses.

The poultry ban did not affect street vendors like Pakela alone.
Former Minister of Communications, Khotso Letsatsi, is one of those poultry farmers struggling following the chicken ban.

He ventured into poultry in January last year. It was an audacious venture that included a M100 000 investment in a shelter and other equipment.
He started with a batch of 300 chicks and had reached 1 000 by the time the ban was imposed.

“The business was lucrative,” Letsatsi says.

“I had to employ two people permanently to assist me on a full-time basis,” he says.

When it was time to slaughter the chickens, Letsatsi says he had to employ seven casual labourers.
Since the ban was imposed he had released all his workers.

“I do not know where they are now. Maybe they are starving,” he says of the workers he released.

Letsatsi doesn’t know how he will revive his business.
The Director of Marketing in the Ministry of Agriculture and Food Security (MAFS), Lekhooe Makhate, says the ban has been devastating to farmers and businesses.

“Some big businesses are going to declare less tax to the government because there was no business,” Makhate says.

He says Lesotho spends M2.1 billion on the importation of chicken and its products from South Africa every year.
But that amount usually soars to M4 billion depending on the market forces of demand and supply.

Makhate says the M2.1 billion goes to South Africa where the chicken and its products are imported.

At the height of the scarcity of chickens in the country, Makhate says people were supposed to make initiatives to travel to villages to search for chickens.

“There is not enough production of chickens in the country,” he says.
“Economically speaking we rely on South Africa. We have to be self-reliant.”

Majara Molupe

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Letseng fends off threat to sue



LETŠENG Diamond says it is under no obligation to advertise jobs for Basotho to provide certain services “where it has the capacity to undertake the same services”.
Letšeng Diamond boss, Motooane Thinyane, was responding to a threat to sue by a little-known political party called Yearn for Economic Sustainability (YES).

Matekane’s company, the Matekane Mining Investment Company (MMIC), had been providing blasting, haulage and drilling services at Letšeng mine since 2005.
The deal with the MMIC was terminated in December last year with the mining company saying it was improper because Matekane had now become a politician.

Letšeng Diamonds announced that it had reached an agreement with the MMIC to acquire its mining equipment at the mine and offered employment to its current employees in line with operational requirements.

“This will enable Letšeng to continue with its mining activities,” the company said in its statement.

This infuriated opposition parties that argued that the mine should have called interested Basotho companies to bid for the contract, saying it is provided for in the Minerals Act of 2005.

The leader of Yearn for Economic Sustainability (YES), Molefi Ntšonyana, wrote the mine last week threatening to sue for allegedly failing to follow section 11 of the Act.
Ntšonyana argued that the Act “does not grant the Letšeng Diamond 100 percent to mine with its good own equipment” but it should engage Basotho companies like it did with the MMIC.

Ntšonyana said Letšeng Diamond and the MMIC made the agreement to acquire the MMIC equipment so that the mine could continue with its mining activities “without any advertisement to seek qualified Basotho to provide such services”.

Ntšonyana said the agreement unilaterally denied Basotho a chance to tender for such services and ignored the fact that the government of Lesotho on behalf of Basotho own 30 percent in the Letšeng Diamond.

“It is advisable to reconsider your decision,” Ntšonyana said, adding that they would also write to the mining board requesting the resolution they made regarding this matter of insourcing mining activities.

He said the company should adhere to section 11 of the Mines and Minerals Act of 2005 and within 14 working days the matter should be reconsidered, “failing which we will have no choice but to drag the company to the courts of law”.

In his response, Thinyane said Ntšonyana must “revisit the section in question in full for its correct interpretation”.

“Letšeng Diamond is under no obligation to advertise to seek qualified Basotho to provide services where it is willing and has the capacity to undertake the same services,” Thinyane said.

He said the decision relating to the agreement referred to has been through the necessary governance structures and is therefore procedural.
Thinyane said Letšeng is a corporate citizen that is fully compliant with the laws of Lesotho.

Majara Molupe

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