- Lesotho: Growth of textile & apparel sector
- Manufacturing Industry
Lesotho’s economy depends heavily on export-oriented apparel industry for export revenue and employment. Lesotho has been able to attract investors in the sector partly by providing, in certain cases, ready-made factory shells and serviced industrial sites.
Apparel Industry: Growth of textile & apparel sector
The Apparel Industry & garment sector, which has grown rapidly under foreign investment, has been the big success in boosting Lesotho’s industrial base in recent years.
The rapid growth of the Apparel Industry has been made possible largely as a result of the preferential trade arrangement with the United States under the African Growth and Opportunity Act (AGOA) initiative for which Lesotho became eligible in 2000.
AGOA hascreated preferential terms of trade on a range of products manufactured in Africa for the U.S
market. Through this, over 40,000 jobs have been created in the private sector.
Somehouseholds have been able to find work, mostly for younger female members, in the new Apparel Industry. Indeed, the contribution of Apparel Industry and clothing sub-sector to employment is by far, higher than that of the public service – showing the significant contribution the sub-sector can make to growth and tax revenue.
Textiles and clothing sub-sector accounts for over 60 percent of the manufacturing base, and about 50 percent of post–MFA investment has gone to the manufacturing sector.
Apparel Industry: Manufacturing
The manufacturing sector in Lesotho has grown rapidly. Today it employs over 60,000 workers, most of whom are women in the Apparel Industry. Manufacturing sector now accounts for the bulk of industrial output in Lesotho, at 20.6 percent of GDP in 2002/3 and 14 percent in 2009/10, with Apparel Industry (T&C) being the dominant sub-sector.
Apparel is the third contributor to Lesotho’s GDP (with 7.7% share of GDP) after agriculture (7.9%) and
the construction sector (9.6%). T&C remains the backbone of Lesotho’s manufacturing and export sector, accounting for about 60 percent of its total exports in 2016 and has continued its rapid expansion.
Other manufacturing industries include leather, food and beverages, consume electronics, clay-based brick and ceramic tiles, television assembly, and edible oils.
The bulk of the Investors are from South Africa, UK, US, Australia and the EU, but in recent years increasing number of investors are coming from Asian countries, notably, China and India.
Although reliable data on investment in Lesotho is hard to come by, some estimates (by UNCTAD for example), suggest that since 1991, the inflows into Lesotho, in U.S. dollar terms, have been rising rapidly, albeit with significant year-on-year fluctuations; recent investment being mostly in export-oriented manufacturing.
As of March 2014, there were 74 companies operating in the Apparel Industry in Lesotho, majority of which were owned by investors from South Africa (45%),
The Asian companies have succeeded to positioning themselves well in the textile-appreal value chain to take advantage of U.S. market.
Asian companies are increasing their footprint in the whole cotton & Apparel Industry value chain, in cotton acquisition and production. Increasing number of Asian traders are arriving in Lesotho and neighbouring countries where they engage directly in the plantation, purchase, and manufacturers.
Lesotho’s economy relies mainly on apparel industry, which account for 60 percent of total exports.