Water For Justice

Does AGOA benefit Lesotho ?

The inception of the African Growth and Opportunity Act (AGOA) in Lesotho in 2001 has made a positive impact in the country's economic growth.
A report from the Ministry of Trade, Cooperatives and Marketing shows that the economy has responded positively to AGOA in attracting additional Foreign Direct Investment and this resulted in the creation of thousands of jobs and growth in the clothing manufacturing exports.
The contribution of the manufacturing industry to the country's economy has also resulted in employment and economic multipliers that include formal and informal sectors activities that feed into and out of the industry. These included road freight transport, security passenger transport, traders that sell food to workers, rented out accommodation, sale of water, electricity and communications.

Since the enactment of the Act, foreign direct investment from AGOA exporting companies have increased from M198.9 Million in 2000, to M1329 Million in 2008, and this was attributed to the establishment of new companies which increased from 23 in 2000 to 70 at present.
Recent statistics from Central Bank of Lesotho indicate that at the end of 2007, the Gross Domestic Product which measures the national income and output for the country's economic growth has increased at a lower rate of 5.2 percent while in 2006 was 7.2 percent. The report shows that other contributing sectors to the country's economy include the Mining and construction sectors. However, the AGOA challenges for Lesotho is on time bound initiative as it will come to an end in 2015, and this indicates that Lesotho made products will no longer have privilege to enter the United States market .
As a result, Lesotho would then be deprived of its competitive advantage in terms of market access which attracted significant investments into Lesotho since its certification.

In a way to overcome the problem, the country is in the process of developing a long term strategy for Textile clothing Industry.
The strategy is expected to come up with recommendations on appropriate incentive for the sector, and will also analyse, and evaluate the existing domestic policies. In 2001, the employment trend in the Industry sector ranged from 16, 417, and it reached its peak in July 2004 when over 53,000 workers were employed and up to March 2008, 45,650 people were employed. AGOA is a non- reciprocal trading arrangement providing duty and quota free access to the United States (US) market for African goods. The initiative was designed to promote growth and development in the Sub- Saharan countries.