The role of Lesotho's textile industry in promoting local economic local economic development: the Thetsane industrial area
Hlabana, Malitaba Magdalene
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This case study explores the role that the textile industry plays in the economic development of Lesotho. The study focuses on the Thetsane textile industry in the south of Maseru. In particular, it explores the contribution of this industry to job creation and poverty reduction. As the industrial garment industry of Lesotho represents the only economic activity showing significant and consistent growth in terms of employment, foreign direct investment and exports, it is already making an important contribution to poverty reduction. There are, however, a number of significant challenges to the industry that if successfully addressed could unleash the existing potential for further growth in the sector and make it an even greater contributor to economic growth, poverty reduction and job creation. For Lesotho to take full advantage of African Growth and Opportunity Act (AGOA), it needs to develop and service industrial land and enhance its water supply to industry as a matter of urgency. From a competitive point of view Lesotho has much to offer at the moment. The peaceful conduct of the recent elections with the resultant aura of political stability is a key foundation for economic growth and foreign investment. The regulatory environment is manageable, wages are low and there is an adequate labor supply. The challenge lies in the future, with trends towards the lowering of global tariff barriers and the expiry of the Multi Fibre Agreement in 2005, which will remove quota restrictions on garment imports to the USA. Lesotho could effectively market itself as a destination of choice for garment purchasers and new investors. It is also of critical importance that the wider community within Lesotho understands the contribution that the garment industry is making towards poverty reduction and job opportunities.