‘America irked by Chinese dominance in LHWP’
Prior to the August 1 announcement of new 15 percent American (US) reciprocal tariffs, the Trump administration was punishing Lesotho with the burdensome 50 percent tariffs over the dominance of Chinese-owned firms in Lesotho Highlands Water Project (LHWP) contracts, as investigations by investigative journalist Pascalinah Kabi (PK) reveal that the decision to impose the punitive tariffs was triggered by its 2022 decision to award two of its largest water infrastructure contracts – worth a combined M17 billion (over $900 million) – to Chinese state-owned enterprises under Phase II of the LHWP.
One of the losing bidders for the tunnel construction contract was the Afcons–Murray & Roberts Joint Venture, which included the American firm Brierley Associates.
The winning bidder, Kopano ke Matla, is a consortium led by China’s Yellow River Company and Sinohydro Bureau, alongside South Africa’s Unik Civil Engineering. The contract involves the construction of a water transfer tunnel between Polihali Dam in Mokhotlong and Katse Dam in Thaba-Tseka.
In an exclusive interview, the Minister of Trade, Industry and Business Development, Mokhethi Shelile (MS), said Lesotho was ‘disappointed’ to learn that the US administration was unhappy with the dominance of Chinese firms in the LHWP.
As part of her Bertha Impact Fund project, Kabi sat down with Minister Shelile on July 23, to discuss the impact of the US-imposed tariffs and government’s efforts to close the gap. Below are excerpts from the interview:
PK: Thank you so much, Honourable Minister, for taking the time for this interview. Judging by the traction on social media platforms like Facebook, some members of the public believe you have done a commendable job in reviving the clothing industry since taking office. However, the US administration seems to have thrown the spanner in the works. How has the journey been since April 2025?
MS: The issue of tariffs has really slowed me down. We had momentum on our side because our strategy was twofold: reopen factories and focus on the regional market. Even before these tariffs came into effect, we were already facing challenges with the US market.
More and more buyers are shifting to sourcing from nearby countries with shorter delivery times – three to six months – while Lesotho requires longer lead times, often six months or more.
In response, we began diversifying into regional markets. As I have mentioned before, since June last year, we have officiated more than 11 factory expansions and reopenings. Out of all those, only one company is producing for the US market.
The rest are targeting South Africa or the broader regional market. That was always part of our strategy – and it still is. I believe we acted at the right time because the momentum is strong.
Just this weekend, I will be officiating the launch of another company that has already employed 700 people. They have been operating for about two months now. We want the public to know that there is progress. Products from these companies are going to South Africa as well.
After that, I will visit another new factory here in Maseru. They manufacture vehicle seat covers for niche markets – customised options for customers who want alternatives to standard car interiors. This investment came from Port Elizabeth and has already relocated to Maseru. It is operational, and it will likely be the next launch we announce publicly. There are several other companies in the pipeline.
But unfortunately, the tariff issue has disrupted the momentum. We were steadily recovering jobs, and now we are struggling just to maintain current employment levels. We were busy recovering jobs and now we are fighting to keep the numbers the same. It is not an easy job now. It was quite easy when we started.
PK: What are some of the key challenges you are facing as you try to navigate this new reality – particularly in ensuring that the 12 900 workers, some of whom have already lost their jobs, are retained within the system? And how are you working to address those challenges?
MS: We are not just looking at the South African market as we do our expansions. Now we have started discussions with Nigerian buyers, which is now the Africa CFT area. We believe that we will get a good market in that part of the world. Initially when this thing of the tariffs started, I met with the European Union delegation here, asking for support.
And long and behold, yesterday I got a nice letter telling me that they are ready to engage, which is going to be an engagement between the EU and our producers here. The engagement is with the view to now introduce producers to the buyers in Europe, I am happy with that as well, it’s taking root traction.
We have also an EU-sponsored project that is being managed by GIZ. On the 21st, we are opening what they call Skills Development Centre. We are launching that on the 21st of next month with potential employment of more than 280 people.
The lines that are going to be there are going to be given to projects of small textiles, Basotho textiles. One of my dreams is when I leave this office, when this government goes somewhere, particularly when I leave this office, to have started to transform the ownership in a meaningful way of the textile industry into the hands of Basotho.
So there will be maybe four or five companies each having a line and we are going to launch them on the 21st of this month.
It will be followed on the same day with a fashion show where we will ask them to display their products on the catwalk at Maseru Avani. And we will also be calling on these large factories that may want to display their things in the catwalk as well. Because we are going to be calling the big buyers from South Africa – Mr Price, PEP, TFG which has Markhams, The Fix and so on.
They will be invited to take part and to come and watch what Basotho can produce. It is my hope that they will be interested in some of the things that we are doing. I am saying this because last week I was in Cape Town and ten of our Basotho producers who were there, they came back with very good support and good pledges to work with major brands now.
I always hesitate to say this, but there will be an announcement of a major brand that is going to work with our local producers. They are not here. The lumber jackets. These are thermal lumber jackets, you switch a button here, you get warm. This is an electric blanket type of thing. It is a product of our initiatives at the CAFI.
He graduated last year, this gentleman. He is from Hlotse and he is operating there at Hlotse. So, it is very encouraging, that taught me that our people are now at a level in terms of conceptualising clothing, they can put, produce very decent things. I watched three fashion shows where Lesotho products were displayed and everybody was excited about what we put forward.
So, I am expecting them to come, especially because they also want to transition from getting products from abroad, notably China, to sourcing them locally, the South Africans.
So, we are manoeuvring these things and the challenges, they are always there for challenges as well. We are a country that is always going to be landlocked. Securing raw materials will always mean we have to go elsewhere to get the cloth that we have to cut.
Invariably, it means somewhere in China or maybe somewhere in Bangladesh, which will still add a layer of delays in terms of how quickly can we respond to even the market next door. They are coming back to us because they want it to be short. But securing the raw material is still something that is very difficult for me to understand how we are going to deal with it.
It sounds like we have to have a solution. Maybe have somebody get raw material and put it here, but the problem is also when you get the order, you don’t know whether they are going to ask for this or that. But you can also influence that yourself.
If you do the catwalk of your own material, they will have to order that. So, you know, I have that material already, so the catwalk is going to be the fashion show. It’s going to give us more leverage in terms of what it is that we choose to provide to them.
It’s a new layer of industry, this one. We have a lot of kids that are attending school, doing fashion design. Fashion, things that we wear today on the streets, they are designed by those people that do fashion a year before, maybe two years before. They decided we are going to do these colours for this season and all that.
That is what we are going to be doing, like the Italians are doing. They are good at that, and that is why 60 percent of the cost are, it is not on the stitching, it’s on the intellectual right.
PK: My understanding is that you or your ministry participated in the AGOA discussions last month. How did those talks go? Are we likely to see a renewal by September?
MS: I did not go personally, but the Deputy Prime Minister (Justice Nthomeng Majara) attended what is called the Corporate Council on Africa event that was in Luanda, Angola. I must explain that this is a private initiative.
The Corporate Council for Africa is an institution that is a lobbying group that has been there since the beginning of AGOA to lobby for AGOA for the African nations. It’s owned by an African-American that is the one who is at the helm of it since then.
I did not attend, as I have said, but what happened is that officials from the United States Trade Representative, which is the Minister of Trade, I think I saw six of them that were scheduled to attend, and one major one whose name is Connie Hamilton, you can Google her up. She is the one that has been working directly with us with the issues of the tariffs and of course, AGOA.
She will continue to be there to assist should we need to, or if there is an appetite for a renewal of AGOA, the main legislation. As it is now, there is no AGOA because Mr Trump, in January, he declared a state of economic emergency and then came with the tariffs.
AGOA has zero tariffs, again for Lesotho we are still officially under 50 percent dispensation. What it means is that he has really put aside or suspended AGOA.
But we are hopeful that in September we will get an announcement from the US administration on the future of AGOA.
But rest assured that those that understand the dynamics of geopolitics within the US administration have done their work and we will be looking forward to a positive announcement around September, either on the tariffs as a country or the AGOA issue, what is the future.
But I know that people are really drafting a bill to extend it. An emergency that has been proclaimed by the President in January cannot last indefinitely.
PK: Yes, it certainly can’t. Has the US administration provided any formal communication regarding Lesotho’s current standing? I recall that during your last press conference with Minister Lejone Mpotjoane, you mentioned that you were still trying to secure appointments and initiate direct conversations. Has there been any progress on that front?
MS: I will give you a blow by blow. One, there was a tariff. Then secondly, we scrambled to get meetings. And then I went to Pretoria to meet with them. There was an official that came through from the USTR, we had the meeting. After that, we submitted our initial proposal.
They looked at it and then came back to us saying, look, we are going to get into deep discussions. Let’s sign a non-disclosure agreement (NDA) on the contents of what we will be discussing. Then that was signed.
Then they came back to us with what they called a counter or additional information on the tariffs. We responded to that. And then after which there was a meeting online. That was done, which I attended and Coney Hamilton was giving information on what is going to happen next.
And what happened next was that there was another request for submission of additional information, which came to me. I did that.
We are at a stage where, given our discussions in Angola and during the meeting online, we are at a stage where we believe they are not looking for a face-to-face meeting. They just want to give us a communiqué that says the tariff is going to be here.
But I think for our own benefit, they are doing it for sub-Saharan Africa, they are not going to do Lesotho tariffs.
So we are expecting a good tariff of 10 percent, which will be absolutely fine for us. We will compete simply because in countries like Kenya and eSwatini, are at 10 percent and we have to be there, at that level for our buyers not to ditch us and go to another buyer to another country.
PK: Why was it important for the American administration to put in the NDA in place, was it explained?
MS: I don’t know, because as a Minister of Trade, I have not seen anything that pertains to the usual extrapolations that we had. There was a conference, I don’t know if you were there, I don’t know, at the Ministry of Foreign Affairs some time back, about some leaked information, which had things like third country prisoners, military this and that. No, there was none of that.
My meeting in Pretoria with the official from USTR, we were clear to each other and to him, we are trade officials, we will work on official trade issues. If there is anything else that comes from somewhere else, it’s not our baby.
All the communication that has been submitted from my office is about non-tariff barriers, tariffs barriers themselves, in which areas we have collaboration with the US in terms of businesses. And there was nothing like, we need your army to go and do what and what.
We are going to be bringing in some people from our presence to your country because we don’t like them here. No, none of that is there.
PK: Were you shocked when you saw that there is none of those that people were afraid that…?
MS: No, I wasn’t shocked because from the day we started talking with USTR, we were clear that our issues are reciprocal tariffs. It’s not what else it is that can be done to appease the US administration beyond trade.
PK: I would really like to understand, what is the offer of the government of Lesotho to the US administration in terms of reciprocal tariffs? What are you offering?
MS: It becomes difficult when you have signed an NDA that you are not going to give out the information. But I need to assure you that we have followed the blueprint of the questions they asked.
On agriculture, tariffs on grains and all that. What are the tariffs? And we simply went to the tariff book that we already have. This is what we have. And it’s low, it’s around two percent or something. It’s what we call a favoured nation status tariff under the SACU regime.
So we have not really given them anything other than what is already happening within SACI. Yes, and it is working.
PK: Was the government shocked when it received communication that the US was unhappy with how the Chinese are benefiting from the Polihali project as compared to the American businesses?
MS: Yes, it is outside of my scope but yes, we were quite disappointed that it was seen in that light. Because the project, as you know, is a project between two countries – the Republic of South Africa and the Kingdom of Lesotho.
These two countries are raising money, more especially South Africa is the one that is raising money and the procurement of consultants, contractors and so on, is done on an international basis. Companies that are willing to submit their tenders, whatever they are called, RFPs, I am not sure, come across the globe and they compete on a number of aspects.
One of them is, can you really do the job? Can you do the job in the time frame that we need and can you do it at a good price? And at the end of the day, Lo and behold! To much of our surprise, and maybe some discomfort from some of us, only Chinese companies took the major jobs.
And who do we blame for that? It’s not a proper approach by those that are concerned to complain about a fair process that was followed by the LHWP, if it’s them or the Highlands Commission to select a contractor on a competitive bidding basis. It was one of those things that I really did not understand why it had to be.
I am disappointed personally that we cannot agree that the process that was transparent had to be that way. There were no favours done for the Chinese contractors. And the good thing about it is that I was at Polihali during the launch of the tunnel boring machine. That thing that goes underneath the ground to the tunnel is huge. It’s a huge machine.
And I asked the question, what is this machine’s origin? They said, no, it was made in China. Oh, OK. But the technology, everything, the design was done in the US.
So you see that international value change that the US is having employment of that, same project. We buy a TBM, it comes to Lesotho, it is made in China, but developed in the US. So there is still money going to the US from the very same project. I wonder how many other pieces of equipment, yellow plant and other things that are there.
PK: I appreciated the example you gave when my colleagues were here – about US-made cars being present in South Africa, yet that presence not reflecting in Lesotho’s import figures from the US?
MS: We have bought a lot from them.
PK: Do you or does the current Lesotho administration feel that Lesotho is being caught between the geopolitical tensions between the US and China?
MS: I think so. There are clearly tensions between the two large economies. The US is number one, China is number two and it’s catching up to the US quite quickly. And ordinarily, I think it is normal for those that are at the top, when they can see the inevitable coming, that they will find ways to stay at the top.
And we are a non-aligned country. We have been maintaining that stance for the longest time. Ever since I was a small boy at school, I knew that the Lesotho is part of the non-aligned movement. We are still that. We will maintain that. And our votes in the UN, when we do them for or against the US, it’s simply because we are what we are.
And we will vote in terms of the merits of the vote that we have to do at any point in time. We have voted with the West when it comes to the issues of Ukraine before. And then there was a last vote a few months back, where we did not vote at all because on this issue, for the first time, Europe was this side, America was that side.
And it goes like these are our friends, what do we do now? Okay, let’s stand it out, let them fight over it themselves.
They do come to lobby for this and that. We are available to be persuaded to vote for certain things. But where we will not go, is where we are expected in our decision to hurt or prejudice any other partner, whether it is the UK or the US or China. In fact, the Chinese embassy, they came to my office, saying “We appreciate that you are talking to the US.
We support that very much, but please understand China is doing it this way. But as you continue with your discussions, we will appreciate it very much that you do not do anything that is going to prejudice us as China.” Which is a fair request.
PK: But it makes us to be caught now between a rock and a hard place.
MS: Yeah, but I think it is a fair request ‘m’e Kabi from them. Go and do your talking, but don’t come back here or agree with them when they say we should be levied more tariffs or something like that. And that is the decision that SACU took as well.
We as SACU members, we now found ourselves having to go and negotiate individually, not as a SACU. Guys, go ahead, but don’t do anything that is going to be messing us up, okay? Then we agreed on that.
PK: When you look at the statistics on the LHDA website regarding companies that applied for contracts under the Polihali construction or Phase II, you will notice that only one American company submitted a bid – and it was unsuccessful. So I am wondering, why is the Polihali issue being raised as a concern when there appears to be little appetite from the US side to participate?
MS: I didn’t even know that. I was just saying this thing was transparent and I didn’t know there was just one company or two or what. But even if there was 20, this is my take, even if there was 20 and there were two Chinese, the issue that you select a company to do a job is on those aspects that I have mentioned.
Are they technically proficient to do the job? Is the pricing the one that you can live with as a financier of that project? Those two are the key.
And if you have an American company that cannot demonstrate both of them to your satisfaction, I think technically they could pass, but financially maybe that’s where the things were not very good. Not that the cheaper Chinese contractors are good, not necessarily. They have to pass this technical thing first.
When you evaluate, you look for technical ability first. Even before you can open the financial proposal. It will determine whether you open that one, you look and then you say, this they know what they are doing. Okay, let’s look how much they are charging for this thing that they know. Okay, it’s fine. It looks good.
PK: Where to from here in terms of appeasing both because Lesotho is a beneficiary of both the Chinese and the American administrations in terms of donations and loans?
MS: I think I want to assure you that we have learned our lesson and this is the message that I am echoing…a message from the Right Honourable the Prime Minister. He said to us, ladies and gentlemen, I am not quoting him verbatim but he said – You can see that we have to be self-sufficient in everything.
We have to now work to liberate ourselves from donations of any kind, from any corner because we are here at this point because we allowed ourselves to be given things. When we have our own country, when we have our own land, let’s just work and wean ourselves from this.
So that is the general direction that this government is going to be taking. We want to be equal partners in everything that we decide that is done globally and regionally. The issue of pursuing support like donations and other things like that, we in this government have been given a clear direction that we have to be on our own.
PK: And I believe that Basotho will be happy to hear that given how they have been complaining…?
MS: Yes, and we are capable, ‘m’e Kabi we are capable. I don’t know how we ended up being what we are now. I sometimes tell people, look guys, are you aware that this country sometime back, not very far back, it could donate things to the United Kingdom? Not small things, you know the story of the Spitfire? That was a donation from a nation that at the time had 400 000 people. We gave them about 20 planes. And some of them were piloted by people from here.
They still have a squadron now in the Royal Air Force, Basotho squad even up to now. And we took at that time 20 000 people to go and fight in the theatre in Europe. Remember I said we were 400 000, not even half a million. We are 2 million now, we just took 126 to Mozambique.
Probably that was the biggest engagement that this country has ever had in foreign theatre and if you take contribution of the Lesotho in the Second World War, in terms of men, and in terms of what we spent, and then bring it to per capita, I can assure you we will be at the top there with America and everybody else.
Nobody has done that but I think we should be there. There is no way 400 000 people could buy 24 Spitfires and send 20 000 of their men and women. You consider that a small contribution. It is very big. Extremely big. We used to be that, so we can be that.
PK: Echoing the Prime Minister’s message about national liberation, how do we move from rhetoric to reality? Is there a clear, step-by-step blueprint that outlines how we are going to achieve this vision of true liberation?
MS: There is no proper document that I would say now this is the blueprint with which we are going to get there. But the blueprint exists. When we say we are going to reignite agriculture, invest in that, that is the right place to start. Even for me as the Minister of Trade, vis-à-vis the Minister of Agriculture, I agree with that approach. You have an industry that is anchored on your ability to produce food.
Then you have the ability to process the food. Then you have the ability to support agriculture with mechanisation, irrigation systems, these applications that they do, microchips and so on. Now you gradually add the same thing to white-collar jobs, its blue-collar then it becomes white-collar jobs. We have a manufacturing base that is anchored here. I am going to make an example.
We are expecting an investor from China who is going to invest in poultry here. The first site visit is coming this month, 21st next month, it is August.
They are going to slaughter 10 million chickens a month and employ 1 000 people in the factory. This is a fully decorated outfit with parent stock to make the layer, to lay the eggs and then take the fertilised eggs into the incubator. And then the chickens, the chicks come out.
Then we take the chicks to a pharmacy, give them food. And for that, they will give the service of growing the chickens and giving them water and everything.
When they are done, we take them back to the factory, kill them so that they get paid. And that very same act, there will be 10 000 jobs created on that. It is a total of 11 000 jobs.
Here is the fact. You are going to have to now get food made, get agriculture, some flour oil, some this and that and that. Lesotho Flour Mills, if them or any other, things are going to get even much, much, much busier.
And there are quite a lot of spin-offs even with that. It’s just not the food. I found out while I was in Osaka last time that you can make fibre out of the membrane of chicken eggs from the shells. There is a membrane in there, that membrane, take it out. Then mix it in some liquid and then start to turn it into a fibre. And I will show you the video. And then you will make clothing out of that.
PK: So you really can make it?
MS: Yes, my point is agriculture. You can do this and do this and do that. Let’s just say we do a big dairy farming thing here. You get cheese, you get this and that and that and do that.
PK: What is your message to the ordinary Mosotho who has lost hope – especially with American funding withdrawn and punitive tariffs in place? In the face of all this, you continue to preach a message of hope. What would you say to those who feel there’s nothing left to believe in?
MS: I am not sure which angle I should be tackling this one, given that I think I have been saying the very same thing that you are saying I should say. We have a prime minister that is from a small village in Mantšonyane – one of those poorest villages, my first time passing Mantšonyane, it wasn’t anything to talk about. And he has built himself to an extent where he competes with the best in the continent in terms of him being a business person.
That is my message, we have that person now in the leadership of this country. And he is actually doing exactly that. This is why he is saying let’s stop.
Let’s build ourselves, our capacity to get to a better level. Look, he did not become rich overnight. He always says that. You do this small and small and small and small, but at the end of the day you are going to see huge results. We are starting a very basic foundation on how a proper economy should be anchored through agriculture and the rest will follow. We will, through agriculture, have maybe our own processing plant for materials that we make clothes with.
We have had an experimentation already growing cotton here. We were successful. Two years, one dry, one wet. The dry time we got better yield even than that, so we can grow cotton. I am trying to show you that when we talk about agriculture, there are possibilities, we can take this country to a level of independence.
PK: There are possibilities?
MS: Yes, that is why the Prime Minister is saying let’s be truly independent, economic independence is the key.
PK: My last question. You mentioned that the meeting took place, but local media reported you saying otherwise. You were quoted in the local media saying the meeting did not happen. I just want that clarification?
MS: I know that clarification. The meeting took place. It is not good that I said the meeting did not take place. I said that, but it was for a good reason to protect the officials that attended the meeting from the US side. We were required to do that. I think we would not be where we are now had we not taken them into confidence that we would protect them.
