MASERU – Local economists have urged the government to change its approach of depending on mining and textile firms and focus commercial agriculture instead. In the work of temporary closure of some mines, as well as the closure of some textile factories due to the COVID-19 pendemic fallout, the experts suggest turning to commercial farming could unlock a “new gold mine”. A large part of the economy hinges on mines and textile industries that export clothes to mostly the United States of America and South Africa through the African Growth Opportunity Act (AGOA) enacted in 2000 and SACU respectively.
The textile and apparel industries in Lesotho employs about 45 000 workers who could lose their jobs if embattled sector closes.
Prime Minister Dr Moeketsi Majoro announced on national television the possible closure of EDCON Holdings Ltd which he said would be damaging to Lesotho’s economy as the US market is also expected to suffer due to COVID-19.
EDCON is a leading retail company based in South Africa which manufactures clothes and foot wear, among others. The closure of industries was also confirmed by Minister of Employment and Labour Keketso Rants’o who noted that some factories have informed her that they will be closing because they have suffered under the COVID-19 control measures. The closure would mean loss of jobs by factory workers, she said, adding the shutdown of some factories would also affect factory workers’ bargaining power since it will not make sense to increase salaries while other factory workers stand to lose their jobs altogether.
LMDA, Minopex and Lets’eng diamond announced possible salary cuts and retrenchments due to lack of markets as a result of COVID 19.
Financial expert Robert Likhang said for Lesotho to grow its economy it has to urgently change its mindset when it comes to growing the economy. For a long time, he said, Lesotho has been dependent on Foreign Direct Investment which costs the country huge sums of money but at the end of the day benefits foreigners more than Basotho. With direct foreign investment Lesotho loses more money because investors don’t circulate the money within the country but send it to their home countries. “Lesotho, like other African countries, has been granted opportunities to grow its economy through the Southern African Customs Union (SACU) and AGOA but, instead of benefiting from the opportunities, it invites foreigners to benefit on its behalf.
“This could be, among others, caused by belief that Lesotho has no capital muscle but the truth is it has but only lacks proper strategies for private sector development. “The other challenge is public procurement. The government should normalise buying from locals and only seek expertise if it cannot be found locally. “This will prevent money from leaking to other countries but guarantee its circulating within the country,” he said.
Economist Letsatsi Sephepha noted since the two most important income generators for Lesotho (textile industries and the mines) are not making money due to the lockdown enforced by different countries, it is high time that Lesotho focuses on commercial farming. He said commercial farming can generate a lot of revenue for the country and can even help the country to stop exporting food from South Africa while also creating job opportunities for Basotho.
He noted the country can invite investors if enough expertise is not found among Basotho adding that commercial farming could be the “new gold mine” for the country as it will also reduce malnutrition related sicknesses and save the country money used for medical purposes. “Even if we face another lockdown again in future there will be no time that the country will struggle because we already import a lot of food from South Africa. The food will be sold within the country and maybe at an affordable price,” he said. According to a World Food Programme report titled “Fill the Nutrition Gap” released in 2019, Lesotho is not self-sufficient for both its meat or vegetables needs.
This is because Lesotho is focused more on cereals, primarily maize although average yields remain comparatively low due to climate shocks. In 2017, the country produced 986.8 kg per hectare of cereals and 467.7 kg per hectare in 2016 or five percent of the gross domestic product (GDP). This is despite 78 percent of productive land area being used for cropping, horticulture or livestock and 38 percent of the economically active population engaging in agriculture. “Lesotho relies heavily on imports from South Africa for almost all commodities, with only 30 percent of all foods consumed being produced in Lesotho. The majority (91 percent) of fields for crop production are run by smallholder farmers for subsistence. “These farmers often struggle to reach a subsistence level and in most cases need to supplement their own production with purchased commodities, resulting in an overall deficit at the household level. This suggests that currently many smallholders are not able to sustain their livelihoods through agricultural activities,” the WFP report noted.