Lesotho risks losing AGOA, MCC compact
THE United States (US) government has given Lesotho just three months to address concerns about human trafficking and other human rights violations or risk losing out on the African Growth and Opportunity Act (AGOA) facility which allows it to export goods duty-free to the US.
Should the country lose out on AGOA, this could cost 45 000 factory workers their jobs as the textile industry is anchored on the duty-free exports to the US market.
The warning was delivered by the US Ambassador to Lesotho, Rebecca Gonzales, in an exclusive interview with the Lesotho Times yesterday.
Ms Gonzales also warned that if the concerns are not addressed by the end of February 2021, Lesotho would also lose out on the multi-million-dollar second compact under the Millennium Challenge Corporation (MCC).
AGOA gives duty-free and quota-free access to the US market to eligible sub-Saharan African countries including Lesotho. The legislation, which was approved by the US Congress in May 2000, is meant to incentivise African countries to open their economies and build free markets.
It was renewed for another 10 years in June 2015 as the AGOA Extension & Enhancement Act and amended to allow the US to withdraw, suspend or limit benefits if designated AGOA countries do not comply with its eligibility criteria.
The law obligates the American president to designate countries eligible to benefit from the trade facility on an annual basis after undergoing a review process. Among the main eligibility criteria for the facility are a market-based economy, adherence to the rule of law, the implementation of mechanisms to combat corruption and upholding of human rights.
The MCC was established by the US Congress in 2004 as an innovative foreign aid agency to help lead the fight against global poverty by working with selected partner countries to identify requisite areas in need of funding support.
Before qualifying for funding, countries have to meet a number of conditions similar to those of AGOA.
Compacts are large, five-year grants for countries that pass the eligibility criteria. Lesotho received its first five-year MCC compact worth US$362, 5 million (more than M3 billion) in July 2007.
Among others, the $362, 5 million compact funded the construction of the Metolong Dam as well as the President’s Emergency Plan for AIDS Relief (PEPFAR) to mitigate the negative economic impact of poor maternal health, HIV/AIDS, tuberculosis and other diseases.
In 2015, the MCC stalled in renewing the compact programme over rampant human rights abuses under then Prime Minister Pakalitha Mosisili’s government.
Lesotho’s eligibility for the second compact was first confirmed by the MCC Board in December 2017 after the ouster of the Mosisili coalition in the June 2017 elections and the advent of former Prime Minister Thomas Thabane’s second coalition government.
However, the Thabane administration, which lasted until May 2020 when it was replaced by the current Moeketsi Majoro-led coalition, was accused of failing to tackle police brutality against citizens and corruption.
The former government also dragged its feet on the multi-sector reforms process. It even missed the May 2019 deadline set by SADC for the full implementation of the constitutional and security sector reforms. All of these issues were part of the eligibility criteria for the second MCC compact.
In addition, the Thabane government was accused of paying lip service to repeated warnings to address human trafficking concerns.
The US government defines human trafficking as “modern day slavery” which involves the movement of persons locally and beyond a country’s borders against their will to get them into forced labour, involuntary servitude and debt bondage.
Early last month, Ms Gonzales revealed that due to its failure to deal with human trafficking, Lesotho had been placed in Tier 3—the lowest tier in the US State Department’s Trafficking in Persons (TIP) Report for 2020.
She warned at the time that Lesotho risked losing out on reselection to continue developing a second MCC compact if the scourge of human trafficking and other human rights concerns were not addressed by February next year.
As if the potential loss of the MCC compact is not disastrous enough, Ms Gonzales yesterday warned that even AGOA benefits will be lost if the Majoro administration did not act within three months to address human trafficking concerns.
Ms Gonzales said, under normal circumstances, a country in Tier 3 on human trafficking like Lesotho would have already lost all development assistance from the US.
However, she said she had recommended a waiver of any punishment against Lesotho to enable Dr Majoro to act on the issue since he had only assumed office recently. His failure to take concrete steps forthwith would however result in Lesotho losing out.
“Normally, countries on Tier 3 are ineligible for most US foreign assistance. However, President Donald Trump has approved my request for a waiver for Lesotho this year. We wanted to give Prime Minister Moeketsi Majoro time to deal with trafficking in persons (TIP),” Ms Gonzales said.
She said although there were encouraging signs as shown by Dr Majoro’s appointment of an inter-ministerial committee to tackle trafficking, there was still a lot to be done to get the country off Tier 3 and maintain its eligibility for AGOA and a second MCC compact.
These she said, included passing legislation to combat trafficking as well as ensuring that law enforcement agencies “investigate the many credible allegations of official complicity in human smuggling and human trafficking”.
“If investigations uncover evidence that incriminates any person or persons, then prosecution must be pursued to the fullest extent of the law. There must be accountability for such heinous crimes.
“Official complicity in TIP is the worst form of corruption—using one’s high office to profit from the buying and selling of humans is outright appalling…
“The government must take all recommended actions by February 2021. If not, the restrictions on US foreign assistance will come into force. The waiver protects PEPFAR and most other assistance the United States provides to the people of Lesotho.
“However, the Millennium Challenge Corporation (MCC) will not move forward with a new compact while Lesotho is on Tier 3. I had dearly hoped to see Lesotho sign a much needed second compact this year. But only governments that adequately protect basic rights are eligible for MCC compacts.
“Finally, I am concerned that AGOA eligibility may be threatened if Lesotho doesn’t get off of Tier 3. AGOA is not exactly a foreign assistance programme but the United States may opt not to give preferential trade access to a country whose government won’t protect basic human rights,” Ms Gonzales said.
The government is therefore in a race against time to save both its AGOA and MCC eligibility.
The loss of AGOA could plunge 45 000 workers directly employed in the textile factories into joblessness. The firms face stiff competition for markets for their products from more established countries like Bangladesh and other Asian nations. Lesotho’s factories have largely been kept afloat by the duty-free access to the US market which their competitors from outside Africa do not have. The government must therefore address the trafficking concerns to save jobs.