Setipa calls for AGOA exports diversity
TRADE and Industry Minister, Joshua Setipa, says local businesses need to diversify the products they export to the United States beyond textiles to fully benefit from the recently-renewed African Growth and Opportunity Act (AGOA).
AGOA gives duty-free and quota-free access to the United States 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.
Mr Setipa made the remarks during a workshop the Ministry of Trade and Industry (MTI) held in conjunction with members of the private sector in Teyateyaneng on Tuesday to devise an “AGOA Response Strategy” following the renewal of the facility for 10 years.
It was meant to foster the participation in the scheme of local businesses in such areas as mining, quarrying, horticulture, agro-processing, wool and mohair production among others.
The workshop also sought to improve the capacity of local businesses to make the most of AGOA since it is not expected to be renewed in future. Facilitated by MTI Consultant Peete Molapo and United Nations Economic Commission for Africa (UNECA) representative Jane Karonga, the workshop was also attended by Berea district administrator, Principal Chief Masupha Majara and other senior government officials.
Mr Setipa, who recently led a delegation lobbying for the legislation’s renewal beyond its September 2015 deadline in the US, said AGOA would be officially reintroduced “in the coming weeks”.
The minister pledged to support local businesses in diversifying the products they export to the US market and developing strategies to integrate local skills with viable partnerships.
“At the moment, the majority of our investments are in the hands of foreigners, but that is not say foreign investment is not welcome but that we need to prioritise local investments,” said Mr Setipa.
“Investing locally has never been an integral part of our system before, but in the next 24 months, we need to establish a chain of local entrepreneurs that can supply products abroad.
“Even if it is a handful of Basotho women who are sewing lishoeshoe apparel, the ministry will provide some incentives and establish partnerships to take those businesses further.”
He added that the ministry would make use of the experience of trading through AGOA for many years to integrate sectors other than textiles.
“During my tenure at the LNDC (Lesotho National Development Corporation), we carried out an experiment to diversify our exports to international companies,” Mr Setipa said.
“Out of the 72 companies we approached, two agreed to work with us and today we have two automotive firms manufacturing car leather seats in the country.
“We need to use such strategies to help us diversify our AGOA exports for the benefit of our economy.”
The minister also cautioned against complacency, saying there was no time to waste in applying the strategies since AGOA had only been extended for 10 years.
“The good news about the renewal of AGOA ends with that announcement. Many challenges await us as we work to improve the way we do business. We have many years of experience trading through AGOA and have come this far without having had any strategy in place, but now we are faced with the challenge of developing one,” he said.
“Amid the excitement over the 10-year extension, we must not be fooled into thinking that it is a long time since, in practice, we only have a five year plan to work on.”
On her part, Ms Karonga said Lesotho had the potential to diversify its exports if it implemented well-developed strategic plans to overcome a number of constraints.
“Lesotho has been doing well until recently when Kenya surpassed it with regards to textile exports,” Ms Karonga said.
“Ethiopia is also fast gaining momentum in the industry and therefore something has to be done in the country.”
She added that the Economic Commission for Africa conducted studies on the effective utilisation of AGOA whose findings revealed that support was being offered for businesses but not well coordinated.
“The support offered to institutions such as textile and apparel industries and the private sector by Lesotho and the US lack coordination and strategic direction to overcome key constraints,” said Ms Karonga.
“As a result, export targets have not been optimal yet Lesotho can do better.”