MASERU — The vice-president of the Lesotho Textiles Exporters Association, Nkopane Monyane, on Monday said the replacement of the Duty Credit Certificates Scheme (DCCS) will help improve the competitiveness of the textile sector.
The scheme was first implemented in 1993 with the view to influence and encourage textile and clothing manufacturers within the Southern African Customs Union (Sacu) region to compete internationally.
Under the scheme, clothing and textile manufacturers in Sacu member countries can earn rebates on imported clothing and textiles based on the value of their exports to non-Sacu destinations.
The purpose of the scheme was to enhance the international competitiveness of local exporters within the Sacu region.
“The Duty Credit Certificates Scheme helped in boosting the liquidity of exporting factories. They were eligible for a duty certificate equivalent to 30 percent of their exports,” Monyane said.
Monyane said there was need for incentives that could make the manufacturing sector in Lesotho competitive in the global market.
“There are many export incentives that our competitors are given. With all these incentives in place there is negative competitiveness so the future of this industry especially on the exports is very bleak,” he said.
The textile sector in Lesotho is facing tough competition from the Far East.
Countries such as China and Bangladesh have much lower cost structures.
“Their prices are lower even with duty free access. They produce at lower costs — from labour costs, utility costs and other infrastructural costs”. Monyane said.
He said Lesotho’s exports to the United States have been on the decrease for years particularly after 2004.
The global economic crisis that began in 2008 accelerated the problems in the local textile manufacturing sector which saw a huge drop in demand for clothing in the US.
“Our industry is buyer-driven and orders have to be placed three to six months earlier. You need to have more orders coming in for the sustainability of the business,” Monyane said.
He said major buyers were now reducing the number of countries where they source their garments.
“Practically they are focused on the East and there is huge threat from Least Developed Countries lobby in the Far East,” Monyane said.
He said the European Union market was not a big homogeneous market which makes it difficult to serve as local factories are designed for mass production.
“Europe has many countries with different needs and many smaller buyers which is not viable for big factories employing many people,” he said.
He said the Sacu market is very small for the current textile manufacturing companies.
“You need to use your current base for purposes of diversification both in terms of markets and products,” he said.
