Overview
The manufacturing sector is considered one of the best prospects in the industry sector for Lesotho. The major industries in the manufacturing sector include textiles, clothing, footwear, food, and beverages. The sector is dominated by the textiles and apparel industries. According to the Ministry of Labor Inspectorate and Better Work Lesotho, Lesotho’s formal manufacturing sector is free from child labor. Some employers violate national and international basic worker rights, and mainly the right for workers to join unions. There are also reports of the presence of gender-based violence and other types of abuse and harassment in many textile factories throughout the country.
Lesotho has taken advantage of AGOA to become one of the largest exporters of garments to the United States from Sub-Saharan Africa. It is ranked number two in terms of value of goods exported under AGOA and number three in terms of volume of goods exported primarily in textiles. Exports reached $ 333.7 million in 2021. The manufacturing sector is the largest employer after the government. The number of workers employed by the sector has fluctuated from 43,542 in February 2020 to 30,741 in April 2020 following the Covid-19 outbreak. It then registered 45,261 in March 2021 and declined to 33,964 in December 2022. Apparel exports to the South African market are growing because of Lesotho’s strategy to diversify the sector. Most of the companies are producing for the South African and U.S. market. Textile companies reported a decline in the U.S. market which has led to the closure of multiple factories while others downsized to maintain their operations. Textile exports into South Africa account for 30 percent of total apparel exports in volume terms. With one exception, the factories import all the raw materials they use to make garments, which means opportunities exist for other upstream industries. Beyond the U.S. market, Lesotho’s products enjoy duty free access to SACU and SADC countries, with a total population of 277 million. U.S. companies could capitalize on this opportunity by setting up manufacturing operations in Lesotho to produce for these regional markets.
With the growth of the apparel industry, companies have begun manufacturing other labor-intensive products in Lesotho, such as car seat covers, clean cookstoves, and circuit breaker switches. There are also opportunities to manufacture electronics and automotive components. The LNDC offers comprehensive incentive packages for manufacturing companies. For more information on an incentive package for investors go to: https://www.lndc.org.ls/
Manufacturing Sub-Sector Best Prospects
- Textile and apparel
- Electronics
- Automotive components
- Other labor-intensive manufacturing
Opportunities
The LNDC is seeking investors for a knit fabric mill in Lesotho Given the huge demand for knit fabrics in Lesotho and surrounding SADC member countries. In 2019, Southern Africa imported $1.5 million worth of knit fabrics; Lesotho imported $96 million in knit fabric. There are also opportunities for other upstream manufacturing for the garments sector, such as zippers, buttons, and thread. The 2021 Lesotho AGOA Utilization Strategy identified the manufacturing sector as one in which Lesotho may have comparative advantage. U.S. companies can seize this opportunity.
As Lesotho looks for ways to diversify its industry base outside of textile manufacturing, U.S. manufacturers could find opportunities in the manufacturing of electronics, automotive components, cosmetics, plastics, food processing, and other labor-intensive manufacturing.
Resources
Lesotho National Development Corporation: https://www.lndc.org.ls/
Contacts
Lesotho National Development Corporations
P/Bag A96
(266) 22322012
Website: https://www.lndc.org.ls