Latest news with #SubSaharan
Yahoo
18-07-2025
- Business
- Yahoo
Trump's Trade War Could Kill Lesotho's Garment Industry
The tiny southern African nation of Lesotho is watching the days pass with a growing sense of despair—and desperation. As the White House's 'Liberation Day' tariff deadline of Aug. 1 creeps closer with no sign of a deal for the country President Donald Trump once said 'nobody has ever heard of,' nor the renewal of a critical trade program that has boosted economic development on the Sub-Saharan continent for a quarter of a century, the outlook for Lesotho is nothing short of bleak. More from Sourcing Journal Canada, Losing Confidence in US Trade Deal, Cozies Up to Mexico Trump Touts Trade Truce With Indonesia, Indicates India Might Not Be Far Behind Is Amazon's Third-Party Marketplace Stoking Worker Exploitation? A follow-through of the so-called 'reciprocal' rate of 50 percent—the highest faced by any country outside of China—could also be the undoing of its garment industry, which contributed more than half of Lesotho's nearly $1 billion in annual exports in 2024 and underpins roughly 20 percent of its gross domestic product. Some 75 percent of the clothing it makes for brands such as JCPenney, Levi Strauss & Co., Reebok, The Children's Place and Wrangler owner Kontoor Brands are earmarked for the United States. Denim and activewear are big categories. Some Trump-branded Greg Norman golf shirts are made in Lesotho, too. The rumblings of a potential exodus by American buyers are already being keenly felt. Orders started evaporating in April, when the initial tariffs were announced, and a significant fraction of Lesotho's 30,000 mostly female garment workers were furloughed or laid off beginning in June. With unemployment standing at 30 percent—or nearly 50 percent for young people—Nthomeng Majara, the country's deputy prime minister, said a 'state of disaster' would be in force until June 2027, allowing it to 'take all necessary steps' to unlock funds to spur job creation in other sectors. If the African Growth and Opportunity Act, or AGOA, isn't renewed in September, the entire garment industry could cease to exist, the government has said. It doesn't help that U.S. foreign aid cuts have 'crippled industries that previously sustained thousands of jobs,' as Prime Minister Samuel Matekane said on TV last month. Nor does it that until March, Lesotho was under an eight-month state of disaster because of acute food insecurity. 'There's a lot of uncertainty,' said Scott Nova, executive director of the Worker Rights Consortium, a labor rights watchdog in Washington, D.C. 'Lesotho and other garment exporters are facing the prospect of tariff rates that were unthinkable six months ago and in many cases look unsurvivable.' What made Lesotho attractive for brands was its low production costs, coupled with tariff-free trade under AGOA. The concern, he added, is that the Trump administration has been unwilling to pay attention to the matter, at least to the 'degree that action will happen,' despite AGOA previously enjoying bipartisan support in Congress. While economists have questioned its formula, the White House claims that Lesotho imposes 99 percent in tariffs and other trade barriers on the United States, creating a $234.5 million trade deficit in 2025. As far as Nova is concerned, that's a rounding error. 'Is there anything Lesotho could particularly do to fix the trade deficit?' he asked. 'They're selling two things: diamonds and clothing, and they're not going to buy an equivalent amount of diamonds from the U.S, right? That's not an option. And blue jeans—basic blue jeans, even higher-end blue jeans—are not coming back to the U.S. for production. And since they're not, there really isn't any beneficiary of high tariffs. Nobody wins.' Of the brands that were contacted about changes in their sourcing strategy, only Levi's responded to say that its plans have remained 'unchanged.' The denim giant is a prominent client of Nien Hsing Textile Group, a major employer that shuttered several of its subsidiaries, including Glory International, Nien Hsing International and C&Y Garments, in 2023 due to what it said was a lack of demand for its products on the international market, especially in the United States. Two years before that, the Covid-19 fallout and 'other market forces' led to mass retrenchments. A spokesman from Nien Hsing Textile Group said that Nien Hsing Lesotho has orders until the first quarter of 2026, though he would not say if there have been or will be further layoffs. Other factories are less lucky. Facilities employing thousands of people, such as Precious Garments, Tzicc Clothing Manufactures and Maseru-E Textiles, haven't fielded orders since the tariff was originally announced, said Solong Senohe, secretary-general at the United Textile Employees Union, or UNITE, which has been negotiating worker settlements with various owners. Precious Garments, he said, has started rotating employees on shifts that have them working just two weeks out of each month. Many of UNITE's members, however, have been placed on 'short-term layoff' without pay until September, with a rapidly dwindling hope that they might be recalled in October if the tariff rate eases or if, by some miracle, AGOA is put back in play, returning it to equal footing with competitors like Ethiopia, Ghana and Kenya that are facing an additional 10 percent tax post-Aug. 1—no different than what every nation is grappling with now. Even South Africa's 30 percent figure looks like a bargain by comparison. Most of the workers whose livelihoods are now hanging by a thread don't know what they will do if they remain unemployed, Senohe said. They worry that when schools reopen later this month, they're not going to be able to afford the fees. Or worse, that they will lose the literal roof over their head because they can no longer afford rent. They will also have to contend with extreme deprivation in a country where half of its 2 million-strong population already lives below the poverty line. Even breaking into the far less-regulated informal sector would be difficult because 'it is already flooded,' he said. The garment industry's travails will extend into other sectors that rely on workers' patronage: transportation operators, say, or lunchtime vendors. When their savings run out, workers could find themselves resorting to the most dangerous jobs. Parents could be forced to traffic their children. 'The government's response is to opt to diversify export markets to the European Union or other African countries like South Africa,' Senohe said. 'But unfortunately, the process is not that easy; negotiations have to start now. And meanwhile, people are suffering.' Nova thinks that September will be a decision inflection point. No AGOA and a 50 percent duty on garments from Lesotho would also mean no garment industry in Lesotho, he said. Many of the support programs workers relied on, such as HIV and tuberculosis prevention, have already been pulled because of the gutting of the U.S. Agency for International Development. If conditions further deteriorate, 'every social ill that already exists in Lesotho will be massively magnified for this worker population,' he said, before adding, 'it'll be one of the worst things we've ever seen in the garment industry. There will be no place for people to go.' It was only in 2021 that Lesotho was the site of the first binding agreement to tackle gender-based violence and harassment in the fashion industry. The Worker Rights Consortium, the Solidarity Center, the Federation of Women Lawyers in Lesotho and UNITE were among a slew of organizations that helped broker a hard-won deal between Nien Hsing Textile Group, Levi's, The Children's Place and Kontoor Brands to create a worker-led program to eliminate sexual harassment and abuse across the then-four shop floors. The Lesotho Agreement to End Gender-Based Violence and Harassment would prove to be one of the templates for the Dindigul Agreement to Eliminate Gender-Based Violence and Harassment in India and the Central Java Agreement for Gender Justice in Indonesia. The fate of the program is now in the air because it's tied to that of the industry. Senohe said that factory owners were told by brands that their companies had 'no say in this' because the state of affairs was directed by the U.S. government and they cannot increase the prices of the products they buy. But these are people's lives that are at stake, he said. Surely brands should feel some kind of responsibility? He's unsure why this isn't the case. 'The buyers are not willing to pay the tariffs,' Senohe said. 'Even the 10 percent tariffs now they are not paying. The factories are doing it. The reason they are exporting from Lesotho is the cheap labor that gives them more profit. It is, unfortunately, how capitalism works. It sucks your blood and whatever to make profit and then, at the end of the day, it dumps you.' And come September, if nothing changes, mass firings will begin in earnest. Factories that depend on U.S. orders, too, will have no choice but to close. The implications of this are deep and sweeping. Even if part of the sector survives, it'll no longer be beholden to American brands' generally higher-road requirements, such as freedom of association, freedom from forced labor and freedom from gender-based violence and harassment. Instead, Lesotho may have to court markets—perhaps China—'where people don't care.' 'I think the worst scenario is going to be that people are going to cross the border into South Africa as illegal migrants,' Senohe said. 'There is a textile hub in the city of Newcastle in KwaZulu-Natal, where most of the people are illegal and you're harassed every day by the police. Some of them are going to go to the illegal mines in South Africa. If somebody comes up and says, 'I have work for you in South Africa,' they will go there. And then we don't know if we'll ever see them again.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Zawya
10-07-2025
- Business
- Zawya
Building Trust through Effective Service Delivery in Africa
The World Bank's annual Country Policy and Institutional Assessment (CPIA) report for Sub-Saharan Africa, released today, reveals that despite a stable average CPIA score for the region, there is an urgent need for governments in Africa to improve the delivery of essential services to promote inclusive, sustainable growth. The CPIA Africa report evaluates the quality of policy and institutional reforms in IDA-eligible countries in Sub-Saharan Africa for the calendar year 2024. According to the report, the average CPIA score for the region remained similar to 2023 at 3.1 points (out of 6). While some areas saw strong reforms, poor performance in governance offset these gains, and improvements were concentrated in already well-performing countries. The CPIA report underscores that meeting the needs of African citizens will require mobilizing the government to provide services amidst limited external financing. The report serves as a vital guide for policymakers and international investors, identifying specific reform actions to support effective public service delivery and foster a more resilient and prosperous future for Sub-Saharan Africa. Against this backdrop, the report notes a trend in public discontent in 2024 – a year that was marked by youth protests and a notable decline in political support for incumbents across the continent. This is mirrored in survey results in the region that have shown growing dissatisfaction with the quality of public services, which continue to lag other regions, particularly in infrastructure, human capital, security, and administrative capabilities. "Confidence in a government's ability to efficiently transform public resources into essential services is fundamental to fostering a shared purpose with citizens and improving trust," said Andrew Dabalen, World Bank Chief Economist for Africa."Populations across Africa are clearly asking for more from their leaders to enable them to realize their aspirations. Our CPIA Africa report underscores the urgent need for transparent management of public resources and effective delivery of quality services to address growing dissatisfaction and enable citizens to reach their full potential." The report details significant shortfalls across various public service sectors. Infrastructure-related services, including transport, remain underdeveloped, hindering economic activity and quality of life. High poverty levels are exacerbated by a lack of access to public infrastructure, particularly in sanitation. Human capital development is hampered by poor educational quality and inadequate health services, limiting citizens' well-being and earning prospects as they enter the workforce. Furthermore, the ability of governments to provide basic security has been undermined, with conflict-related casualties nearly tripling between 2014 and 2024. Administrative services, crucial for a thriving business environment, also lag, with Sub-Saharan Africa performing poorly in areas like business location and financial services. Despite these challenges, the report notes some positive developments. Many countries have shown improved fiscal discipline, tackling high wage bills and fuel subsidies, and making progress in debt consolidation. Efforts to implement trade facilitation agreements, leverage digital technologies, and strengthen financial sector regulation are also underway. The report also highlights progress in empowering adolescent girls through legal and policy reforms and strengthening of social protection systems. "While some countries have made commendable strides in fiscal prudence and digital transformation, issues of weak governance, limited transparency, and insufficient implementation capacity continue to undermine efforts to deliver essential services. Addressing these fundamental challenges is not just about economic growth; it's about showing people that governments can work for them to help create a better path for the future," added Nicholas Woolley, the CPIA report's lead author. Distributed by APO Group on behalf of The World Bank Group.
