AFRICAN GROWTH AND OPPORTUNITY ACT

 

Lesotho follows an export led growth strategy to pursue the industrial development objective. This strategy is supported by a series of export incentives, which are currently being revised aiming at expanding the country’s export base through finance and insurance hence strengthening Lesotho’s investment package in order to attract foreign direct investment. The African Growth and Opportunity Act (AGOA) fitted perfectly within this strategy, since it has always been Lesotho Government’s main objective to build a global competitive advantage. AGOA is a piece of legislation that was signed into law in May 2000. It is the most important legislation relating to the U.S. Sub-Saharan Africa Trade Relations. The bill offers duty and quota free access of more than 1800 products to the U.S. market. As a Least Developed Country (LDC), Lesotho can source apparel making material from any country in the world, a provision that has become a real magnet for investors. Lesotho is currently one of the leading exporters of apparel to

the U.S. market under AGOA. In November 2002, Lesotho was granted permission to export hand - loomed and hand made products under article nine of the AGOA folklore provision.

Since its certification in April 2001, the country has enjoyed increasing benefits. Employment grew from 20,600 locals in March 2001 to 45,000 in November 2002 thereby making the private sector the largest employer for the first time since independence. Thirteen new factories were opened, and five already existing factories expanded their operation. Investments to the tune of $170 million have been mobilized for the construction and establishment of denim fabric, yarn and cotton fabric mills. The Lesotho Fancy Garments Group’s new factory is expected to generate 18,000 new jobs upon completion. Between 1999 and 2001, exports to the U.S. increased from $111 million to $217 million. In 2001/02 (comparing January - November in each year) total exports to the U.S. increased by 50% in value, from $197 million to $297 million. Between 2001/02 the share of U.S. imports from Lesotho through AGOA including the GSP element of AGOA grew from 55% to 99% of the total. The government is currently in the process of exploring other areas of diversification in order to take full advantage of the legislation. For additional information on AGOA provisions, please click, www.agoa.gov Lesotho offers the following incentives to investors. www.lndc.org.ls U.S.- SOUTHERN AFRICAN CUSTOMS UNION (SACU) FREE TRADE AGREEMENT The U.S. - SACU Free Trade Agreement (FTA) offers another important avenue for continued strong trade relations between the U.S. and SACU member states. The organization, which was founded in 1912, is known as the oldest Customs Union in the world. It comprises the following countries, Botswana, Lesotho, Namibia, South Africa and Swaziland. In November 2003, the United States Trade Representative (USTR) announced the intention of the U.S. Government to enter into FTA negotiations with SACU. The FTA is expected to build upon the already evident successes enjoyed under AGOA. The negotiations between the U.S. and SACU started in May 2003. Both parties expressed optimism and eagerness to move the process forward. Information provided by: Ministry of Trade and Industry, Cooperatives and Marketing