According to a report by Lesotho’s local media “Lesotho Times” on November 3, Global International, a textile factory owned by Nien Hsing Group, has begun to lay off more than 3,000 employees, bringing benefits to the local economy and thousands of employees. The family was cast into a haze.
Global International said that the U.S. market is currently the only purchaser of its products, and workers have been temporarily laid off due to a lack of orders. The factory will be closed for 2 months and resume operations on January 4, 2023. Formosa, another textile factory owned by Nien Hsing Group, is also in poor condition. Due to reduced orders, it has only been open for two weeks in the past month.
The United Nations Development Program (UNDP) report shows that Lesotho’s manufacturing industry contributes as much as 14.2% to the local economy, and manufacturing workers account for 16.2% of the total employed population. The textile sector is the second largest source of employment after the government sector. Since the epidemic, Nianxing Group has cut more than 7,000 jobs. However, industry insiders say the real reason behind Nianxing Group’s massive layoffs is the company’s involvement in gray transactions, including tax arrears. Now that companies are mired in cash flow, layoffs may be a ploy to get the government to forgive debt. The person in charge of Nianxing Group firmly denied this and said that the only reason for the layoffs was the shrinkage of the US market.
Analysts point out that large-scale layoffs may exacerbate poverty and spawn a new wave of crime. What’s more, with textile mills staffed by mostly female workers, the layoffs would reverse the significant gains Lesotho has made in women’s empowerment.
To this end, the new Matt Kane administration needs to take quick action to make good use of the U.S. African Opportunity and Growth Act (AGOA) and strive to tap into industries other than textiles and apparel. Export specialty products to the United States. For example, the Lesotho government can learn from South Africa, which exports a variety of products from agricultural products to automobiles to the United States under AGOA worth billions of maloti every year. In addition, the government needs to actively seek new export markets instead of relying solely on the United States and South Africa.
