Offices and Departments

Economic/Commercial Section

ECONOMIC:
 
1.  African Growth and Opportunity Act.
 
The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000.  In 2004 the Act was extended to 2015.

 The primary objective of AGOA is to encourage increased trade and investment between the United States and countries of Sub-Saharan Africa.  Countries are deemed AGOA-eligible based on criteria that include establishment of a market-free economy; rule of law; political pluralism; elimination of barriers to U.S. trade and investment; efforts to combat corruption; protection of intellectual property; protection of human rights and worker rights; elimination of child labor; and policies to reduce poverty. AGOA-eligibility is reviewed annually based on reports that assess the country’s record in adhering to the eligibility requirements. Lesotho was the forth country to obtain its AGOA eligibility in 2001.  The country has since maintained its eligibility.

AGOA eligible countries have the opportunity to export over 6,400 products to the United States free of quota and duty.   Under a special rule for least developed beneficiary countries, Lesotho enjoys duty free access for apparel using “third country” fabric, i.e. fabric originating anywhere in the world. The special rule was originally intended to expire in 2004, but was extended to September 30, 2007 following strong lobbying by African governments and garment producers from the region.

 Website:  http://www.agoa.gov/ 
LESOTHO AND AGOA:
 
Textiles and Apparel:

 Lesotho is one of few countries that were able to take advantage of AGOA from the outset.  This is because the country already had a textile sector that exported to the United States and Canada under the Generalized System of Preferences, GSP. 

AGOA qualification saw a growth surge in the industry.  At its peak in 2004, the textile sector employed 53,000 workers, mostly women, making it the largest formal sector employer in the country.

Services associated with the textile industry have made a substantial contribution to the country’s economy.  These include water, telecommunications and electricity utilities; road freight transport; courier services; shipping and forwarding agents; security services; passenger transport and the sale of food to worker.  

Article 9 – Handicrafts and Hand-loomed products.

Article 9 of the AGOA provides for the duty free treatment of hand-loomed, handmade, or folklore articles of an AGOA-eligible country. Qualification of articles is determined following consultations between the government of the country and the Committee for the Implementation of Textile Agreements (CITA).  The committee accepted Lesotho’s submission of hand-loomed wool and mohair articles including scarves, tapestry wall hangings, floor rugs and table runners in 2002.
 

 President’s Annual Report:

 The President’s annual report to Congress outlines the successes and challenges experienced in implementing the spirit of the Act.  Since 2001, Lesotho has featured as a model state because of the growth of its textile sector.  

AGOA Forum:

 The AGOA stipulates that the U.S. President convene a U.S./Sun-Saharan Africa Trade and Economic Forum (AGOA Forum) which serves as a vehicle for regular dialogue between the United States and African countries on issues of economics, investment and trade.   Lesotho’s Minister of Trade and Industry has led delegations to four AGOA Fora held in Washington, D.C., Mauritius, and Senegal.  The delegations have included private sector actors who attend the Private Sector Forum, which runs concurrently with the government official’s forum.

Southern Africa Global Competitiveness Hub:

The Southern Africa Global Competitiveness Hub was established by the U.S. Agency for International Development (USAID) Regional Center for Southern Africa (RCSA) in June 2002. It is part of President Bush’s Trade for African Development and Enterprise (TRADE) Initiative launched at the first AGOA Forum in Washington, D.C. in 2001. 
 
Located in Gaborone, Botswana, the Hub directs activities for the 11 AGOA-eligible countries in Southern Africa, which include the five countries of the Southern Africa Customs Union, SACU (Lesotho, Botswana, Namibia, Swaziland and South Africa).
 
The Hub promotes regional and global competitiveness through trade capacity building; export business development under the AGOA; customs and trade facilitation; transport corridor efficiency; sanitary and phytosanitary (food safety, animal and plant health) standards for agricultural trade; and information exchange and outreach. 
 

Southern Africa Global Competitiveness Hub
Plot 40, Units 1 & 4 
P.O. Box 602090
Gaborone, Botswana
Tel:  (267) 390-0884
Fax: (267) 390-1027

Website:  www.satradehub.org

 

2.    US/SACU Free Trade Agreement:

 

As part of the U.S. government’s effort to drive draw developing countries into the mainstream of global trade, the office of the United States Trade Representative (USTR) was mandated to negotiate a Free Trade Agreement with countries of the Southern Africa Customs Union (SACU) in 2002.  Negotiations were launched in Pretoria, South Africa in June 2003.  By building on the successes of the AGOA, the agreement aims to create a comprehensive infrastructure for trade and investment.

 

Negotiations on the agreement are expected to end in 2006.

 3.     Millennium Challenge Account:
 

The Millennium Challenge Account (MCA) was established in 2004 as a foreign assistance program designed to reduce poverty by promoting sustainable economic growth. Implementing the MCA is the responsibility of the Millennium Challenge Corporation, MCC. 

The MCC works with poor countries that have demonstrated good performance in the areas of “ruling justly, investing in health and education for their citizens, and encouraging economic freedom”.  Countries are assessed for funding annually, and Lesotho has qualified for funding in 2004, 2005 and 2006.

 

Eligible countries pick their own priorities and develop their own programs for MCA assistance in consultation with civil society and the private sector. Proposals are contained in a draft Compact that is submitted to the MCC. 
Lesotho’s Compact builds on its unique success with the AGOA, which has made it one of the largest African exporters of clothing to the United States.  It aims to   further improve the environment to do business in Lesotho, both through policy and regulatory reform and the provision of water for industrial and domestic use by construction of Metolong Dam in the Thaba Bosiu area.

 The then Chief Executive of the MCC, Mr. Paul Applegarth, visited Lesotho in May 2005 to sign a pre-Compact agreement to facilitate the development of a proposed Compact.  Through the agreement, the MCC undertook to disburse $ 1.4 million to: 

• Undertake a feasibility study that could help boost the supply of water to the lowland districts of the country;

 

• Support the development of plans to make improvements in the country’s business climate, especially in regard to the financial sector and land registry/tenure system.  Such reforms will have a positive impact on most sectors of the economy, but will have a particularly positive effect for women who own the majority of small businesses.

 

• To collect baseline data that could assist the MCC in measuring results of the proposed Compact program.

 

The Government of Lesotho called for interested firms to submit proposals for the  studies. Proposals were evaluated in December, and the studies are expected to commence early in 2006. Mr. Applegarth has since left the MCC, and the President has appointed Ambassador  John J. Danilovich to the position of CEO. 

Website: www.mcc.gov

COMMERCIAL:
 

Commercial assistance to U.S. firms in the United States and abroad is the responsibility of the U.S. Department of Commerce.  In Lesotho, commercial functions are performed through the Economic/Commercial section of the Embassy.   

The United States Department of Commerce opened its first commercial center in Johannesburg in 1998.  The Ronald H. Brown Commercial Center provides support for America companies looking to enter or expand into the Southern and Su-Saharan Africa market. Over the years, the Center has invited Lesotho private and government officials for trade fairs in the United States and discussions on possible collaboration with U.S. trade missions to the region.

 

Contact Details:        15 Chaplin Road, Illovo 2196

Tel: 011-778-4800; Fax: 011-442-3761/3770/8818

E-mail: usfcs@icon.co.za

Web Site:  http://www.ita.doc.gov/                       

Business Facilitation Incentive Fund:
 

The Fund is an initiative of the U.S. Department’s Bureau of Economic and Business Affairs to provide financial support for business promotion and commercial outreach activities. Projects are solicited annually (November) to effect the following initiatives: 

• Build on the Embassy’s commercial service platform;
• Increase the knowledge and skills of Embassy staff serving the business community;
• Promote U.S. products and services;
• Develop the country’s market capacity and increase U.S. investor awareness and confidence.

 For more information contact Ms. 'Manthako Mphei on Ext 4134