Growing the Lesotho Garment Industry

Beginning in 2001, with funding from U.K. Department for International Development (DFID), DAI designed the Lesotho Garment Industry Strategy, which was adopted by the Government of Lesotho with buy-in from the private sector and the labor unions. Implementation of the strategy, with support from DAI’s DFID-funded ComMark Program, doubled the size of the industry in three years. The industry now employs more than 40,000 people, the largest block of formal employment in the country.

Two key interventions anchored this growth, one in the area of supporting services, the other on the policy environment:

  • A critical constraint to growth was the productivity of the factories, which were assessed at less than half of global benchmarks. ComMark focused on the supply and demand for productivity training services, bringing in productivity consultants to understand the potential market for their services in Lesotho and incentivizing the factories to purchase their services. The result: an increase in factory productivity to near world benchmarks, leading to an increase in industry competitiveness and a sustainable market for productivity training that lasted well after the program ended.
  • Realizing that the main benefit of the garment industry was employment creation, ComMark worked with the government to redesign Lesotho’s investment code, leading to a tax-free investment incentive for international investors. This measure stimulated investment by the international firms that dominate the global garment value chain, ensuring increased employment.

Following the end of the MultiFibre Agreement in January 2005, Lesotho’s increased competitiveness helped it weather the storm of garment industry changes better than any other African country. Lesotho’s industry lost only 10 percent of its employment, while less prepared countries like Swaziland and Kenya lost up to 50 percent.