Lesotho’s manufacturing sector has long been viewed as one of the country’s most promising economic drivers, with textiles and apparel standing at the forefront. For two decades, the small southern African nation leveraged preferential trade under the African Growth and Opportunity Act (AGOA) to build a thriving garment export industry. But recent US tariff policies have shaken the very foundation of this success story.
AGOA: A Gateway to Growth
The African Growth and Opportunity Act granted duty-free access to US markets for eligible Sub-Saharan African countries, and Lesotho became one of its biggest beneficiaries. By 2024, the country had become the second-largest exporter by value under AGOA, racking up $237.3 million in textile and garment shipments to the United States.
This boom provided thousands of jobs—most of them to women—while offering foreign exchange earnings and industrial identity to a nation of just over two million people. For years, Lesotho’s apparel industry symbolized economic progress and integration into global trade.
Tariffs and Turmoil
The narrative shifted dramatically when the US imposed a sudden 50 per cent tariff on Lesotho’s exports. Although later reduced to 15 per cent after a 90-day pause, the uncertainty proved devastating. Importers cancelled orders, factory production slowed, and layoffs surged.
The government declared a two-year state of disaster as unemployment soared, hitting women and young workers hardest. For many families, livelihoods collapsed almost overnight.
Unequal Playing Field
Although the tariff was eventually fixed at 15 per cent, Lesotho’s trade minister argued that it was effectively crippling when compared to regional rivals. Countries such as Kenya and Eswatini continued to enjoy a 10 per cent tariff, giving them a competitive edge in a market where even small differences in cost determine survival.
“Those are our direct competition,” the minister emphasized, underscoring the frustration within Lesotho’s garment industry.
Lessons for Smaller Economies
The episode highlights the vulnerability of smaller economies heavily reliant on a single export market. For Lesotho, a country where the garment sector had been a pillar of growth, the tariff dispute underscored how quickly global policy shifts can unravel years of progress.
As the dust settles, Lesotho faces the challenge of diversifying its markets, strengthening its value chains, and reducing dependency on unpredictable trade preferences.
