Exploring the sub-national spatial and economic development impacts of the African Growth and Opportunity Act 2000 (AGOA) in Lesotho

Abstract

Rapid and sustainable economic growth and progressive social and spatial development through industrial development, has been a persistent challenge for the Sub-Saharan Africa (SSA). A commonly held "solution" to this challenge has been to provide access of manufactured goods from the SSA-region to the dynamic markets of the affluent North. This perceived wisdom led to the passing of the African Growth and Opportunity Act (AGOA) in 2000 by the 200th Congress of the United States of America. In this exploratory study, the experience of Lesotho with AGOA, with specific reference to the economic and spatial development outcomes of the Act in the country, is explored. The findings of the study reveal that the larger settlements where the AGOA-factories are located have shown little improvement, neither from an economic, nor from a spatial perspective. The same applied to villages to which AGOA factory workers sent their remittances. This was due to the meagreness of the remittances a function of the low wages paid in the factories and the resulting limited disposable income to support small-scale businesses in these villages. While AGOA did result in the creation of tens of thousands of job opportunities for unskilled and semi-skilled Basotho youth, it did not provide them with portable skills for use after leaving the factory floor. AGOA was also not found to have motivated the youth or local entrepreneurs to tap into the manufacturing sector. On the spatial development side, a number of landlords in the larger settlements subdivided their land and built residential rental units for the factory workers. Some landlords also sold their land illegally and informally, resulting in haphazard land development. The research findings suggest that, while "trade and development boosting tools", like AGOA, may be useful in providing term-based job opportunities for unskilled workforce, they will most likely not have as significant a positive impact on (1) the local economy, (2) the creation of an indigenous industrial class, or (3) the building of sustainable human settlements. Other supporting instruments, in addition to tools such as AGOA, will need to be developed locally, to achieve these goals. In addition to the research findings providing an insight into the experience of Lesotho with AGOA, they should also be of assistance to scholars and policy-makers working on the development of trade-driven tools in support of struggling regions.