Multi-fibre arrangement (MFA) phase out : the case of Lesotho garment industry.

Abstract

The overarching objective of this study was to establish the extent to which the Multi-Fiber Arrangement impacted on the garment industry of the Kingdom of Lesotho. The quota system which controlled access to the world's biggest textile and clothing markets in the United States (US) and European Union (EU) namely Multi-fiber Arrangement (MFA) was incorporated in 1974. Nonetheless, with the thrust towards the increasingly liberal world market, MFA was abolished on 1 January 2005. As a result countries such as Lesotho had to compete on an equal footing with developed countries. Lesotho depends heavily on textile and clothing exports, thus, it is potentially vulnerable to this change in competitiveness. There have been predictions that the garment industry will suffer as a result of quota abolition and spell the end of thousand of jobs. This study was conducted to understand the various implications of Multi-Fibre Arrangement phase out on the Lesotho garment industry. The study first examines the impact of MFA on the economic growth and employment in Lesotho. Then it determines the consequences of MFA phase out on workers and the garment industry, that is, whether this elimination badly affected the industry and workers. Lastly, it establishes if adequate actions or efforts have been undertaken to attenuate potential negative impacts on workers. The results strongly indicate that MFA had contributed enormously to the Lesotho economic growth. The phasing out has led to job losses and disruption in the industry. However, programs have been put in place to mitigate and manage the negative impacts on workers such as providing training to workers with the aim of improving productivity. By the same token, recommendations have been suggested in order to address the impacts, such as to integrate vertically the industry to enhance production times.