Know-how and its role in economic development: the case of the Lesotho clothing industry

Abstract

The paper investigates the extent to which clothing manufacturing knowhow, which was introduced by Taiwanese expatriates in 1986, diffused into the economy. The core question is whether proximity to clothing production processes enabled Basotho to start enterprises of any size, be it micro, small, medium or large businesses, in the formal or informal sector, in and around this industry. The research process was two-fold. The first part consisted of desktop reviews from projects and programmes literature written by entities such as international trade and labour bodies, Lesotho government agencies, reputable multi-pronged organizations addressing growth and development in Sub-Sahara region, trade experts and economists on the clothing manufacturing sector in Lesotho. The second part of the research process was conducted through interviews, email and telephonic correspondences. The study found the following: between 1980s and 2012, high-skill level jobs were reserved for Taiwanese expatriates and that other high-skill level functions were conducted from Taiwan and not in Lesotho; Basotho supervisors generally working for Taiwanese hold very limited powers; Taiwanese investors set up in Lesotho to take advantage of tariff and quota benefits such as AGOA, as a result knowhow transfer to Basotho is not in their agenda; Basotho started owning clothing mills three decades after the influx of expatriates’ investment in the sector, that is, after 2012; a legion of micro and small enterprises has since sprung in and around clothing manufacturing sector to serve largely the needs of the factory employees; the government of Lesotho is commended for initiatives such as Partial Guarantee Scheme, Diaspora Engagement Strategy and Trade Expos to assist Basotho to enter and succeed in the sector; Afri-Expo Textiles is of the impression that the government is not committed to addressing hurdles faced by Basotho-owned clothing mills; the training institutes set up by government for this sector are found to lack capacity to provide adequate skills; Afri-Expo Textiles is committed toon-going skill enhancements for its employees. The main conclusion found is that Taiwanese investors do not arrange their operations in a manner that fosters the transfer of knowhow to Basotho employees. It is recommended that the government of Lesotho consider owning a clothing mill specifically to insert knowhow to Basotho