Lesotho Mulls Investments From Textile Groups That May Leave South Africa

Lesotho, the mountainous African kingdom, said it’s considering investments from textile companies that are threatening to close down factories in South Africa because of an increased minimum wage.

The Lesotho National Development Corp. is studying applications from 380 companies which are considering moving to Lesotho or Swaziland, said Lesa Makhoalibe, an official at the investment agency, in an e-mailed response to questions today.

“Any kind of job creation is an advantage to the country, especially in the labor intensive clothing and textile sector,” she said. Lesotho will have to be “very selective” about which investments is approves because it doesn’t have the infrastructure to accommodate a large number of companies, she wrote.

Some Chinese and Taiwanese-owned factories at Newcastle, in South Africa’s KwaZulu-Natal province, temporarily halted operations last year amid a dispute over minimum wages. Both Lesotho and Swaziland, which border South Africa, rely on income from a regional customs union for the bulk of their budget revenue.

While the factories will have to meet Lesotho’s minimum wage standards, the country has lower cost structures than South Africa, Makhoalibe said.

To contact the reporter on this story: Motheolane Chakela in Maseru at mchakela@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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