‘Lesotho makes jeans but doesn’t sell in Africa’ — Okonjo-Iweala bemoans weak intra-regional trade

Ngozi Okonjo-Iweala, the director-general of the World Trade Organisation, says Africa needs to strengthen intra-regional trade and be more self-reliant in the face of reciprocal tariffs.

Okonjo-Iweala spoke to journalists on Friday about the impact of the sweeping tariffs announced by the United States (US) on Africa.

On April 2, President Donald Trump announcedtariffs of at least 10 percent on all goods coming into the US, with Nigeria getting 14 percent.

Speaking on the sidelines of the International Monetary Fund (IMF) and World Bank spring meetings in Washington DC, she said the continent as a whole is not affected by the tariffs, noting that only 6.5 percent of Africa’s exports go to the US, and 4.4 percent of its imports come from the US.

The economist said while the tariffs’ impact is limited, the aforementioned data shows that “we’re not trading much, which is not a good thing”.

“But the problem is that within Africa, there are a handful of countries that are very severely impacted because they’ve got high reciprocal tariffs put on them, and these are poor countries. I’ll just use two as an example,” she said.

“One is Lesotho that everybody is talking about that has 50 percent reciprocal tariffs. It exports $200 million worth of textiles to the US, imports about $3 million worth of goods from the US, so very little.

“If those tariffs are implemented on Lesotho, it will lose almost half a percentage point of its GDP growth, which is huge for a poor country.

“It will lose a lot of its exports to the US, even though it might gain a little bit by exporting elsewhere. So, the issue is, how can we avoid having such reciprocal tariffs on Lesotho?”

Okonjo-Iweala said the US is being asked to look at least developed countries — the poorest — and try to waive the tariffs.

She said Ghana has a 10 percent tariff put on them, while Cote d’Ivoire, which exports almost a billion dollars’ worth of cocoa to the US, got 21 percent.

The WTO chief said Cote d’Ivoire’s cocoa income will “disappear across the border if you have differential reciprocal tariffs”.

“So, Africa is not scot-free. I’m saying as a whole, the continent is not as impacted. But certain countries are definitely hit, and we have to take care of them,” the former minister said.

‘LESOTHO MAKES JEANS, BUT DOESN’T SELL ITS TEXTILES IN AFRICA’

Okonjo-Iweala said the message to Africa is for the continent to be more self-reliant, stressing that more needs to be done for the region to rely on its own resources.

“It’s very clear. Aid is disappearing [and] we need investment,” she said.

“When you need investment, you have to do so much more in terms of mobilising domestic resources to put infrastructure in place, removing bureaucratic barriers so investment can come in.

“And this is what we need to do, and we need to trade more. We cannot trade more externally, where our trade is only 3 percent of world trade, or internally, where intra-Africa trade is 16 to 20 percent at most.

“If we don’t add value to our products, we’ll keep exporting the same things: commodities that are not processed. We don’t create jobs. So, we must attract investment to change that, and then trade internally.

“Can I give you one example? Lesotho is exporting $200 billion worth of textiles to the US, and we’re all lamenting [that] this market will be taken away. Guess what? Africa spent $7 billion importing textiles. So, why can’t Lesotho sell its textiles in the African markets? It’s making jeans.”

In 2023, Lesotho exported a total of $1.14 billion, making it the world’s 158th exporter, according to the Observatory of Economic Complexity (OEC).

The OEC said the exports of Lesotho have increased by $127 million from $1.01 billion in 2018 to $1.14 billion in 2023.

The data platform said the country’s most recent exports were led by diamonds ($539 million), non-knit men’s suits ($70.9 million), wool ($62.8 million), knit women’s suits ($61.4 million), and knit T-shirts ($45.1 million).

According to the OEC, the most common destinations for the exports of Lesotho are South Africa ($351 million), Belgium ($295 million), the United States ($228 million), the United Arab Emirates (UAE) ($95.4 million), and India ($86.3 million). (The Cable)