Lesotho succeeded in developing a dynamic manufacturing sector, due to the expansion of the textile and clothing industry, including cut make and trim operations, footwear and leather. The appreciation of the local currency loti to the USD, during 2003 and 2004 and the abolition of the Multi Fibre Arrangement in 2005, affected the economic growth of Lesotho severely. The local Government responded pro-actively to the sectoral crisis by seeking assistance from China. Moreover, the Government of Lesotho tried to attract new investors through tax exemptions and the reduction of administrative procedures.
Local investments in downstream industries of the textile value chain, such as fabric mills, yarn, trim, packaging and printing renders the local textile and clothing production more flexible. Further, Lesotho benefits from the South African quota system, introduced in 2007, for Chinese imports.
In compliance with the Codes of Conduct of international clothing brands, the textile industry in Lesotho focuses on save working conditions and on an ethical brand policy. Part of total textile and clothing revenues are donated to fight HIV/AIDS in the country.