See also:
» 12.02.2010 - Lesotho to focus budget on alternative revenue creation
» 05.10.2009 - Lesotho signs $25 million agreement with WB
» 23.09.2009 - Lesotho will be hard-hit by declining SACU revenues
» 30.07.2009 - Forum discusses role of infrastructure to health care
» 16.07.2009 - Lesotho govt not backing off new financial tool
» 08.04.2009 - Lesotho ready to roll out social cash grants
» 01.04.2009 - Lesotho's public accounts still a shame
» 18.02.2009 - Lesotho to tighten spending to cushion against recession

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Economy - Development | Labour

Lesotho union questions govt subsidy of Chinese firm

afrol News, 8 December - Lesotho's prominent unionist Macaefa Billy has questioned a financial injection of over rand 30 million by government into the consortium Chinese Garments Manufacturers (CGM), swallowed by mounting debts since May this year.

Last month, the Taiwanese owned factory which is reported to be on the brink of collapse and losing close to R10 million a month, was given a loan by Lesotho's government development agency, the Lesotho National Development Corporation (LNDC).

The Factory Workers Union (FAWU) secretary general, Mr Billy, said he is not against government rescue plans to save over seven thousand textile workers theirs jobs. However, he said he doubts the transparency of the deal as all social partners were not involved.

"The main concern is corruption on public spending. The government should have clear policies on its rescue plans," he told afrol News.

He said, though Lesotho has enjoyed broad access to the US markets under African Growth and Opportunity Act, the US initiative in Africa to increase trade since 2000, a number of factories halted operations in 2005, when the multi fibre agreement was facing out.

In December 2005, more than 10,000 factory workers lost their jobs as factories closed down in the country seeking better and cheaper means of production to export to the high demanding US market.

"Why has the government not intervened in 2005 when a number of factories were closing down? What is so special about this particular factory that would force government ditch out money?" the unionist asked.

Mr Billy has also accused the company of firing employees coming close to the ten-year employment threshold, in order not to pay their long term benefits. "Most of them are charged with insubordination, that charge disqualifies employees to get any benefits," he said, indicating this was a clear indication of a company in financial crisis.

However, LNDC Chief Executive Peete Molapo, shielding a decision by the Chinese corporation, said the government could not watch a major employer being declared bankrupt yet government could save jobs of thousands of Basotho.

Mr Molapo told a national broadcaster that the Lesotho government has a stake in CGM, hence it was also protecting its interests.

One of the CGM employees said, though she was not aware of the company's financial crisis and the financial injection from government, that job losses would heavily impacted on their general household in income.

In her opinion, government's move to secure thousands of jobs was a bold step by government to reduce poverty. Lesotho has is committed to reach the Millennium Development Goals target by 2015, an initiative that aims to reduce extreme poverty and hunger.

"I just imagine waking up the nest day knowing that I won't have anything to put on my table for many days to come," the employee at Thetsane industrial told afrol News.

LNDC is expected to advance yet another rand 40 million to the company, including R 27.5 million in bank overdrafts until March next year, when the company is expected to have stabilised.

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