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Tuesday, May 26, 2015
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Published: Wednesday, 3/16/2005

Dollar's value hurts Lesotho

THE falling value of the dollar has, so far, been largely an annoyance to most Americans, perhaps prompting some to forgo a dinner outing when they see a rise in prices on imported goods. But for employees at garment factories in Lesotho in southern Africa, the consequences are far more devastating than a lifestyle upset: It means thousands get laid off from jobs where they only earned meager salaries.

Any decline in the value of the dollar is bad news for southern Africa. Some 50,000 people work in garment-making jobs in Lesotho, and almost half of the 2 million populace lives in poverty anyway. Nearly 6,000 workers have been laid off since December. Now, another 6,000 people are about to be laid off and six of the nation's 50 clothing factories are closed.

The closings have devastated the impoverished country, plagued by HIV and AIDS like so many other African nations. If the factory closing trend continues, it will be horrific for Lesotho, where nine out of 10 manufacturing jobs are tied to garment making.

When Americans feel the pinch in the falling value of the dollar, they usually cut back on buying dry goods. That has disastrous consequences for nations like Lesotho, where garment factories must sell twice as much as three years ago to cover the wages of a single sewing machine operator. Now, to pay one operator, factories have to sell $109 in products to U.S. stores, compared to the $56 that they had to sell a few years ago.

So whether the Lesotho government succeeds in stabilizing the situation depends, again, largely on the performance of the dollar. Some of the mostly foreign-owned garment factories there say that if the value of the U.S. dollar drops another 20 percent against the South African rand, more factories will close. For many Lesotho families, that could mean they don't eat at all.


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