An analysis of the competitiveness of Lesotho’s wool and mohair industry

Abstract

Climate change, poor technological and information developments, fluctuations in exchange rates, access to credit, infrastructure, etc. threaten resources, endowments, and skills and technology development opportunities, especially in sectors like agriculture, which is most vulnerable to changes in underlying conditions. Consequently, there is a consistent need to assess the competitiveness of businesses, supply chains, sectors, countries and regions to inform public sector policy making and private sector strategy. Having acknowledged the importance of competitiveness through studies covered in Chapter Two of the dissertation, it is crucial for Lesotho’s most important commodities to undergo such analysis for the betterment of the stakeholders and Lesotho as a whole. This study analysed the competitiveness of the wool and mohair industry of Lesotho, which is one of the primary and strategic sectors in the country. The consequences of rangeland degradation, poor handling standards of wool and mohair, and declining production in Lesotho raise questions about the sector’s competitiveness in a global market for the products. The main purpose of the research was to establish the competitiveness status of the industry against other wool and mohair producing countries, and discover contributing or inhibiting factors to the status. The Relative Trade Advantage (RTA), designed by Vollrath (1991), was employed to evaluate the status of the industry. Through the use of Porter’s Diamond Model, the study gathered and analysed the perceptions of farmers to determine the factors that affect competitiveness of the industry. The study discovered that the five most prominent factors that drive Lesotho’s wool and mohair industry competitiveness are strongly enforced rules at the shearing sheds, rules governing the association, collective action, prevalence of competition for high quality products, and availability of skilled labour. Conversely, crime, climate change, occurrences and effects of natural disasters, disease outbreaks, and a lack of trust in government officials’ to full their responsibilities are those factors that have a detrimental effect on the competitiveness of Lesotho’s wool and mohair industry. The research finds that the existence of unfavourable factors within the industry does not affect the competitiveness status and, therefore, the industry is considered to have a competitive advantage against pertinent countries, based on the Relative Trade Advantage (RTA). Therefore, efforts promoting the enhancing factors would help the industry to maintain and/or promote its competitiveness status. Serious provisions, on the other hand, are recommended for eliminating the constraining factors. Possible strategies in this regard include: implementation of trade tax policies that cater for the industry products, reforms or amendments of marketing and trading regulations of the commodities, and policies that foster skill, innovation and technological development. Additionally, the involvement of farmers in decision-making may help improve their awareness and understanding of the business environment. Lastly, private-sector development is a necessity for the industry to guarantee proper channels for information and resource dissemination.