How A Foreign Investor Rattled A Tiny African Economy

Guohui Shi secured a monopoly on Lesotho’s primary export, then stopped paying producers

- Antony Sguazzin and Mathabiso Ralengau, with Sarah Chen

Mohlalefi Moteane runs his wool and mohair brokerage out of his veterinary practice, housed in a small building on a dirt road in Maseru, the ramshackle capital of Lesotho. When a young Chinese businessman visited in 2012 asking to join the business, Moteane turned him away. He saw no need for taking on a partner he didn’t know.

Six years later the same businessman, Guohui Shi, and his Lesotho Wool Centre were awarded a monopoly over the wool and mohair trade in the Southern African mountain kingdom, meaning that Moteane and other small brokers would have to shut down. Since then, thousands of farmers have had to wait a year or more to be paid by Shi’s brokerage; some say they’ve been underpaid, and others say they haven’t been paid at all. Approximately 75% of Lesotho’s population lives in rural areas and relies on wool and mohair for income. Some herders have been forced to eat their flocks to survive.

At $67 million, Lesotho’s wool industryâ—‹ Guohui Shi secured a monopoly on Lesotho’s primary export, then stopped paying producers is small but significant for the impoverished nation. It dates back to the 1850s, when migrant workers returned to Lesotho from South Africa, which encompasses the tiny country, with Merino sheep. Today, Lesotho is the world’s second-biggest mohair supplier; it controlled 17% of the global supply in 2017. The sheep are an ever-present sight, as are Angora goats, whose soft coats are used to make mohair. Herds graze on the roadside in Maseru, and shearers set up makeshift stalls on the sidewalk, where farmers bring their flocks.

Aside from wool and mohair, Lesotho has little in the way of industry. There are a few Chinese-owned textile plants, and the state exports water to South Africa. Per capita gross domestic product is about $1,200, but farmers can earn just $265 per year.