By Stephanie Hanes

Last year, Anna Tsoeu was unable to send much needed money to her family after being laid off from her textile factory job in this poor southern African country.

Lesotho's key industry was collapsing as factories cut about 10,000 jobs after Chinese imports flooded the market.

Now Tsoeu is working again, packaging shirts for brands like Old Navy.

She's part of a remarkable turnaround spurred by Lesotho's increasing attractiveness as an origin of "ethical clothing." More than 7,000 jobs have been restored recently, thanks mainly to a growing demand for sweatshop-free clothes, like the Product Red label, which rock star and founder Bono will promote on Friday's Oprah Winfrey show.

Gap or Levi's - or any of the myriad brands that source here - can promise customers that T-shirts and jeans made in Lesotho were not produced by sweatshop labor, and that working conditions met high safety standards.

And in these days of socially conscious consumers, this sort of promise sells.

"The ethical image has value," says Christian Kemp-Griffin, CEO of Edun Apparel Ltd, a self-described "socially conscious clothing company" with a factory in Lesotho that was started last year by Bono and his wife, Ali Hewson. "A company doesn't have to sacrifice its margins to sell its product because it's doing it ethically. It actually adds value for the consumer."

The rebirth of Lesotho's textile business spread a sigh of relief throughout this country of 1.9 million, where there is almost no other industry besides textiles and hundreds of thousands of people depend on factory workers' incomes.

'Guilt Free' Clothing Becomes Chic

According to the ComMark Trust, a group working to develop Lesotho's textile industry, British shoppers spent almost $50 billion on ethical goods and services in 2005 - a high percentage of which was on clothing.

Julia Hawkins, of the London-based Ethical Trading Initiative, says the demand in the U.S. is just as high.

Consumers are willing to spend a bit extra, she says, if they know that their purchase is "ethical" - and even more if profits go directly to a good cause. If the funds help Africa, even better. And while the trend might have grown from the anti-sweatshop movement of the 1990s, with its university protests and company boycotts, today's ethical buying is decidedly mainstream, even yuppie.

"There has been a huge surge in interest in ethical fashion," Hawkins says. "There definitely seems to be an appetite from consumers - the clothes are well made, look good, and they can ease their conscience a bit."

Earlier this year, Gap, Emporio Armani and other high-end brands launched their Product Red lines in Europe - red T-shirts, cellphones, sunglasses, and other goods. A portion of Product Red profits goes to the Global Fund to fight AIDS, Tuberculosis, and Malaria - a way to save Africa by shopping, the brands suggest. The line has been featured in fashion publications such as Marie Claire and Vogue.com, and promoted by celebrities such as Leonardo DiCaprio, Ashley Judd, and George Clooney.

Last month, Edun introduced the ONE Campaign T-shirt, made at its Lesotho factory, advertising that $10 of the $40 price tag would go to a new program that brings HIV testing and treatment to Lesotho's textile workers, an estimated one third of whom are HIV positive. More than 30,000 shirts have sold since Nordstrom introduced them Sept. 11.

"It's become a trend," Kemp-Griffin says. "Like with food, there's a trend of traceability and acknowledging where your stuff comes from."

And this makes it worthwhile for companies to make T-shirts in Lesotho.

Companies produce their clothing at factories scattered throughout the world. It is good publicity, and economics, for them to say that a certain percentage of goods comes from "guilt free" countries.

Textiles Key To Lesotho's Economy

Lesotho's textile business began in the early 1980s, when South African companies set up factories here to avoid apartheid-era sanctions. In recent years, the industry boomed because of international incentives and subsidies - in particular the World Trade Organization's Multi-Fibre Arrangement's quotas on China and other countries, and the U.S. African Growth and Opportunity Act. By the early 2000s, Lesotho's economy was dependent on its textile industry, which at its height employed 53,000 workers, around 85 percent of whom are women. According to the UN's Food and Agriculture Organization, textiles account for about 40 percent of Lesotho's GDP.

Then, at the beginning of 2005, the Multi-Fibre Arrangement's quotas expired. Analysts from around the world predicted the demise of textile industries in countries such as Lesotho since brands could make all of their clothes in cheaper, more productive Chinese factories. And true to those predictions, in 2005, a number of brands closed or reduced their operations in Lesotho. Textile employment dipped to around 40,000.

That's when Tsoeu lost her job.

But at the same time, an alliance of companies, NGOs, government representatives, and others were trying to find ways to protect the country's industry. Already, some brands had improved working conditions in Lesotho to answer concerns about sweatshop labor. The group realized that if Lesotho could start aggressively marketing itself as an ethical source of clothing, it could retain and even grow business.

"Ethical trading gives you a competitive edge," says Andy Selm, regional textile and apparel specialist at ComMark Trust. "You can attract a better quality of customer."

The companies listened. While there are other factors in Lesotho's recent textile upswing - softening currency, for instance, and other international trade limitations on China - the ethical trade boom plays a huge role. Gap makes its Product Red line here, for instance. Edun Apparel chose to build its factory in a remote part of Lesotho. And Selm says that some of the brands that left during 2005 are looking to start making clothing here again.

Not only does Tsoeu have a job, her working conditions are far better than in other countries.

Selm says he expects the factories to employ 50,000 people - almost the industry's peak - by the end of the year.