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NEWS & RESEARCH FROM THE AFRICAN CONTINENT
(#1 / 2018 - 19 March 2018)

www.africantextilesandapparel.com
FACT
South Africa-Tanzania
Textile & Apparel Balance of Trade
 
In 2016 Tanzania exported US$7.1m worth of textiles and apparel to South Africa
 
In 2016 South Africa exported US$6.1m worth of textiles and apparel to Tanzania
 
Dear All,

Welcome to the first edition of "
The African Cotton, Textiles & Apparel Monitor" newsletter. I hope you find it, and future editions, informative.

Each week I aim to deliver news of what's going on in the African continent's crop-to-shop value chain. I'll try to bring you the most relevant news and research. I will also profile some organisations and development projects active in the Africa cotton, textiles, apparel, and clothing retail pipeline.

My intention is to report on the good work being done in Africa - work that creates hundreds of thousands of decent jobs and livelihoods in the continent. But I will not shy away from reporting on the bad, the ugly, nor on the emperor's clothes. You will also find me offering the odd opinion.

If you have any research reports, news, press releases, or copyright free photographs that you want to share kindly forward them to me and I will try to include them.

Please also send this newsletter to all those that you think may want to subscribe. I hope to keep this a subscription free publication; paid-for advertisements will be introduced at a later stage.

Enjoy.

Mark Bennett
Editor: "African Cotton, Textiles & Apparel Monitor"

editor@africantextilesandapparel.com

PS
You have been subscribed to this newsletter without expressly giving your permission. An "unsubscribe" button is at the end of the newsletter
 
Sewing Floor - Lesotho Precious Garments
 

NEWS

ETHIOPIA - INDUSTRIALISATION, 2 March 2018
One hears a great deal about the textile, apparel and footwear manufacturing miracle that is taking place in Ethiopia. This in depth feature article by "Bloomberg Businessweek" - "China is Turning Ethiopia Into a Giant Fast-Fashion Factory" (written by Bill Donahue) - overviews the opportunities and challenges faced by value chain industrialists that have set-up in Ethiopia. While not mentioned in the article a major threat facing Ethiopia is that they could potentially lose their duty free access to the US marketplace, in terms of the African Growth & Opportunity Act (AGOA), due to ongoing political instability. Future editions of this newsletter will provide greater insights into Ethiopia's textile and apparel "industrial revolution".

KENYA - WORK PERMIT FEES, 16 March 2018
The Kenyan Government has announced that it will scrap the US$2,000 fee for work permits applicable to foreigners working in its textile (and apparel?) sector. It has advised that the move is aimed at revamping the sector. Foreign workers will enjoy this incentive for two years, after which they will start paying work permit fees of $100 per annum.

This is a good move on the part of the Kenyan government - one which will significantly aid the development of their industry. Exhorbitant work permit fees are a big turn-off for some investors who have plans to create large (in excess of 500 workers) textile / apparel manufacturing plants; or those who want to establish smaller plants which will make the value chain work more effciently (e.g. commission dyehouses, quality assurance auditing firms, etc). These investors already incur significant costs as they have to pay expatriate staff salary premiums, provide accommodation and subsistence, and transport them to (and from) their new places of work.

Some African countries will also have to revisit their policies of only granting limited numbers of work permits to investors that want to establish or maintain value chain investments in their territories - many states simply do not, at this stage of their development, have the human resources with the right skill sets to work at senior production and administrative positions. This however does not abrogate foreign investors from endeavouring to develop strategies to engage more locals in middle and senior management positions.
 
SOUTH AFRICA - EDCON GROUP FINANCIAL RESULTS, 7 March 2018
One of southern Africa's largest apparel retailers - the EDCON group - has released a trading update on its unaudited results for the 13 weeks ending 23 December 2017. EDCON operates 1 167 stores - including Edgars/Jet/JetMart.

Its retail sales decreased by 9.4% to R7,646m. It advised that sales decreased primarily as a result of a reduction in promotion activity following the introduction of better entry price points in fiscal 2017. Sales were also impacted by the sale of its Legit stores (bought by Retailability); its exit of non-profitable brands; and, the closure of unprofitable stores. On a like-for-like basis its retail sales decreased by 4.9%.

EDCON's sales from other non-South Africa stores decreased by 3.7% compared to the 3rd quarter 2017, and contributed 11.3% of retail sales for the 3rd quarter 2018, (up 10.6% from 3rd quarter 2017). All territories except Zimbabwe and Ghana reported a decrease in rsales with the biggest decline experienced in Namibia. Retail sales in Swaziland, Lesotho, Namibia, Zambia and Botswana were impacted by the sale of the Legit business. Zimbabwe, Ghana and Zambia reported an increase in local currency sales. EDCON now has 186 stores outside of South Africa (including 51 in Zimbabwe).
 
GLOBAL COTTON TRADE - US AGENCY REPORT, 8 March 2018
The US Dept. of Agriculture's (USDA) Foreign Agricultural Service (FAS) produces a monthly publication entitled "Cotton: World Markets & Trade". The March 2018 report includes data on US and global trade, production, consumption; as well as analysis of events affecting world cotton trade. Africa, as an important producer of cotton, features in the useful statistical tables.
 
GLOBAL TEXTILE PRODUCTION - ITMF PRESS RELEASE, February 2018
The International Textile Manufacturers' Federation (ITMF) recently released its 3rd quarter statement relating to global textile production. It reported a stable Q3/2017 global market for both yarns and fabric production; but advised that it anticipates production to contract in Q4/2017.

SOUTH AFRICA - MASSMART FINANCIAL RESULTS, 22 February 2018
Massmart, the South Africa HQ-ed retailer (majority shareholder is Walmart) released its financial results for the 53 week period ending 31 December 2017. It recorded total sales growth of 2.7% to R93.7 billion, a trading profit increase (before interest) of 4.2%;,and, an increase in headline earnings of 14.0%.

Many will know the Group because of its Makro and Game operations - both these chains sell limited amounts of home textiles and apparel; while stores within Massmart’s building materials division sells industrial workwear. Massmart comprises 4 divisions which operate 423 stores in 13 sub-Saharan African (SSA) states. The 42 stores that are outside of South Africa produce 8.3% of the group’s sales.

One of Massmart's strategic priorities will be expand in SSA. Over the next 3 years this expansion will see an additional 76,823m/2 of floor space being added (representing ex-SA growth of about 35.6%). Part of its expansion plans will include more Game stores. Its latest analysts’ presentation shows (slides 20+21) where they currently have stores outside of the SA; and, where they intend opening new ones.

Walmart is rapidly expanding into SSA – it will only be a matter of time before it starts to sell more made-up textiles and garments in SSA. The question remains as to where will these home textiles and clothes destined for its African stores be made … it is known that some are already made in Africa. Of course its useful to remember that Walmart already does source (mainly via agents) fairly large volumes (in African terms) of garments for its US stores from apparel manufacturing units located in Africa.
 
NIGERIA - GOVERNMENT PROCUREMENT, 11 March 2018
Nigeria's Federal Government is considering using state procurement systems to bolster the country's textiles industry. Its government intends to halt the importation of textile materials for the production of para-military security uniforms.

Notwithstanding the fact that the strategic use of state procurement systems can yield very positive pro-job results given some countries' experiences of using public sector procurement systems to aid their textile-apparel value chain the Nigerian government would be wise to also consider ensuring that local manufacturing producers do not engage in anti-competitive practices.

In this regard they should consider the finding (of 25 February 2018) of the South Africa competition authorities related collusive tendering between a South Africa fabric manufacturer (Berg River Textiles - which has been closed down) and another firm (Eye Way Trading) related to the supply of fabrics used to make military uniforms, and prisoner's clothing. In November 2016 another South Africa textile company (Da Gama Textiles) acknowledged that it had colluded with other firms to set the prices of fabrics destined to make uniforms for the South African military, and the prisons' service.
 
ZIMBABWE - COTTON CONTRACT FARMING, 11 March 2018
The Cotton Company of Zimbabwe (Cotco) has requested the Zimbabwean Government to reinstate its monopoly on cotton marketing. A major reason for the Cotco request lies in the fact that after the liberalisation of the Zimbabwean cotton sector (which allowed more cotton traders into the market) that the industry was beset with a massive increase in "side marketing".

Side marketing is the process whereby some traders buy cotton from farmers who have contracted to sell their crop to another company. Often the designated company has extended loans (for inputs such as seeds, fertilisers, pesticides) and they provide extension services in the anticipation that they will be able to buy the farmer's crop. Insurgent buyers merely buy the crop without loaning any funds for inputs nor providing any technical support services.
 
TANZANIA - IN BRIEF, March 2018
Newspaper articles concerning: the Tanzania army and Tanzania government owned National Service Garment factory; and a story relating to the alleged pollution emanating from factories located in the Ubungo Export Processing Zone (in Dar es Salaam). This EPZ is the home of Tanzania's largest jeans exporter (see Tanzania Tooku Garments parent company).
 
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FEATURE

MAURITIUS STAKEHOLDERS DISCUSS "MODERN SLAVERY"
In late February 2018 ASOS, and online apparel retailer, hosted a workshop, together with the UK High Commission in Mauritius, whereat the challenges of “modern slavery” in the garment supply chain was discussed. The workshop focused on agreeing a common framework for improving worker protection in Mauritius. The event was attended by the Mauritian and Bangladeshi governments (there are many Bangladeshi migrants working in the Mauritian textile-apparel value chain), the International Labour Organisation, the IndustriAll trade union, the Ethical Trading Initiative (ETI), and Anti-Slavery International. A number of executives from other garment brands/retailers (e.g. Adidas, zLabels, Puma, Woolworths, Whistles) also attended.

The ETI believes that “modern slavery” is an overarching term which includes: i) “Human Trafficking”: the process of bringing a person into a situation of exploitation through a series of actions, including deceptive recruitment and coercion; ii) “Forced Labour”: where any work / services which people are not doing voluntarily and which is exacted under a threat of some form of punishment; iii) “Bonded Labour”: where labour is demanded as a means of repayment of a debt or a loan; iv) “Slavery”: a situation where a person exercises (perceived) power of ownership over another person. The ETI holds that there are 3 key ways businesses can contribute to eradicating slavery: i) recognising workers’ rights; ii) improved enforcement and regulation; and, iii) ensuring there is maximum supply chain transparency. The ETI believes that collaborative solutions (involving the entire supply chain, including NGOs) are key to eradicating modern slavery.

ASOS (www.asosplc.com [corporate]; www.asos.com [online shop]) is an online British headquartered garment retailer that focusses on selling clothes to adults in “20-something” age group. Its revenues for the year to end August 2017 were £1,876.5m. ASOS’s websites attracted 135.7m visits in August 2017; as at 31 August 2017 it had 15.4m active customers (5.2m in the UK; 10.2m outside of the UK). Its sourcing base includes 16 manufacturers in 5 African countries – Kenya (1 factory), Madagascar (1), Mauritius (11), Egypt (1), and Tunisia (2). The details of all the factories from which ASOS sources its garments, including from Africa, can be found on its website.
 
MORE RESOURCES ON MODERN SLAVERY & HUMAN TRAFFICKING
Ethical Trading Initiative
Know The Chain Freedom Fund
Verite
Anti-Slavery International
 

FACT OF THE WEEK

TOP TEN
AFRICAN COUNTRY GARMENT (HS61 & 62) EXPORTS TO THE US (in US$)
Country 2015 2016 2017
% Change
2016-17
in 1,000 US$
Egypt 844,042 695,314 726,520 4.5%
Kenya 368,382 340,538 340,070 -0.1%
Lesotho 299,687 295,666 290,539 -1.7%
Madagascar 51,097 103,789 160,119 54.3%
Mauritius 215,188 196,273 146,446 -25.4%
Morocco 122,438 128,919 131,336 1.9%
Tunisia 70,808 60,736 62,400 2.7%
Ethiopia 17,652 32,680 53,121 62.5%
Tanzania 27,316 36,971 40,544 9.7%
Ghana 9,203 6,281 8,509 35.5%
  2,025,813 1,897,167 1,959,604  
  • In 2017 African countries exported US$1.97bn worth of garments to the United States (in 2015: US$2.05bn; in 2016: US$1.91bn).
  • In 2017 the United States imported garments worth US$80.62bn of garments. China exported garments worth US$27,17bn; Vietnam US$11,43bn; Bangladesh US$4,86bn; India US$3,70bn; Cambodia US$2,16bn.
  • While there is a massive drop Mauritian exports to the US this is most likely to have been caused by Mauritian based garment companies / agents off-shoring production to (cheaper production) Madagascan factories (Madagascar's AGOA status was restored in June 2014). No doubt the void left in Mauritian factories has been taken up by increased orders to Europe and South Africa.
SOURCE: United States International Trade Commission (USITC).
 

AFRICAN VALUE CHAIN PROJECTS & ORGANISATIONS



USAID'S SOUTHERN AFRICA TRADE & INVESTMENT HUB (SATIH)
About: The USAID Southern Africa Trade & Investment Hub aims to increase international competitiveness, intra-regional trade and food security in Southern Africa. Core activities include: i) customs reform and modernisation; ii) food production and security; iii) textiles and apparel production and exports; iv) trade facilitation and WTO compliance. SATIH is supported by United States Agency for International Development (USAID) and works closely with the Southern African Development Community (SADC).
Textile & Apparel Objectives: SATIH aims to improve the competitiveness of the Southern Africa's textile, apparel and footwear industry, to improve the intra-regional trade of textile and apparel products, and to increase exports of textiles and apparel to the United States using the African Growth & Opportunity Act (AGOA). SATIH has assisted manufacturers to attend international trade shows (e.g. "Source Africa" and "Sourcing@Magic"). It also facilitates buyer tours to Southern Africa.
Operations: SATIH runs programmes in Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland and Zambia.
HQ: Pretoria (South Africa)
Website: www.satradehub.org and www.theafricaadvantage.com. [These websites say little about the Hub's current textile and apparel programmes as they have not been updated for a considerable period of some time].
 

RESEARCH & REPORTS

EGYPT:
"A Devalued Egyptian Pound and Cotton Now Correctly Labeled 'Egyptian' Injecting New Life Into What Was a Moribund Industry". United States Department of Agriculture's Foreign Agricultural Service (USDA - FAS). Cairo. 30 March 2017.
Report Highlights: In MY2017/18, cotton area is forecast to double to 110 000ha and production is set to almost double and reaches 340 000 bales. Post estimates cotton harvested area and production in MY2016/17 at 55 000ha and 175 000 bales, respectively. FAS/Cairo attributes the increase in area and production to record cotton prices in MY2016/17, encouraging farmers to double the area planted with cotton. High prices were a result of several factors including a devalued Egyptian pound, tighter supplies, and increased global demand after fraudulent claims of 100% Egyptian cotton by a key Indian manufacturer came to light. Imports are forecast to drop by 20% to a record low of 420 000 bales, while exports are forecast to increase by 66% to reach 200 000 bales.

LESOTHO:
Global Value Chains, Sustainable Development, and the Apparel Industry in Lesotho”. Mike Morris, Justin Barnes, Moshe Kao. Geneva. 2016. International Centre for Trade & Sustainable Development (ICTSD).
Synopsis: The apparel industry has been central to Lesotho’s economy. It accounts for around 1/3 of the country’s gross domestic product and employs 80% of its manufacturing workforce. The possibility of Lesotho embarking on an industrialisation path depends on the sectors prospects. This country case study examines the interplay between two different sets of foreign direct investment (FDI) driving two very different value chains: the one global, with FDI from Asia and production based on preferential access to the US market under the African Growth & Opportunity Act (AGOA); the other regionally based, with FDI from South African firms relocating production to Lesotho. The analysis of the differential impacts of these value chains makes the Lesotho case particularly interesting, revealing different paths to sustainable development.
 

UPCOMING EVENTS

  • Africa Occupational Safety & Health (A-OSH) - Trade Show - 22-24 May 2018. Johannesburg, South Africa. For more information: www.aosh.co.za
  • Source Africa - Trade Show - 20-21 June 2018. Cape Town, South Africa. For more information: www.sourceafrica.co.za
  • 14th Symposium of the Southern & East Africa Cotton Forum - Workshop - 4-6 July 2018. Harare, Zimbabwe. For more information: SEACF
  • Apparel Sourcing New York - Trade Show - 23-25 July 2018. New York, United States. For more information: www.apparel-sourcing-usa.us
  • Sourcing at Magic - Trade Show - 12-15 August 2018. Las Vegas, United States. For more information: www.ubmfashion.com
  • International Textile Manufacturers' Federation (ITMF) - Annual Conference - 7-9 September 2018. Nairobi, Kenya. For more information: www.itmf.org
  • Origin Africa – Trade Show - 9-11 September 2018. Nairobi, Kenya. For more information: www.originafrica.org
  • Apparel Sourcing Paris - Trade Show - 17-20 September 2018. Paris, France. For more information: www.apparelsourcing.fr.messefrankfurt.com
  • Africa Sourcing & Fashion Week (ASFW) - Trade Show - 1-4 October 2018. Addis Ababa, Ethiopia. For more information: www.asfw-online.com
  • Textile Exchange Sustainability Conference - Annual Conference - 22-24 October 2018. Milan, Italy. For more Information: www.textileexchange.org
  • Destination Africa - Trade Show - November 2018. Cairo, Egypt. For more information: www.destination-africa.org
  • ATF Expo - Trade Show - 20-23 November 2018. Cape Town, South Africa. For more information: www.atfexpo.co.za
  • 77th Plenary Meeting - International Cotton Advisory Committee (ICAC) - Annual Conference - 2-7 December 2018. Abidjan, Ivory Coast. For more information: www.icac.org
 
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about Mark Bennett - Editor
"The African Cotton, Textiles & Apparel Monitor"
I have almost 30 years' experience working in Africa's cotton, textiles and apparel value chain. Initially I was, for 15 years, a sector trade unionist in South Africa; then, from 2004 onwards, I worked as a development consultant for various Southern / Eastern African governments, and domestic private sectors. In my development activities I have been engaged by private sector foundations, and by DFID and USAID funded contractors. I find it rewarding creating development interventions that help cotton, textiles and apparel stakeholders to better processes, improve productivity, increase sales and add investment. See full CV.
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