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NEWS & RESEARCH FROM THE AFRICAN CONTINENT
(#7 / 2018 - 2 May 2018)
www.africantextilesandapparel.com
Kenya’s textiles and apparel exports to the world in 2016 were US$441,7m
Kenya’s textiles and apparel exports to the EU in 2016 were worth US$13,8m
Kenya’s textiles and apparel exports to the US in 2016 were worth US$352,2m
 
NEWS
KENYA - MINIMUM WAGE CONCERNS, 30 APRIL 2018
Kenyan manufacturers have cautioned the Government that they would have to lay off workers if the minimum wage is increased. In 2017 President Uhuru Kenyatta increased the minimum wage by 18%. “A pronouncement to increase the minimum wage will be a huge blow to the industry and will negatively impact the livelihood of workers,” said the manufacturers’ lobby, the Kenya Association of Manufacturers (KAM). READ HERE >>


UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE
President Uhuru Kenyatta has awarded labourers a basic pay increase of 5% - the minimum wages will cover textile and apparel workers. The announcement was made by Cabinet Secretary for the Ministry of Labour and Social Protection Ukur Yattani at a Labour Day celebration. “In recognition of the good work done by our workers and cognisant of the rate of inflation of 4.8% this year, I hereby at this stage declare, a corresponding increase of five per cent with immediate effect,” Uhuru’s statement read. READ HERE >>
See later in this newsletter
for details of Kenya's old minimum textile and apparel wages
a new schedule will be shared once the new minimum rates are gazetted


ETHIOPIA: US$60m INDUSTRIAL PARK TO BE COMPLETED SOON, 30 APRIL 2018
The Ethiopian Government has advised that the construction of the Bahir Dar Industrial Park, by a Chinese contractor, will be completed within three months [by end July 2018].

Construction of the park, which is expected to create job opportunities for some 20,000 people, is (apparently) 37% complete. The park is located approximately 560km (>8 hours drive by road) from the Ethiopian capital of Addis Ababa. The Ethiopian Industrial Parks Development Corporation (IPDC) MORE HERE >> has previously disclosed that the 75-hectare park will focus on labour-intensive industries that would export value-added textile and apparel, as well as food products. READ HERE >>
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Comment
The Ethiopian Government would do well to ensure that this industrial park is properly completed before it rushing to allow tenants to move in. It is known that a number of apparel manufacturing investors which have moved into other Ethiopian industrial parks have become very frustrated after moving in only to find flaws (some major / some minor) which impact upon their set-up and/or on their production.



NIGERIA – SMUGGLING TASK FORCE TO ASSIST TEXTILE FACTORIES, 25 APRIL 2018
Dr Frank Jacobs, the President of the Manufacturers' Association of Nigeria (MAN), said that there were ongoing discussions with the Federal Government to revitalise moribund textile factories. He said that as part of the discussion, that MAN had proposed the establishment of an Anti-Smuggling Task Force to prevent or reduce smuggling. Jacobs said smuggling was the key reason why many textile factories had shut down their operations in the first place. READ HERE >>


SOUTH AFRICA – COMPETITION TRIBUNAL APPROVES GEMELLI MERGER, 25 April 2018
The Competition Tribunal has approved a merger between RMB Ventures Seven (Pty) Ltd (RMBV) and the clothing and accessory manufacturer and supplier Gemelli Group without conditions. RMBV is a subsidiary of RMB Private Equity (Pty) Ltd which is ultimately controlled by FirstRand Ltd (“FirstRand”). RMBV is an investment holding company for shares and investments in unlisted companies. RMBV is managed by RMB, the investment banking arm of FirstRand. The Gemelli Group consists of Gemelli (Pty) Ltd (Gemelli), Seagreen Trading (Pty) Ltd (Seagreen), Springstein Trading (Pty) Ltd (Springstein), Avonside Trading (Pty) Ltd (Avonside) and Export Unlimited (Pty) Ltd (EU). The Group is involved in the manufacturing and supply of women’s, men’s and children’s apparel/clothing and accessories. The group’s activities include in-house design, development and pattern making, an in-house knitting mill, warehousing, import/export facilities as well as partnerships with suppliers and retail outlets. The merger was found to have no public interest concerns.
SOURCE: Competition Tribunal press release (25 April 2018).

Gemelli also owns a clothing factory in Lesotho called Export Unlimited - its unknown as to whether this plant was affected by the transaction.
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The SA’s Competition Tribunal has given notice, in terms of Competition Act, that it has received a referral from the Competition Commission alleging that Stuart Graham Fabrics has engaged in a prohibited practice relating to minimum resale price maintenance. SOURCE: SA "Government Gazette": No. 41593 of 26 April 2018 - Notice 202 of 2018.
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'People must go to jail'
Trevor Manuel calls for action against state capture

Former South African finance mInister, Trevor Manuel, has stated that people involved in "state capture" must go to jail. Manuel said that so many people must go to jail that it may even require a flouting of tender procedures to get enough orange uniforms (and handcuffs). READ HERE >>

Orange fabric is procured by the South African government from mainly two South African textile companies (Da Gama Textiles and Berg River Textiles) and this fabric is used to make prisoners' garb in prison workshops. Both companies were recently found guilty, in separate matters, of collusive tendering (with other parties) by the South African competition authorities when bidding on tenders to supply, amongst other products, of range fabrics to the country's correctional services. In the case of Da Gama Textiles MORE>> the ultimate owners (a consortium involving Cowie Trading/Jacobs Capital/Da Gama employees) would no doubt have ultimately picked-up the tab for management conduct. While the quantum of the fine imposed upon Berg River Textiles has not yet being determined no doubt it will be the ultimate shareholders that will pick-up the fine (Berg River Textiles is part of the Winelands Textiles' group which in turn is controlled by Deneb Investments which in turn is controlled by Hosken Consolidated Investments (HCI) - whose controlling shareholder is the Southern African Clothing & Textile Workers' Union (SACTWU)).

It would be interesting to hear if any of the senior management of any of these companies that sanctioned and/or played a part in the collusive tendering scams was dismissed (or disciplined in any other way). I am 100% sure that no one will go to jail wearing Trevor Manuel's handcuffs and orange uniforms!

("State Capture": a term used in South Africa to describe "systemic political corruption in which private interests significantly influence a state's decision-making processes to their own advantage").


SOUTH AFRICA – ZARA COPYRIGHT INFRINGEMENT, April 2018
International clothing retailer Zara stores caved-in to pressure after allegedly copying South Africa’s Laduma Ngxokolo’s signature diamond-shaped design. A new Zara sock range closely resembled MaXhosa by Laduma’s Khanyisa range of cardigans and socks. The socks have been removed from Zara’s stores (including its online platform). READ HERE >>


ZIMBABWE – NEW HYBRID SEED RELEASED, 24 APRIL 2018
Zimbabwe’s major cotton seed producer Quton (since 2014 owned by the Maharashtra Hybrid Seeds Company - an Indian agri-biotech company) has released a new hybrid cotton seed which has a higher yield potential compared to current non-hybrid varieties. It has been argued that the new seed could play a part in reviving the country’s cotton sector. Apparently the results of research had shown that the hybrid seeds, which generally require less water, had a yield potential of 20-25% higher than non-hybrid seeds. READ HERE >>


MALAWI – COTTON FARMERS, 23 APRIL 2018
The Malawi government has set minimum farm gate prices for cotton at MK375 (US$0.52) per kg - up from last year’s MK320 (US$0.45). The change represents a 17% increase in the prices ... a development which has excited cotton farmers in the country. READ HERE >>



SOUTH AFRICA - EDCON FINANCIAL WOES, 22 APRIL 2018
Edcon, having announced Grant Pattison as the man who would fix and list the retailer, has backtracked on its Johannesburg Stock Exchange (JSE) listing plans. This decision was apparently taken after management's strategies have failed to win back consumers. Edcon, the owner of Edgars, Jet and CNA stores has endured a crippling debt crisis, a loss of market share and has closed of some of its stores. READ HERE >>
 
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FEATURE
UNITED STATES & CHINA TRADE WAR
AN APPAREL DIVIDEND FOR AFRICA?

On 22 March 2018 the President of the United States (PUSA) signed an order, in terms of Section 301 of the 1974 Trade Act, instructing the US Trade Representative to apply customs tariffs worth US$50bn on Chinese made goods. The PUSA stated that the tariffs would be imposed due to Chinese theft of US intellectual property; and that these duties would make the US "a much stronger, much richer nation."

Prior to the imposition of the duties a network of US apparel and retailer bodies (including apparel brands and retailers) engaged in an extensive lobbying exercise to avoid tariffs being imposed on Chinese origin consumer products, such as clothing, shoes, home goods, fashion accessories, and travel goods.

In March a coalition of 17 US organisations wrote to the PUSA to express their concern relating to any customs tariff increases that may be levied on shoes, clothing, fashion accessories, home textiles, etc READ HERE >>. The coalition argued that such tariff increases would hurt US consumers / workers / companies. They pointed out that China is the top supplier of these items to the US: in 2017, China accounted for about 41% of all apparel, 72% of all footwear, and 84% of all travel goods imported into the US. The US’s National Retail Federation, on the behalf of 25 (mainly) US apparel retailers and brands (including the VF Corporation, Levi Strauss, Costco, JC Penny, Kohls, Target, Walmart), also expressed concern READ HERE >>.

Prominent US sector organisations involved in the lobbying were the US Fashion Industry Association (USFIA – previously known as the US Association of Importers of Textiles & Apparel), and the American Apparel & Footwear Association (AAFA). The US Global Value Chain Coalition (USGVC) also attempted to educate US policymakers and the public about the American jobs and the domestic economic growth US companies generate through their value chains. In their argument to prevent PUSA tariffs on Chinese made goods the USGVC attenplted to show that any sourcing supported substantial numbers of US jobs.
Source: US Global Value Chain Coalition SEE HERE >>

Textile and clothing products were ultimately excluded from the US' first set of tariffs targeting China. However it now appears that a bellicose White House may be considering a further tranche of duties on Chinese origin goods – which may also include “soft” products.
 
The rumors of additional US tariffs on Chinese made goods made are already having an impact on US retailers and brands that source "soft" product from China. The Chief Executive Officer of the American Apparel & Footwear Association (AAFA), Rick Helfenbein, has said that retailers plan their product purchases an average of 6-9 months in advance, and they’re already preparing for the potential levies to be in place. Who could be affected? “Everybody,” he said. “We’re hearing loud and clear people are trying to move their production,” Helfenbein said. “If I’m going to get slaughtered, I’m moving my goods now.” READ HERE >>.
 
This nationalistic trade war could present some opportunities (unless the move prompts a major tit-for-tat trade war which will severely knock the global economy) for African apparel manufacturers. If US apparel retailers and brands are exploring a more diversified basket of country sourcing options – perhaps they may have already requested their sourcing staff to include more African producers. Its likely that the established SSA producers (in Kenya, Mauritius, Madagascar, Lesotho and perhaps even Swaziland (which in January 2018) regained its AGOA privileges) may pick-up windfall orders.
 
FACT OF THE WEEK
 
STATUTORY MINIMUM WAGES TO BE PAID TO WORKERS ENGAGED IN KENYA'S TEXTILE & APPAREL MANUFACTURING INDUSTRY

The Regulation of Wages Amendment Order, which came into effect on 1 May 2017, set the Kenyan minimum monthly wage, exclusive of a housing allowance, at:
in Nairobi, Mombasa and Kisumu:
  • General Worker (under contract) - KSh12,926.55 (about US$128)
  • Machinist (under contract) - KSh14,650.90 (US$146)
  • Junior Clerk (under contract) - KSh16,724.75 (US$166.66)
  • Garment & Dress Cutter (under contract) - KSh19,909.45 (US$198)

all former municipalities and Mavoko, Ruiru & Limuru town councils:
  • General Worker (under contract) - KSh11,926.40 (US$118)
  • Machinist (under contract) - KSh13,663.60 (US$136)
  • Junior Clerk (under contract) - KSh15,646.00 (US$156)
  • Garment & Dress Cutter (under contract) - KSh18,201.95 (US$181)

all other areas:
  • General Worker (under contract) - KSh6,896.15 (US$69)
  • Machinist (under contract) - KSh11,050.35 (US$110)
  • Junior Clerk (under contract) - KSh12,791.70 (US$127)
  • Garment & Dress Cutter (under contract) - KSh15,519.35 (US$155)
 
RESEARCH & REPORTS
Kenya Apparel & Textile Industry: Diagnosis, Strategy and Action Plan”. Y Konishi, MP Mogollon, A Adamali, K Ramakrishnan, M Barma. 2015. Washington DC, United States. Prepared for the World Bank.
Synopsis: Kenya’s textile and apparel sector has the potential to play a key role in anchoring the country’s deeper movement into middle income status and in serving as a source of gainful employment for its fast growing, young population. As a manufactured good, it offers opportunities for increased value capture and streamlined trade logistics and for the building of skills and experience from the factory floor to management level. Based on these foundations, it therefore serves as a potential gateway to other manufactured goods, offering opportunities for Kenya to capture an increasing share of global trade and to advance economic diversification. The full report can be accessed HERE >>.


Textile & Clothing Value Chain Roadmap of Kenya (2016-2020)”. Formulation of the Roadmap was led by the Kenya Ministry of Industrialisation & Enterprise Development; with the technical assistance of International Trade Centre (ITC) through the Supporting Indian Trade & Investment in Africa (SITA) project (SITA - which is funded by the UK’s Department for International Development (DFID)).

Synopsis: The goal of Kenya’s textile and clothing (T&C) value chain roadmap is to set the sector on the course of strategic development by addressing constraints in a comprehensive manner and defining concrete opportunities that can be realized through the specific steps detailed in its Plan of Action (PoA). Kenya’s current model has performed well, yielding strong economic and social returns. However, a progressive shift to a new strategic model is required to remain competitive. The industry must unite and evolve in order to leapfrog into higher growth and value addition. The sector’s strategic orientation should follow a two-pronged approach. Firstly, Kenya has to build on its assembly and CMT prowess. Secondly, the sector has to move up the global value chain, shifting from basic items to superior products in order to capture greater value and penetrate premium market segments. The programme of Action responds to these two visions by setting forth strategic objectives to support their implementation: i) maximize productivity and uphold quality requirements through skills development; ii) improve the business environment to further support the development of the T&C industry; iii) expand the benefits of investment throughout the T&C value chain; and, iv). enable market penetration and product development through trade intelligence. The full report can be accessed HERE >>.
 
AFRICAN VALUE CHAIN PROJECTS & ORGANISATIONS


Kenya Association of Manufacturers (KAM)

About: The Kenya Association of Manufacturers (established in 1959) is the representative organisation for manufacturing value-add industries in Kenya. KAM’s membership is organised into 14 economic sector delineated units which allows for customised service delivery to the relevant membership. It has one section devoted to the textiles and apparel manufacturing sector. KAM has a number of sub-committeees that structure its engagements with government, for example on: trade and tax, legal and regulatory affairs, infrastructure, etc

Cotton, Clothing & Textile Objectives: KAM provides a link for co-operation and dialogue with the Kenya Government by representing the views and concerns of its members to the relevant authorities. In pursuit of its core mandate of policy advocacy, KAM promotes trade and investment support, upholds standards, encourages the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduce the cost of doing business.

HQ: Nairobi (Kenya)

Website & Contact: www.kam.co.ke Mr. Abel Kamau is the KAM Liaison Officer responsible for the co-ordination of the textile and apparel sector (abel.kamau@kam.co.ke).
 
INTERNATIONAL TEXTILE MANUFACTURERS' FEDERATION (ITMF)
ANNUAL CONFERENCE - NAIROBI (KENYA) SEPTEMBER 2018

From 7-9 September 2018 the International Textile Manufacturers' Federation (ITMF) will hold its annual conference in Nairobi (Kenya). The theme of the conference will be: “Supply Chains & Business Models in Times of Rapid Change". The provisional ITMF annual conference programme can be accessed HERE >>.

The current ITMF President is Jaswider ('Jas') Bedi from Kenya (his profile can be accessed HERE >>). He is an individual that has, perhaps more than anyone else, managed to put sub-Saharan Africa's textile and apparel manufacturing industry on the map. He has done this while successfully maneuvering around some of the ego and the strong personaliies that are a feature of Africa’s cotton, textile and apparel industry; and its associated development advisors!

Jas is the second senior African based office bearer of the ITMF – a previous ITMF president was Walter Simeoni (2006-08) who ran, among other businesses, South Africa's Frame Textile group READ MORE >>.


Immediately after (9-11 September 2018) the ITMF meeting the Origin Africa trade show will take place in Nairobi.
 
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 - 17-19 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
 
CLASSIFIEDS
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MANUFACTURING EQUIPMENT WANTED / FOR SALE
Looking for staff? Want to engage a consultant? Have equipment to sell? Do you need 2nd hand machinery? Have a tender? For a limited period the "African Cotton, Textiles & Apparel Monitor" will publish (free of charge) select classified advertisements from firms / development organisations active in the Africa's crop to shop value chain. Adverts limited to 50 words / 300 characters (and may include a mini logo).
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CLICK TO SHARE YOUR NEWS & PICTURES WITH US
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 my full CV at Devex or LinkedIn.
 
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