This newsletter contains links to content located on external websites.
Over time it is likely that some of the links to this content may be broken.
You are advised to download material of interest as soon as possible.
(#18 / 2018 - 17 July 2018)
In 2017 Zimbabwe exported apparel worth US$11m; and textiles worth US$22m (much of the latter being cotton lint)
In 2017 Zimbabwe imported US$27.8m worth of textiles, plus US$7.5m worth of apparel
In 2017 Zimbabwe imported US$5.8m worth of clothes from South Africa, and it exported US$7m worth of garments to South Africa

The Southern African Clothing & Textile Workers’ Union (SACTWU) has declared a national wage dispute in the country’s clothing sector. The dispute comes after the trade union and clothing industry employers could not reach a wage settlement after three rounds of negotiations. The dispute was formally declared on 12 July 2018.

Clothing employers are offering a 7% wage increase; while SACTWU’s members are demanding an 8% package increase for metro areas (e.g. Johannesburg, Durban and Cape Town) and 8.5% for non-metro areas (e.g. towns in the more rural areas of the country). The hourly minimum wage for a qualified sewing machinist in Cape Town is currently R27.94 (US$2.11); while a qualified sewing machinist in the rural South African town of Newcastle is R18.63 (US$1.40) per hour.

SACTWU has written to the National Bargaining Council for the Clothing Manufacturing Industry (NBC) and requested its General Secretary to process the dispute as per the requirements of the Clothing Bargaining Council’s constitution. South Africa’s Labour Relations Act requires parties to refer disputes in the clothing industry to the NBC. The next step in the process is a conciliation set up by the NBC.

If clothing employers do not concede to the union’s final demands it will mean that the deadlock would remain unresolved. SACTWU has stated that, in that event, it will conduct a strike ballot in the clothing industry which may mean that 60,000 clothing workers might embark on a wage strike. SACTWU’s members in the footwear industry are currently (15 July 2018) on a national wage strike. SOURCE: emailed SACTWU (SEE >>) press release

Ethiopian Airlines will set up a facility in Ethiopia that will manufacture and supply aircraft seat covers, safety belts, carpets and many other interior parts to ACM Aerospace of Germany. Ergo, the biggest African airline group, has signed a partnership agreement with European aerospace manufacturing. Initially the Ethiopian facility will manufacture products by importing raw materials, however it hopes to develop capacity to be able to certify select inputs that are produced in Ethiopia. The new facility will generate a considerable amount of forex and create job opportunities for more than 100 individuals. READ HERE >>

At the opening plenary of the 2018 US-Sub-Saharan Africa Trade & Economic Cooperation Forum (a.k.a. – the AGOA Forum) the US Trade Representative (USTR) advised:
“It has long been the desire of the US for AGOA-beneficiary countries to advance to a point where it would be possible to talk about a comprehensive and more permanent framework to deepen our relationship. Indeed, AGOA was designed to encourage alignment around best practices in order to pave the way for a free trade agreement between the United States and sub-Saharan African (SSA) countries. Our Congress reinforced this point during the reauthorisation of AGOA in 2015 when it expressly instructed the USTR to pursue free trade agreement negotiations with AGOA eligible countries. In part because of AGOA’s success, we believe that many of you are at the point where we could enter into free trade agreement negotiations. If you are willing, we are eager to take this next logical step in our relationship. READ HERE >>

For some time it has been known that the US wants to replace the AGOA arrangement, which expires in September 2025, with reciprocal bi and/or multi- lateral free trade agreements with SSA states. Its not known with which SSA country / trading block the US would first like to conclude an agreement with. It is thought that the following countries / trade blocks may be on the US list of possible candidates: the East African Community (EAC – Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda); the Southern African Customs Union (SACU – Botswana, Lesotho, Namibia, South Africa and Swaziland); and, perhaps Mauritius and Nigeria.

With AGOA expiring in seven years many SSA states with ambitions to further develop their textile and apparel manufacturing industries will be placed in difficult positions. For how will they be able to market their economies as textile and apparel investment destinations, or places where US apparel retailers and brands can develop significant sourcing operations, when the advantages of AGOA are set to expire and they do not know what the replacement preferential trade arrangements will look like?

Tanzania is one such country. It hopes to develop a dedicated textile and apparel export processing zone – which is yet to be constructed – whose factories will focus on exporting to the US marketplace using AGOA. Should they develop a zone (and this could take at least 2-3 years) – Tanzania may still have a hard time finding investors that would be willing to commit to their zone (and train workforces) with a looming AGOA expiry deadline; and an uncertain vision of what will replace the unilateral trade privilege programme. The fact that Tanzania has still not ratified the EU – EAC Economic Partnership Agreement will not provide potential investors with any comfort that Tanzania may ratify any post AGOA free trade agreement that may be concluded with the US.

In a previous edition of the “African Cotton, Textiles & Apparel Monitor” (#16 of 3 July 2018) it was reported that South Africa’s Competition Commission (SEE >>) had approved a merger whereby an entity called Ready Right Now (RRN - a company belonging to South Africa’s Industrial Development Corporation (IDC – SEE >>)) would be allowed to take over Glodina towels’ (SEE >>) manufacturing operations.

The IDC already owns 100% of Colibri Towelling (a major South African towel manufacturer SEE >>); and, it also owns 100% of Prilla 2000 (SEE >> - which supplies most South African toweling plants with their cotton yarns). The Commission stated, among other issues, that since there were volumes of towels being imported into South Africa that any worries about a market monopoly being created as a consequence of the takeover would be unfounded.

The matter then progressed (on 11 July 2018) to the Competition Tribunal (SEE >>). At the proceedings Glodina Lifestyle and Zorbatex made presentations. The Tribunal directed that the non-confidential merger record be made available to Glodina Lifestyle and Zorbatex by close of business 13 July 2018; that the participants file their submissions by close of business 17 July 2018; and, that the Commission and merging parties should file their responses by 19 July 2018.

The Competition Commission, the Competition Tribunal and the IDC are all South African government entities that receive policy mandates from, and report to, the Economic Development Department (EDD).

The speed at which this matter is being processed is surprising. Fair enough, some may argue, because it will be important to get the Glodina plant (or parts of it) producing and thus employing people. Of course some may argue that if the IDC had undertaken a more robust due diligence exercise when it initially backed a private sector buyout of the Glodina facility then people may have been employed from October 2017 onwards!

Clearly South Africa’s Zorbatex Towelling (SEE >>) must be worried about the potential dominance of the South African toweling market with the IDC controlling Glodina, Colibri Towelling and Prilla 2000. For if these firms operate as a block it could present them with serious market challenges.

Aside from competition issues another complicating factor of this proposed IDC buyout is that the IDC is a development finance institution that South Africa’s textile and apparel industry go to when they require financing. The IDC also manages another huge pot of industry support funds on the behalf of the South African Department of Trade & Industry (DTI) – the Clothing & Textile Competitiveness Programme (CTCP) funds. It is known that Zorbatex, and the company that tried / actually bought Glodina in September 2017, as well as uBuhle Towels (an aspirant towel manufacturer that wanted to open a plant on the KwaZulu-Natal provinces north coast) have, or have applied for, IDC funding. In short the IDC is an active player in the textile and apparel industry; and at the same time it often acts a banker to the industry - often with the same staff playing dual roles.

What has happened since the Glodina facility closed in the second half of 2017 has certainly not covered the IDC in any glory. The IDC has not publicly disclosed as to why the R185m (US$13.9m) deal it backed hit problems – a deal which government leaders recently identified in the South African parliament as part of its “black industrialists” programme.

It perhaps would have been better if the IDC had engaged arms’ length consultants to ascertain the viability of it saving all of Glodina’s operations, or part of them, or none of them at all. A thorough independent evaluation would surely have shown if the purchase of this operation would, under specified conditions, make commercial sense. This evaluation exercise could have been done in the context of a broader comprehensive value chain analysis of the entire South(ern) Africa toweling manufacturing sector. This research may have shown that it would have been better if public funds could have been utilised to sustain and create employment in existing operative toweling plants, or for that matter the broader textile, apparel and home textiles manufacturing sector.

I strongly suspect that if this deal is given the green light that the IDC will be required to financially back a loss making plant (working capital; capital equipment upgrade) for many years into the future ... and if this is the case it would be a tragic waste of public funds. Jobs are very important - but so is managing the public purse!

"[Ethiopian] industrial parks up and down the country are employing thousands of people thanks to FDI which currently stands at a minimum of US$200k for any business interested. All exports of products made in Ethiopia [and exported] to the US and Europe are duty free. Entry level salaries for workers range from US$35 to US$40 per month – lower than Bangladesh’s minimum wage of US$68 per month and far below the average wage of US$500 in the Chinese textile sector." READ HERE >>

The Chairman of the Kenya National Parents Association (NPA) that came up with a proposal for a single school uniform in Kenya said it is meant to reduce the cost of uniforms for parents. However the proposal has caused significant debate since the organising secretary of the NPA Chair has distanced himself from the proposal. Kenya’s Education Cabinet Secretary Amina Mohamed attempted to calm the situation by saying the matter would be put before stakeholders for discussion. READ HERE >>

It had previously been reported - see: "African Cotton, Textiles & Apparel Monitor" #17 of 10 July 2018 - that some Kenyan policy makers believed that developing a single school uniform policy in their country would provide a significant fillip for the Kenyan textile and apparel manufacturing industry - as they (rather than imports) could provide the garments required.

It takes an average of 135 days for goods to be delivered to United States’ buyers from the time they place an order in Kenya. Varieties of fabrics needed to keep pace with rapidly changing demands are not made available to Kenyan factories. Shortening the supply chain would enable Kenyan manufacturers to reap greater gains. READ HERE >>

The Standards Organisation of Nigeria (SON) has sealed 21 warehouses in Kano, which it said housed fake and substandard textiles. The SON Director-General (DG) said that the warehouses were stocked with substandard African print popularly known as ‘Atampa’, near the famous Kano textile market. The Surveillance & Intelligence Monitoring (SIM) unit, in collaboration with a security team, sealed the 21 warehouses stocked with textiles worth millions of naira. The DG stated that the owners of the warehouses were flouting the law, by stocking substandard African prints that did not meet the requirements of the relevant Nigeria Industrial Standards (NIS). The NIS stipulates that African prints should be made of 100% cotton and must not be colour fast amongst other relevant attributes. According to him, initial surveillance revealed that the textiles being sold as African prints are actually materials manufactured with up to 70% polyester and about 30% cotton. Meanwhile, some of the prints were discovered to be completely polyester which is at variance to the standard requirement. READ HERE >>

The Government should intensify efforts to rid corruption at border posts to curb smuggling of goods into the country which is negatively affecting production in industries, Zimbabwe National Chamber of Commerce (ZNCC) has said. Smuggling of second hand clothes over the years has severely affected the textile industry, threatening to push many of the players out of business. The high costs of production have seen manufacturing companies passing on the costs to consumers, who have responded by opting for second hand clothes which are much cheaper, thereby fueling smuggling. Studies have shown that Zimbabwe is importing clothing and textiles worth more than US$500m every year, 90% of which should be paying customs duties at 40%, but only less than US$200m in duty revenue is earned collected due to under invoicing, abuse of trade agreements, corruption and discarding of second hand clothing. READ HERE >>

The Zimbabwe Textile Manufacturers’ Association (Zitma) says local banks should handle the foreign currency allocation system as the central bank has failed to allocate forex to the industry and was now facing collapse. Zitma’s vice president, Freedom Dube, has advised that the Reserve Bank of Zimbabwe’s (RBZ) failure to allocate them forex has left the textile industry teetering on the brink of collapse. “The sector is heavily weighed down by shortage of foreign currency as we are not on the RBZ’s priority list. As such, we are struggling to get forex. To make matters worse, the bulk of raw materials is imported. For instance, 90% of our raw material is being imported and we need quite a lot,” Dube said. He advised that the industry used to employ 20,000 people, but currently has just around 3,000 workers. READ HERE >>

A senior lecturer at Tanzania’s Sokoine University of Agriculture (SUA), Professor Reuben Kadigi, has advised the Tanzania government to set-up an Agricultural Input Support Scheme in order to revive cotton farming in the country. The don, who was speaking during a recent cotton stakeholders’ workshop, said the support scheme was vital to providing smallholder farmers with agricultural inputs in order to increase productivity. “It is high time the government borrowed a leaf out of Zimbabwe’s Presidential Input Scheme or AMA (Agricultural Marketing Authority) model to revive cotton crop,” said the agricultural economist at a workshop organised by the Agricultural Council of Tanzania (ACT). READ HERE >>

Edcon (SEE >>), one of South Africa's largest retailers of apparel, says its shelves will increasingly be stocked with locally sourced house brands, as the struggling clothing retailer continues to unwind its foreign-brand strategy. The group, which in June 2018 shut its flagship Topshop store in Sandton (South Africa), was assessing how to position the British fashion chain in South Africa "in formats that are more viable", said Vannie Pillay, executive for group corporate affairs and communications. Edcon has largely reversed an earlier decision to bring multinational brands to South Africa, having already exited chains including River Island, Tom Tailor and Lucky Brand. Many of these brands struggled to gain traction in South Africa’s weak economy, prompting Edcon to focus more on its higher-margin local products. Pillay said that in line with the shift towards private-label products, Edcon had increased its manufacturing capacity at its Celrose (SEE >>) and Eddels (SEE >>) facilities in South Africa’s KwaZulu-Natal province. READ HERE >>


The South African Revenue Services (SARS) has stated (13 July 2018) that in the first 6 months of 2018 that its customs division had confiscated goods valued at R1.7bn (US$128m). According to SARS, of this amount, R1.4m (US$106.6m) involved “counterfeit clothing, footwear and other goods”; and involved 3,351 “busts”. There were also 20 busts of “clothing and textiles (second hand and other infringements)” valued at R5.2m (US$390k). READ HERE >>
It would be interesting if SARS (and related institutions) were to also release the following data related to textile, apparel and footwear smuggling:
  • when SARS’ states that its seizures involved “counterfeit clothing, footwear and other goods” – what do they mean by “other goods”? How much of the R1.4bn worth of seized goods was clothing? and, how much footwear? and, how much was “other goods”?
  • the amount of fines imposed upon anyone caught smuggling textiles / apparel / footwear? These fines would, hopefully, be in addition to the goods intercepted being forfeited.
  • whether, in the past 10 years, any alleged smugglers of textiles / apparel / footwear have faced criminal prosecutions for their activities? If so when, and what was the outcome?
  • whether any businesses / individuals trying to sell smuggled goods have been prosecuted? If so when, and what was the outcome?

In spite of these seemingly impressive statistics many South African textile, apparel and footwear stakeholders are generally of the view that the amount of seizures disclosed is merely the tip of the smuggling iceberg. This is in spite of a range of these stakeholders having applied consistent pressure on SARS’s customs division for many years – those old enough would say … “decades”!

Currently a range of South African stakeholders are developing a strategy to further develop the South Africa cotton-textile-apparel-footwear-retail pipeline – the so called “Masterplan”. These stakeholders can come up with any industrial and trade strategy plans that they would like – but for as long as the smuggling of textiles and apparel is not decisively attended to their plans will come to naught. That SARS’ customs division only managed – in a period of 6 months – to stop 20 consignments worth about R5.2m is, to me, a clear demonstration that it is failing and not doing the job it should be.

SARS’ customs division needs to re-establish its research and intelligence capacity, and then adopt a merciless approach with regards those co-ordinating the smuggling; as well as those trading in smuggled goods. However, given the current revenue collection crisis, its most probably likely that SARS’ resources will not be allocated to fixing its customs division – resources will most probably be allocated to fixing the leaks in the corporate and personal income taxes field … where the revenue collected rewards will be much higher.

Other South African stakeholders are in a position to assist. For example:
  • South Africa’s Department of Trade & Industry could initiate requests for amendments to the customs related verification procedures pertaining to apparel goods entering SACU in terms of the trade protocol of the Southern African Development Community (SADC). It is suspected by many, in my view correctly, that some of the garments entering SACU from some factories in select SADC member states are not being made with fabrics that are made in SADC and are thus transgressing the SADC trade rules of origin.
  • In an effort to limit smuggling South African apparel, footwear and home-textiles retailers, especially those which have stock exchange listings, could ensure that their own internal buyer value chains do not engage in buying practices that are fed by smuggling. Senior sourcing executives must know when deals brought to them buy their own buyers are too good to be true. The Boards of these companies should put in place strict codes, with appropriate sanctions, in order to reduce the temptation of some of their buyers to procure smuggled goods. These retailers should also provide that external auditors are annually brought in to independently check the integrity of supply chain systems, and to independently audit that the correct customs duties on some import transactions have been paid.
  • The Southern African Clothing & Textile Workers’ Union (SACTWU) can also play an indirect role in the effort to significantly limit smuggling. SACTWU’s investment arms makes it one of the wealthiest trade unions in South Africa – some of its investment include holdings in eTV, and the Tsogo Sun hotel and casino chain. The trade union could easily take R15m (US$1.1m) from the dividends it receives from these and other holdings and engage a private detective agency who would be tasked with hunting down smugglers and to gather evidence that would be submitted to SARS and the South African Police Services; and to then monitor that SARS, the police and the prosecutorial authority do their jobs properly. Its possible that a SACTWU investment in this area will do its membership (and its own investments in the textile and apparel industry) more good that it would by loaning money (R244m (US$18.4m)) media Iqbal Surve’s Sagarmatha group. READ HERE >> SACTWU will be aware of the fact that in the 1990s that the country’s textile and apparel private sector did band together, under the banner of the Customs Law Enforcement Group (CLETG), to fund the engagement of private sector investigators to track down textile and apparel smugglers. The CLETG also provided training to customs officers – so that they could do their jobs better (e.g. teaching them the difference between knit and woven garments).

The fact that SARS's customs division appears to be putting hard resources into stiffly defending South African borders from illegal Viagra imports (R40.4m worth of seizures) as opposed to limiting clothing and textile smuggling (R5.2m worth of seizures) perhaps says something! Many will want to know when they are going to come after smugglers in the textile, apparel and footwear industry!

In late 2017 South African journalist – Jacques Pauw – published a book called “The President’s Keepers – Those Keeping Zuma in Power and Out of Prison” (published by: Tafelberg. October 2017 – SEE). The book covers aspects of the rot within SARS during the Zuma presidency – the relevant sections in the book are Chapters 9 and 10.
2017; Jan-May 2017 compared with Jan-May 2018
2017; Jan-May 2018
Losing to Blackouts: Evidence from [Ethiopian] Firm Level Data”. Daniel Gurara & Dawit Tessema. Working Paper No. 18/159: published by the International Monetary fund (IMF), with support from UK's Department for International Development (DFID). 10 July 2018

Synopsis: Many developing economies are often hit by electricity crises either because of supply constraints or lacking in broader energy market reforms. This study uses manufacturing firm census data from Ethiopia to identify productivity losses attributable to power disruptions. Our estimates show that these disruptions, on average, result in productivity losses of about 4–10%. We found nonlinear productivity losses at different quantiles along the productivity distribution. Firms at higher quantiles faced higher losses compared to firms around the median. We observed patterns of systematic shutdowns as firms attempt to minimise losses.

The report concludes:
"These results have clear policy implications. Broadly beneficial effects aside, maintaining an efficient power supply ensures productive firms remain productive. Not only does it shield firms from having to lock up resources in unproductive activities. It also limits involuntary coping mechanisms like variable capacity utilisation or provisionally suspending operations to minimise losses. Therefore, the policy imperative for maintaining adequate, and efficient power supply is clear."
This paper is based on Ethiopian firm data for the period 2000 – 2009. It is thus possible that some of the problems may have been attended to. On the other hand there have been many reports that while there has been improvements that problems related to power reticulation remain. Of course the general point remains - interruptions of supplies of electricity to textile and apparel manufacturing companies is disruptive and costly (e.g. more costly overtime working; the possible expense of air-freighting late deliveries; damage to work in progress textiles (spinning, weaving, dying, printing; etc).

The full IMF Working Paper can be found HERE >>.

"Cotton: World Markets & Trade - July 2018". The United States' Department of Agriculture's (USDA) Foreign Agricultural Service (FAS). Washington DC, United States. July 2018.

Synopsis: Production for 2018/19 is forecast down with the US and Australia more than offsetting higher supplies in Brazil, India, and Mexico. Trade is projected higher with larger Brazil exports and greater imports for Pakistan and Bangladesh. Higher consumption is largely attributed to revisions for China. The US balance sheet reflects lower forecast production in spite of marginally higher-than-anticipated plantings as indicated by last month’s Acreage Report. Production is reduced with higher expectations for abandonment in Western Texas. The US season-average farm price is up 5 cents to 75 cents per pound. For 2017/18, production is raised due to larger crops in India and Brazil, while use is higher reflecting China revisions. Global trade is up with greater imports in Pakistan and Bangladesh driving higher exports in India and the United States.

The report's tables contain useful data related to African cotton production.

The full USDA FAS report can be found HERE >>.
  • 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
  • Source Africa - Trade Show - 19-21 June 2019. Cape Town, South Africa. For more information: www.sourceafrica.co.za
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).
I get repeated requests from environmental and labour compliance auditing bodies for in-country staff who can assist them with translations when they are undertaking in country audits. If you know of any individuals/organisations who could undertake these kinds of services kindly let me know their details. Country, language competencies, names, contact details please. editor@africantextilesandapparel.com
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.
Copyright © *|CURRENT_YEAR|* *|LIST:COMPANY|*, All rights reserved.
The views expressed in this newsletter do not necessarily reflect the views of the editor.

My mailing address is:

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list

If you would like to subscribe to the newsletter you can also do so by visit the website www.africantextilesandapparel.com

©2017 ACTAM