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LOGO OF THE
NEWS & RESEARCH FROM THE AFRICAN CONTINENT
(#29 / 2018 - 2 October 2018)
www.africantextilesandapparel.com
In 2017 Africa exported US$1.27bn worth of cotton lint; in the same period the global cotton trade was worth US$13.4bn
In 2017 Africa’s biggest exporter of cotton was Benin with US$345,8m; followed by Burkina Faso with US$196,9m
In 2017 Egypt exported cotton worth US$92,2m; it also transformed huge volumes of its own cotton into textiles
NEWS

GLOBAL – COLLECTIVE BARGAINING TO RAISE TEXTILE/GARMENT SECTOR WAGES? 24 September 2018
Global trade union IndustriALL has signed a Memoranda of Understanding with PVH and zLabels, bringing the number of Action, Collaboration, Transformation (ACT) member companies to 20. PVH is the first United States company to join; zLabels is a collection of German brands sold online as Zalando. They join Bestseller and Cotton On which joined ACT in May 2018.

ACT (
SEE >>) bills itself as an organisation facilitating a ground-breaking agreement between global brands and retailers and trade unions to transform the garment and textile industry which will achieve living wages for workers through collective bargaining at industry level linked to purchasing practices. Its obviously an apparel brand and retailer response to the persistent pressure of labour rights NGO that have been campaigning for a living wage for global garment workers. ACT believes that collective bargaining at industry level should mean that workers in the garment and textile industry within a country can negotiate their wages under the same conditions, regardless of the factory they work in, and the retailers and brands they produce for. Furthermore they argue that addressing purchasing practices by apparel brands and retailers should means that the payment of the negotiated wage is supported and enabled by the terms of contracts with global brands and retailers. According to its website its programme countries are Cambodia, Myanmar and Turkey. READ HERE >>

Comment
ACT is obviously an apparel brand and retailer response to the persistent pressure of labour rights NGOs that have been campaigning for a "living wage" for all garment workers.

When I was a textile, apparel and footwear trade unionist I liked collective bargaining – it builds trade unions by making them activist organisations. I liked industry (sectoral) collective bargaining. – and I really like scenarios whereby negotiated wages and terms and conditions of employment agreements were extended across the same industrial sector to “non-party" employers and to the members of other non-party trade unions.

When governments intervene and set minimum wages it is normally an intensely political intervention. Often the determination of minimum wages is subject to the vagaries of how influential employers are (most of the time!); how influential trade unions are (some of the time!); and, when the next general election will be held. Many examples can be given. In Kenya in 2017 – immediately before the 2017 general election – the government increased the minimum wage by 18%; once in power at a 2018 May Day the Kenyan Prime Minister stated workers would get a 5% minimum wage increase ... after howls of protest by employers ... and now 5 months later ... the promised 5% wage increase still has to be made law. In August 2018 a teetering Lesotho government adjusted the minimum wage by 37.4% - most probably in the expectation of an early general election.


In my view what the State can give the working class - that same State can also take it away ... or at least ... heavily discount it.

Centralised, sectorally based, collective bargaining is not without its problems. Sometimes unions are weak; sometimes unions are corrupt; sometimes unions merely operate because they represent the views of political party; sometimes employers or the government establish rival unions in order to undermine other unions; sometimes the bargaining terrain is not the level playing field that it should be; sometimes sufficiently representative unions have to become majority (50%+1) unions in order to bargain; sometimes the extent of the bargaining unit is unilaterally determined making union recruitment difficult; sometimes employer recruitment strategies make it difficult for unions to organise workers; sometimes government laws and regulations make it difficult for unions to operate effectively; sometimes the gate access regulations of industrial parks / special economic zones make it difficult for unions to recruit members; etc.

The ACT approach, in my view, is potentially much more sustainable. It should not not require large amounts of donor resources to maintain it. This is something that the BetterWork programme could certainly learn from.

So when will ACT get to country's like Lesotho, Kenya, Tanzania, Madagascar, Swaziland or even to Ethiopia?

It seems to me that ACT could start in a place like Ethiopia - which has some of the lowest wages paid in the garment making world of today simply - on the basis the fact that two of the larger apparel retailers that have vendors making garments for them in Ethiopia - PVH and H&M - are also members of ACT. Of course Ethiopian central economic planners may see things differently - low wages ... in fact very low wages ... are perhaps seen as the country's biggest (only) selling point ... and so they may not want any ACT programme anywhere near the country!


ETHIOPIA – MANUFACTURING PRODUCTION, 27 September 2018
Ethiopia has been touted as Africa’s best bet to replace Asian countries like Bangladesh, Vietnam and Cambodia as the world’s workshop, in large part due to the plentiful supply of cheap labour. … But if the government is to succeed, it needs to convince young men and women … to stick with their new jobs. A recent study of five industrial firms – including a garment maker and a shoe factory – found that only a third of new employees remained in the industrial sector after a year. In industrial parks like Bole-Lemi … labour turnover has proved especially problematic, with employees often lured away by the prospect of better jobs in the city.

… even the newly launched Hawassa industrial park, in the country’s rural and densely populated south, is struggling with this problem. … in the cut-throat world of light manufacturing, there is little room for a pay rise. Although base wages are low – ETH750 (US$26.88) in Hawassa, up from ETH650 (US$23.30) at the beginning of June 2017 – “non-wage” benefits such as food, transport and accommodation allowances effectively double it, notes Whitfield.

The government is looking at new ways to share these costs with firms, in particular to reduce the cost of housing. Though it is said to be improving, worker productivity remains far lower than in countries like Bangladesh. The government and donors now need age-old rural attitudes to adapt quickly to the industrial workplace, to which end they are rolling out large-scale programmes.

“Things are really on a knife-edge at the moment,” says Stefano Caria of Bristol University. “There is a real possibility the firms will decide in the next couple of years that the constraints are just too high.”
READ HERE >>

Comment
I think that Associate Professor Caria (SEE >>) is right. Things are on a knife edge in Ethiopia … and I wish they were not. It would be really great if Ethiopia were to succeed.

There are rumors that one leading brand sourcing from Ethiopia may be shedding some of its senior staff in Ethiopia. Is this cost cutting? Was this part of their original plan? Are other manufacturing destinations considered to be worth more of their effort? Yes - most other places in the rest of the world do have higher wages but factory productivity is far better there and the production staff there tend to remain loyal to a company for considerable periods of time. Other places in the world have have significantly cheaper and more efficient freight logistics than those that exist in Ethiopia. And, of course, other government systems maybe slightly more robust that they are in Ethiopia.

If this rumor of one buyer downsizing its current ambition due to problems is true this would be a great pity. Brand led industrialisation is, in my book, the holy grail of textile and apparel industry development - it should not be lost to some sort of government logic along the lines of: "we have a queue of sector investors what is there to worry about?".

It seems to me that Ethiopia could perhaps do with a new set of exogenous eyes to advise it on the problems its garment and textile manufacturing industry is facing. This fresh set of eyes should not involve the usual suspects such as senior government bureaucrats, existing manufacturers, existing buyers, existing development donors, existing policy wonks from global multi-lateral institutions, nor, existing academics. It should be an outside multi-disciplinary reference group whose task would be to provide a set of practical recommendations to help key stakeholders to overcome some very practical problems. This exercise should not be focused on developing a whole new set of policies - it should mainly focus on the more practical side of life. Issues such as: freight logistics; the supply of utilities; government permiting and administration; wages and working conditions; productivity improvement; etc. They external consultants should obviously engage with all existing stakeholders in order to find out what their real problems are. As a minimum this group should engage some seasoned development specialists that have worked with trying to get foreign governments and the private sector to attend to that many problems that affect the textile and apparel private sector, and the lives of working people.

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CORRECTION
HOW MUCH APPAREL SMUGGLING IS TAKING PLACE IN SOUTH AFRICA
"ITS BETTER TO BE APPROXIMATELY
RIGHT RATHER THAN BEING PRECISELY WRONG"

In the last edition of the “
African Cotton, Textiles & Apparel Monitor” (#28 of 25 September 2018) I reported on some comments by the Southern African Clothing & Textile Workers’ Union (SACTWU) in relation to the economic stimulus plan announced by South Africa's President Cyril Ramaphosa. I was very skeptical about the SACTWU claim that the smuggling of Chinese made clothing had resulted in the non-collection of approximately R2.3bn (US$160m) worth of customs duties.

I puzzled about the how SACTWU managed to calculate this. SACTWU’s resident bright spark, Etienne Vlok, provided the following answer:
“In 2016 the South African Revenue Services’ (SARS) records showed that R12bn (US$848m) worth of clothing was imported into South Africa from China. For the same period China’s custom’s authority’s records showed that R18.5bn (US$1.3bn) worth of clothing was exported from China to South Africa. This means that that the Chinese reported value was about R5.2bn (US$368m) higher than the SA reported value (minus shipping and other costs and taking into account declaration differences). This is the equivalent of R2.3bn (US$162m) in lost customs revenue.”

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UNITED STATES – NEW AGOA CLOTHING EXPORT QUOTA’S SET 28 September 2018
The Committee for the Implementation of Textile Agreements has announced, for the fiscal year 2019 (1 Oct 2018, through 30 September 2019), limits on duty- and quota-free imports of apparel articles assembled from regional and third-country fabric under the African Growth & Opportunity Act (AGOA). Apparel articles entered in excess of these quantities will be subject to otherwise applicable customs tariffs. For apparel articles wholly assembled in one or more beneficiary sub-Saharan African countries from fabric wholly formed in one or more beneficiary countries from yarn originating in the US or one or more beneficiary countries, the FY 2019 limit is 2,048,357,135 square meter equivalents (SME) (up 1.3% from FY 2018). Of this amount, 1,024,178,567 SME (up 1.3%) is available for apparel articles imported under the AGOA third-country fabric provision, which provides preferential treatment for apparel articles assembled in one or more lesser-developed beneficiary countries regardless of the country of origin of the fabric used. See the US Customs & Border Protection notice here READ HERE >>. The AGOA "quota utilisation" fill reports can be SEEN HERE >>.

Comment
Its important to note that since AGOA has been in place that it has never been the case that the quantitative cap on exports of garments from Africa made with third country fabrics would ever be filled.


ETHIOPIA – IMF COMPLETES ARTICLE IV MISSION, 26 September 2018
Some brief facts / comments from the International Monetary Fund (IMF) Article IV Mission to Ethiopia:
  • in 2017/18 Ethiopia’s real gross domestic product (GDP) is estimated to have grown by 7.5%; Ethiopian growth is expected to step up in 2018/9 to 8.5%
  • the Ethiopian authorities succeeded in reducing the external current account deficit to 6.4% of GDP in 2017/18 through policies to constrain public sector imports and borrowing, and tightened monetary policy to reduce external imbalances and contain inflation
  • political uncertainty, foreign exchange shortages, and weak prices for traditional exports hampered economic activity
  • the IMF supports the ambitious reform agenda announced by the Prime Minister aimed at opening up important parts of economy to competition and encouraging private sector investment.the IMF mission.
READ HERE >>.


SOUTH AFRICA – MAJOR APPAREL RETAILER'S RATING DOWNGRADED, 26 September 2018
S&P Global Ratings said it could downgrade southern hemisphere retailer Woolworths again if its position in the nonfood markets in SA and Australia weakens further. The ratings agency was commenting after announcing it had downgraded its rating on Woolworths from AA, which means it has a strong capacity to meet its financial commitments, to one notch below A+, which means the retailer has a strong capacity to meet its financial commitments but is susceptible to adverse economic conditions and changes in circumstances. The downgrade was prompted by the retailer announcing significant loses – the drop in its profitability being caused by the weak performances in Woolworths’ non-food businesses in Australia and SA. Its South African sales of women’s garments were regarded as particularly disappointing. READ HERE >>


ETHIOPIA – INTERNATIONAL FINANCE CORPORATION FINANCING, June 2018
The International Finance Corporation IFC) has disclosed that it will loan the Ethiopian government US$475,000 to assist its manufacturing and agricultural sector. One part of the financing deal is specifically aimed at the textile/garment industrial park in Hawassa. The IFC notes that while the companies in the industrial park are well established international firms (from China, Sri Lanka, India, Indonesia, Hong Kong, etc.) and may not need local financing, their local Ethiopian suppliers are likely to be facing access to finance constraints and inventory financing could provide a solution. The project will work with the Ethiopia Investment Commission (EIC) to explore the prospects of Commodity Collateralised Financing (CCF). READ HERE >>


NIGERIA – MINIMUM WAGE STRIKE, 27 September 2018
Nigeria Labour Congress: “We members of Organised Labour would want to formally inform all employers of labour and Nigerians that beginning from midnight 26 September 2018, workers from all sectors of the economy and our civil society allies will begin a nation-wide warning strike action over the refusal of the federal government to reconvene the meeting of the Tripartite National Minimum Wage Committee to enable it conclude its work.” Apparently, the current Nigeria minimum wage (set in 2011) is N18,000 (US$49) a month; unions are demanding a minimum N65,000 (US$179). READ HERE >>


UGANDA – GMO CROPS, 26 September 2018
It has been more than two decades since the commercial introduction of GMO crops. They have delivered a range of benefits – including stronger yields, better weed control and the ability to fight off pests – to the farmers in the nations that have adopted them. Bt crops also could aid Uganda’s struggling textile industry, which is dwindling because farmers are no longer growing cotton due to the challenge of the bollworm. Research already is underway on a GMO cotton seed resistant to the devastating worm. READ HERE >>


GHANA – TEXTILE FIRMS LAY OFFS DENIED, 24 September 2018
Akosombo Textiles Limited (ATL) has denied media reports that it has laid off 200 employees. A statement issued by ATL stated: "Management would … like to inform its distinguished customers, the media, and the general public that it has not laid off 200 employees as reported and has no plans to lay off its workers. Rather, the company is in the process of increasing our production activities from 2 shifts to 3 shifts, which will require us to employ more people in the near future. READ HERE >>


SOUTH AFRICA - HIGH CUBE CONTAINER RESTRICTION BATTLE, 26 September 2018
South African freight operators and shippers are poised to take consolidated action against the contentious restriction outlawing high cube containers that exceed a height of 4.3m when carried on the back of a trailer. The urgency of the restriction issue was highlighted by various speakers who attended a meeting to discuss the issue. Apparently, as from 1 November 2018, no high cube containers will be allowed through South African ports unless shippers and harbour haulers can assure the movement of these containers out of the ports. READ HERE >>

Comment
Apparel manufacturers in Lesotho and Swaziland will be watching this with keen interest. They all use South African ports and roads. There may be insufficient numbers of low height road freight trailers that can handle the High Cube containers.


ZIMBABWE – COMPANY APPEALS FOR FOREIGN EXCHANGE TO BUY INPUTS, 27 September 2018
Bulawayo textile giant, Archer Clothing Manufacturers, says it is struggling to process orders owing to a shortage of foreign currency needed for the importation of inputs, machinery and equipment. Its managing director, Jeremy Youmans (also the head of Paramount Garment Works), has advised that the company required at least US$5m in new capital including US$1m for the acquisition of new machinery to support long-term plans. “Archer continues to grow, but the growth has been cut back as the finance sector was unable to provide sufficient support for raw materials to fuel the growth, even though at least half of it was in exports,” Youmans said. READ HERE >>

Comment
Its clear that there is a co-ordinated strategy by Zimbabwe’s textile, clothing and leather industry to try to get Zimbabwe authorities to release more foreign exchange to sector firms who need it to import manufacturing inputs (fabrics and trims), and new production machinery. This is but one of many newspaper articles that have appeared in the press over the past few weeks. Zimbabwean manufacturers are dangling increased export orders and increased employment in the eyes of the government. I hope that their lobbying efforts work.


SOUTH AFRICA – NEW TARIFF CODE FOR BRASSIERES? September 2018
The South African Revenue Services (SARS) have invited public comments on proposals to technically amend the SACU customs tariff book. One of the proposals relates to a request by Hanes for the creation of separate tariff subheadings for brassieres classifiable in tariff subheading HS6212.12. The reasons for the creation of 8-digit tariff subheadings is to make a distinction between bra’s with closures and those without closures (such as certain sports bras). Apparently, the split in tariff code is to enable domestic producers to work out a more accurate reference price for different kinds of imported items – reference prices are being developed in order to limit smuggling (especially of undervalued items). Hanes Inc (SEE >>) is a United States company which owns a manufacturing operation in Durban, South Africa. READ HERE >>


ZIMBABWE – 2018/19 COTTON SEASON, 27 September 2018
Most farmers who received free cotton inputs have intensified land tillage and are ready to plant their white gold as soon as the rains fall. This season the Presidential Cotton Free Inputs programme is targeting 400,000 families up from 350,000 in rural areas who rely on cotton as their source of livelihood. READ HERE >>
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TABLE OF THE WEEK
RESEARCH

The Selection of Talent: Experimental and Structural Evidence from Ethiopia”. Abebe, Caria, Ortiz-Ospina. Latest version draft. 25 September 2018.

Synopsis: The study shows how search frictions in the labour market affect firms’ ability to recruit talented workers. In a field experiment in Ethiopia, we show that an employer can attract more talented applicants by offering a small monetary incentive for making a job application. The size of the effect is equivalent to doubling the wage offer for the same position. Estimates from a structural model suggest that application incentives are effective because (i) the cost of making a job application is large (on average 9-13% of the monthly wage), especially among talented low-income job seekers; and (ii) 30% of individuals are unable to pay this cost due to credit constraints. In a second experiment, the researchers show that local recruiters underestimate the positive impacts of application incentives. This can explain why the use of this intervention is limited in our context. The researchers findings highlight that financial incentives for job applications can improve the selection and allocation of talent. To read the full report SEE HERE >>.


Final Evaluation: West Africa Cotton Partnership Project (WACPP)”. Prepared for review by the US Agency for International Development (USAID). It was prepared by the Analytical Support Services & Evaluations for Sustainable Systems (ASSESS)
[a partnership of the US Department of Agriculture/Foreign Agriculture Service (USDA/FAS), the University of Rhode Island (URI), and Kwame Nkrumah University of Science and Technology (KNUST)]. July 2018.

Synopsis: The West African Cotton Partnership Project (WACPP), also known as the Four Country Cotton Partnership (C4CP) project was designed to meet the challenges related to soil fertility depletion, and increasing production cost of cotton and rotational food crops (cereals and legumes); and to ensure that the food-cash crop system remains a large contributor to food security in Benin, Burkina Faso, Chad, and Mali. Specifically, the project sought to sustainably increase agricultural productivity and economic and social benefits for women; and address issues of soil degradation, climate change and the overuse of pesticides in these targeted countries. The evaluation found that the achievement of the project was significant, given that it started late and had to also work with US$2.4m less than the initial amount planned by USAID/West Africa. In spite of these setbacks, the objectives relating to technology innovation and dissemination, their effects on production and productivity and increasing women’s participation can be said to have been achieved. To read the full report SEE HERE >>.
UPCOMING EVENTS
  • Africa Sourcing & Fashion Week (ASFW) - Trade Show - 1-4 October 2018. Addis Ababa, Ethiopia. For more information: www.asfw-online.com
  • Maroc Sourcing 2018 - Trade Show - 11-12 October 2018. Marrakech, Morocco. For more information: www.marocsourcing.ma
  • Textile Exchange Sustainability Conference - Annual Conference - 22-24 October 2018. Milan, Italy. For more Information: www.textileexchange.org
  • Cotton House Africa - Pan African Cotton Conference - 1-3 November 2018. Kampala, Uganda. For more information: Cotton House Africa
  • 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 and SEE HERE >>
  • Sourcing at Magic - Trade Show - 4-7 February 2019. Las Vegas, United States. For more information: www.ubmfashion.com
  • Morocco Fashion & Textile - Trade Show - 28-31 March 2019. Casablanca, Morocco, For more information: www.moroccostyle.net
  • Source Africa - Trade Show - 12-14 June 2019. Cape Town, South Africa. For more information: www.sourceafrica.co.za
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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 my full CV at Devex or LinkedIn.
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