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LOGO OF THE
NEWS & RESEARCH FROM THE AFRICAN CONTINENT
(#2 / 2019 - 12 February 2019)
www.africantextilesandapparel.com
NEWS

SOUTH AFRICA - EDCON UNRAVELS ... 140,000 JOBS AT STAKE, 11 February 2019
The COSATU-affiliated Southern African Clothing & Textile Workers’ Union (SACTWU - SEE >>) has expressed horror that 140,000 jobs might be lost should the EDCON (SEE >>) rescue funding crisis not be resolved "within the next day". According to SACTWU should a rescue package not be agreed "it will unleash a socio-economic disaster, unprecedented in the recent history of the clothing, textile, footwear and leather sectors".

SACTWU has stated: "The terrible multiplier effects on the poorest of the poor and the economy at large would be too ghastly to contemplate. Most workers in these sectors are from some of the poorest parts of the country, such as Ladysmith, Isithebe, Newcastle, QwaQwa, Botshabelo, Atlantis, Caledon, Babelegi, Fort Jackson, Zwelitsha, Despatch and Mogwase. All of them are black, and the majority are single mothers supporting, on average, at least 5 family members on their weekly wages. We call on the Unemployment Insurance Fund (UIF) and Public Investment Corporation (PIC, NOTE- this is the body responsible for handling the retirement funds of government employees)) structures to urgently fast-track approval of a priority rescue funding plan for EDCON. There is no time to delay." READ HERE >>

Comment
Is EDCON to big to fail? Watching the demise of EDCON has been like watching a train smash in slow motion.

It will not only be South Africa garment and footwear manufacturing firms that suffer - garment manufacturing units in Lesotho, Mozambique, eSwatini, Tanzania, Madagascar and Mauritius will all take a hit should this retail giant close.


Its interesting that SACTWU would make a call on the South african government to intervene in order to save the retailer. I have no problems with this. But using public sector pensioners' money ... on such an "investment"?. Surely only after a proper due dilligence has been completed! But SACTWU has significant financial resources of its own - why does it not liquidate some of its investments in HCI and other entities to fund an EDCON turnaround? Or is it too risky!

Meanwhile rumor has it that South Africa's Industrial Development Corporation (IDC) will be buying EDCON's stake in the Celrose
garment factory located near to Durban (South Africa).

A mini-overview of EDCON's woes can be READ HERE >>.



KENYA – BT COTTON, 9 February 2019
The first results of the national performance trials of GM) cotton done
by the Kenya Plant Health Inspectorate Service in partnership with the Kenya Agricultural and Livestock Research Organisation, universities and several scientists, are due this year. Kenya and South Africa initiated GM crops' research and trials almost simultaneously (Kenya in 2001, South Africa 1998), but the latter has become the first country in Africa to release its first commercial GM crop — insect-resistant — that was subsequently adopted for commercial production four years later in 2002. If Bt cotton will be released in Kenya and adopted for commercial production in 2019/2020, it will have taken the country 18 years to set up appropriate bio-safety legislation, conduct confined field trials and national performance trials. READ HERE >>


NAMIBIA – COTTON PROJECT TO SUPPLY ANGOLA, 8 February 2018
The Ohangwena Vocational & Innovation Institute (OVII) has entered into a joint agreement with an Angolan textile company, Alassola, to develop a cotton project in Ohangwena. The primary purpose of the planned project is to grow cotton, clean the cotton and process it and make fabric and all other related products, the two parties said. It is estimated to cost about N$238m (US$17.4m) to set up and aims to employ about 1,650 people in Namibia. The contract states that OVII must supply a minimum of 45,000 metric tonnes per year of ginned cotton until 2033, which is said to translate to a minimum of N$1.2bn (US$87.8m) in revenue per annum. READ HERE >>

Comment
The Namibian claims seem highly ambitious. For more details on Angola's revitalised textile industry see the "African Cotton, Textiles & Apparel Monitor" - Vol1. No. 6. There have been, apparently, huge investments made. But it appears that little thought went into growing cotton that would feed these textile mills when the mills were being developed.


SOUTH AFRICA – ARMY CATCHES APPAREL SMUGGLERS, 6 February 2019
South African soldiers have seized hundreds of thousands of Rands worth of illegal and counterfeit clothing and footwear destined for South Africa's massive informal economy as part of the national border protection. Operation Corona led to the seizures all happened during the last week of January and was confined to South Africa's land borders with Mozambique and Zimbabwe said the SA National Defence Force Operational Communication Operations Division. In October 2018 soldiers intercepted more than R4m (US$300k) worth of smuggled contraband clothing and footwear on the Mpumalanga/Mozambique border. May 2017 saw soldiers confiscate fake footwear and bales of clothing conservatively valued at R2.6m (US$190k). READ HERE >>


SOUTH AFRICA - STATE OF THE NATION REVEALS TEXTILE & APPAREL PLANS, 7 February 2019
Presidente Ramaphosa: "We will also be looking at establishing special economic zones that are dedicated to producing specific types of products, such as clothing and textiles, for example." READ HERE >>

Comment
This is interesting. What kind of SEZ will it be? It may not be a single site - but perhaps they may designate a zone be defining it to be the geographic borders of a single manufacturing facility. I guess it could makes sense - especially for those South African retailers that have stores outside of SACU (for example The Foschini Group (TFG) which owns two clothing factories ... Prestige I & Prestige II).

Of course I have heard South African leaders promise much - to reduce the smuggling of textiles and clothing; to produce multi-skilled clothing workers; to beneficiate locally grown wool and mohair; to develop the country's textile pipeline; we will end a system whereby there is corruption in the state procurement systems; we will end systems whereby manufactures can no longer; with impunity; pay workers below statutorily determined minimium wages the national minimum wage; and so on and so on and so on

The most magical thing that they have done recently is to provide .. and then extend ... and a number of fiscal incentives to

However I think Terry Bell sumsed up the "State of the Nation" address well:
"But for most unionists who have followed these annual assessments over the years, it must have been a case of deja vu, of having heard it all before. As one wit noted; “It was Thabo Mbeki — without the poetry.READ HERE >>


BOTSWANA – INCENTIVES FOR SELEBI PHIKWE, 4 February 2019
In an initiative to diversify the economy, the government will initiate the SPEDU Revitalisation Programme (SEE >>). In this regard, the Government has approved a set of incentives for the Selebi-Phikwe area, which include 5% corporate tax rate for the first 5 years and 10% after that for tourism, agricultural and manufacturing sectors.
READ BUDGET SPEECH (Para 21) HERE >>

Comment
Selebi Phikwe industrial already has some apparel manufacturers; and in the past, it has had many more. It will be interesting to see how this incentive pans out. Botswana has some of the lowest minimum wages in Southern Africa – so this will be a considerable attraction for potential investors wanting to supply the South African marketplace. Of course, many investors may be turned-off from investing in the country because the country is notorious in not providing work permits for necessary expatriate staff.


SOUTH AFRICA – TEXTILE FIRM CHARGED FOR NOT PAYING NATIONAL MINIMUM WAGE, 31 January 2019
The Department of Labour intends opening a fraud case with the South Africa Police Services against an employer that misrepresented the company to obtain an exemption from paying the National Minimum Wage (NMW – currently R20 per hour (US$1.47)). The Department of Labour received an e-mail on the 19 January 2019 from an employee at Fleeceytex Knitting Company based in Johannesburg. The employee wanted to confirm the authenticity of an exemption notice displayed at the workplace. The employee indicated that the exemption notice displayed showed a rate of R16 (US$1.17) per hour effective from the 17 January 2019 which the employees were subsequently paid on the 18 January 2019. READ HERE >>


NIGERIA – MAJOR TEXTILE BUSINESS IN FINANCIAL TROUBLE, 6 February 2019
The Asset Management Corporation of Nigeria (AMCON), has denied reports that it has taken over operations of a Kano State-based textile company, the Nigerian Braiding Manufacturers Limited (NBML), due to the manufacturer's indebtedness to the corporation.
READ HERE >>


NIGERIA – MINIMUM WAGES ALMOST AGREED, 4 February 2019
A sustained campaign by unions and threat of strike action has succeeded in pushing the Nigerian National Assembly to approve a new national minimum wage of 30,000 Naira (US$83) a month when it appeared to be stalling. All that will be left is for President Muhammadu Buhari to sign the minimum wage proposal into law. The new minimum wage is meant to cushion lowly paid workers in both the public and private sectors. READ HERE >>


RWANDA – LARGE TEXTILE FACTORY GIVEN ONE WEEK TO RELOCATE, 5 February 2019
The Rwanda Environment Management Authority (REMA) has ordered Usine Textile du Rwanda (UTEXRWA) one-week to relocate its business. The factory, which was developed in 1985, is positioned on nine acres of land with built-up construction of over 25,000 sqm. READ HERE >>


ZIMBABWE - DECLINE IN LOCAL BENEFICIATION, 11 February 2019
The Association of Cotton Value Adders of Zimbabwe (ACVAZ) has bemoaned the collapse of giant textile companies, saying it was affecting the local value-addition of seed cotton. At its prime, the industry employed about 24 000 people, but less than 4 000 are now under its payroll, according to the Zimbabwe Textile Union. Textile players, David Whitehead, Merspin, National Blankets, Karina Textiles and Modzone Enterprises have either shut down or are under judicial management. “Our biggest problem right now is, while we are growing the crop, the scope of growth in the textile industry is very low. If I can give you an example, in the last season we (textile companies) only used about 8 000 tonnes of lint locally from a total of 40 000 tonnes produced. So we are using maybe 15% (of output) because the capacity is low,” said the ACVAZ director. READ HERE >>


ZIMBABWE – FREE TRADE AGREEMENT WITH SOUTH AFRICA, 5 February 2019
The Zimbabwe Clothing Manufacturers' Association (ZCMA) has urged Zimbabwe and South Africa to revisit the bilateral trade agreement (BTA) between the two countries as a matter of urgency. In November 2017 South Africa gave a year's notice of its intention to terminate the 1964 pact telling Zimbabwe to use the Southern African Development Community (SADC) Trade Protocol on Trade. ZCMA chairperson has said that the matter has not been settled. He said: "It is our understanding that South Africa postponed the meeting to January and so the matter has not yet be concluded. We are pursuing this with the Ministry of Foreign Affairs and International Trade and the Ministry of Industry and Commerce". READ HERE >>


ETHIOPIA – MINI FEATURE BY SOUTH AFRICAN THINK TANK, 4 February 2019
"Five of 11 government industrial parks are in operation (with 6 due to be inaugurated in the next six months) and two of four privately-owned examples. Together the five operational government industrial parks host 36 companies, providing 45,000 jobs."
"By the start of 2019 Hawassa's factories employed 23,000 local workers and 700 expatriates."
"30km south of Addis is the Eastern Industrial Zone, built by a Chinese investor. Today it hosts 98 (mostly Chinese) enterprises, employing 14,500 Ethiopians and 1,100 Chinese."
"The reason for firms setting up in Ethiopia are clear: a package of incentives (including duty free imports of capital equipment, tax exemptions of up to seven years) combined with cheap electricity at US$0.04c kW/h, cheap rentals, duty-free access to the US market through the African Growth & Opportunity Act (especially important for the apparel sector), one-stop services in each facility including customs and permits, and plentiful labour at cheap rates."
"But it's labour that is the notable advantage. The average salary at Huajian footwear factory is 900Bir (US$30) a month; while workers start at just 750Bir (US$26) a month in the Hawassa Industrial Park."
READ HERE >>
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Correction
In the last newsletter - under the news snippet headed: "SOUTH AFRICA – HARD TO REPLACE DICK HEADS TO BRITS" - I referred to Dick Coetzee. I have been informed that its "Dicky". Apologies!
SNIPPETS FROM AROUND THE WORLD

PAKISTANI WORKER RIGHTS ABUSES
Human Rights Watch. New York, United States. January 2019
Lack of accountability for poor working conditions in garment factories is at the centre of troubled industrial relations in Pakistan. Violations of workers' rights are a problem in nearly all these factories and include practices contrary to both Pakistani law and codes of conduct that Western retailers insist, often in production contracts, that their suppliers follow. READ HERE >>


PRODUCTION & TRADE SUBSIDIES AFFECTING THE COTTON INDUSTRY
A report by the Secretariat of the International Cotton Advisory Committee. Washington (DC), United States. November 2018.
Subsidies to the cotton sector, including direct support to production, border protection, crop insurance subsidies, and minimum support price mechanisms, have been estimated at US$5.9bn in 2017/18, which is an increase of 33% from US$4.4bn in 2016/17. Ten countries provided subsidies in 2017/18, and the subsidies averaged US$0.18 cents/pound, up from US$0.17 cents/pound in 2016/17. Several countries in West Africa provided subsidies for cotton inputs in 2016/17 and 2017/18, especially for fertilisers and planting seeds. In 2017/18, Mali provided an estimated US$35m (US$0.05 cents/pound); Burkina Faso US$30m (US$0.05 cents/pound); Côte d'Ivoire US$15m (US$0.04 cents/pound); and Senegal US$1m (US$0.06 cents/pound). READ HERE >> and READ HERE >>
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PROJECT NEWS
EUROPEAN UNION
MALAWI TEXTILE INCUBATOR
October 2018
The European Union, under the COMESA Regional Integration Support Mechanism (RISM), is providing US$465K to fund a leather studio and textile incubation centre. READ HERE >>

AFRICA DEVELOPMENT BANK
ANGOLA TEXTILE-GARMENT-FOOTWEAR VALUE CHAIN STUDY
December 2018
The Government of Angola has received a loan from the African Development Bank (AfDB) towards the cost of implementation of Institutional Capacity Building for Private Sector Development Project, and intends to apply part of the agreed amount of this loan to carry out Preparation of The Textile, Garment & Footwear Value Chain Development Study. READ HERE >>
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RESEARCH

"Local Firms in the Ethiopian Apparel Export Sector: Building Technological Capabilities to Enter Global Value Chains". L. Whitfield, C. Staritz. Working Paper 2018: 2. Center of African Economies Department of Social Sciences and Business, Roskilde University. 2018.

Synopsis: Economic development is composed of many multifaceted processes, but growth in the technological capabilities of locally-owned firms is essential. Hence, it is crucial to understand how and why local firms invest in building technical capabilities. As a starting point, we need to know which technological capabilities local firms have and how they can be conceptualised, operationalised, and measured in the context of globalised industries. The objective of this working paper is to do this for the apparel export industry in Ethiopia, which has experienced impressive growth since 2010 and will continue to grow, positioning Ethiopia as an important new apparel supplier country. The paper uses original data generated from a firm-level survey designed to measure technological capabilities in apparel exports, combined with in-depth interviews with a subset of local firms and institutional actors. Using this data, the local apparel-exporting firms were assessed on strategically selected indicators across different categories of capabilities and then given an aggregate technological capabilities score. The analysis shows that local exporting firms generally have low technological capabilities and struggle to meet export requirements along all capability categories. However, there is important variation among the local firms, particularly related to firm owners' pro-active efforts to learn from other firms and experts and between vertically integrated, FOB, and CMT firms. The full paper can be READ HERE >>.


"Cotton: World Markets & Trade". US Department of Agriculture's (USDA) Foreign Agricultural Service (FAS). Washington (DC), United States. February 2019.

Synopsis: Production for 2018/19 is forecast up slightly, led by larger crops in China, Brazil, and Australia more than offsetting lower production in Turkey and India. Trade is projected up on higher imports for China and Turkey. Global use is down, mainly in China and India on slower economic growth. US production is down almost 200,000 bales, and consumption is reduced 100,000 to 3.2m. The US season-average farm price is lowered US$0.02 cents to US$0.72 cents/lbs. The full paper can be READ HERE >>.


"Cotton & Products Update - West Africa November 2018". US Department of Agriculture's (USDA) Foreign Agricultural Service (FAS). Washington (DC), United States. 18 December 2018.

Synopsis: This update primarily focuses on providing an overview of the cotton sector in Burkina Faso; it includes an abridged analysis for Senegal, Mali, and Chad. It is forecasted for marketing year (MY) 2018/19 (August to July) that the area planted for cotton in Burkina Faso, Chad, Mali, and Senegal was 1.45 million hectares (HA) - approximately a 14% decrease due to less competitive prices, flooding, and lack of inputs in Burkina Faso and Chad. MY 2018/19 total cotton production for all the countries mentioned above is projected at 2.47 million 480lb. bales, decreasing 8.2% from the previous year due to reports of excessive rains, lack of sunlight, lack of inputs, and high pest pressure that is forecast to reduce yields in Mali, Burkina Faso, and Chad. MY 2018/19 total exports are estimated at 2.48 million 480lb. bales on expectations of strong international demand. The full paper can be READ HERE >>.


African Country Statements delivered at the 77th Plenary Meeting of the International Cotton Advisory Committee (ICAC). 2-6 December 2018. Abidjan, Ivory Coast. READ HERE >> Egypt, Mozambique, South Africa, Sudan, Uganda and Zimbabwe.
UPCOMING EVENTS
  • OECD Forum on Due Diligence in the Garment and Footwear Sector - Conference - 13-14 February 2019. Paris, France. Afternoon session on 14 February 2019: “Due diligence and responsible investment in emerging markets”. This session will explore how companies and investors can conduct due diligence in emerging markets in global garment supply chains, as well as hearing the experiences of producer countries, including Ethiopia. SEE >>
  • Morocco Fashion & Textile - Trade Show - 28-31 March 2019. Casablanca, Morocco, For more information: www.moroccostyle.net
  • Intertex Tunisia - Trade Show - 4-6 April 2019. Tunis, Tunisia. For more information: www.intertextunisia.com
  • Source Africa - Trade Show - 12-14 June 2019. Cape Town, South Africa. For more information: www.sourceafrica.co.za
  • Destination Africa - Trade Show - 9-11 November 2019. Cairo, Egypt. For more information: www.destination-africa.org
  • Africa Sourcing & Fashion Week (ASFW) - Trade Show - 9-12 November 2019. Addis Ababa, Ethiopia. For more information: www.asfw-online.com
  • International Textile Machinery Exhibition - Africa - Trade Show - 14-16 February 2020. Addis Ababa, Ethiopia. For more information: www.itme-africa.com
EDITOR COMMENT!
OH THIS IS GONNA BE INTERESTING - TWO MAINLINE AFRICAN TEXTILE & APPAREL SOURCING EVENTS HELD AT THE SAME TIME ... THE ASFW AND THE DESTINATION AFRICA TRADE SHOWS ! SOMEONE IS GONNA BLINCK AND CHANGE THE DATES ... WHO
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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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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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