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NEWS & RESEARCH FROM THE AFRICAN CONTINENT
(#7 / 2019 - 19 March 2019)
www.africantextilesandapparel.com
NEWS

SOUTH AFRICA – SAVING FASHION RETAILER EDCON – MORE DETAILS EMERGE, March 2019
South African Cabinet Statement, 13 March 2019
Ad Para 4.3. Cabinet also, welcomes the joint efforts of government, the Unemployment Insurance Fund (which includes trade unions) and the private sector (banks and shopping mass [sic] landlords) to recapitalise South Africa’s largest clothing retailer – EDCON. In order to conclude an agreement to save EDCON, all parties had to make sacrifices and to work closely together.
Ad Para 4.4. At the heart of efforts to ensure that EDCON stays afloat is the impact on employment. More than 40 000 direct jobs and many more thousands of direct and indirect jobs would have been lost if EDCON had not been recapitalised. Cabinet calls on South Africans to support the call made at the Jobs Summit to buy Proudly South African products and support local industry.
READ HERE >>

Growthpoint Properties: says it turned down EDCON’s request for a rental reduction. However, the South African property giant participated in EDCON’s restructuring, by providing it with an injection of R110m (US$7.63m) in return for an equity stake, Growthpoint said a rental reduction for the troubled retail group would not have been in line with its strategy. Growthpoint said it had already decreased its exposure to the retail group by about 9,000m² since the end of 2017. Its exposure was expected to decrease by at least another 18,000m² over the next two years. READ HERE >>

Redefine Properties: contributed R54.6m (US$3.79m) of equity agreed to rental reductions of as much as R13.8m (US$957k). READ HERE >>

Hyprop Investments: has a strong interest in EDCON’s survival, given that the owner of Edgars, Jet and CNA occupied 66,781m² of space in Hyprop’s malls at the end of December 2018, or 9.2% of its gross lettable area. Hyprop has been working with EDCON to reduce the retailer’s space requirements. The companies had agreed that 7,563m² would be vacated in the short term. READ HERE >>

Octodec Investments: has agreed to a rental reduction of approximately R11m (US$763k) for two years starting 1 April 2019 and would receive equity in lieu of it. READ HERE >>

Reitway Global: “The market has voted — at least twice — that the EDCON model is unsustainable.” … “it would have made more sense to save Jet and CNA specifically, as these were the two most viable parts of the business.” … “The department store model is a dead company walking, and shareholder funds would be better applied to companies that have a better long-term survival prognosis." READ HERE >>


UGANDA – A MINIMUM WAGE SOON TO BE IMPLEMENTED? February 2019
Ugandan employers face a 3-year jail term or a penalty of up to UGX10m (US$2,700) if they are found paying their workers below the about to be set minimum wage. The sentences were approved in a new law, the Minimum Wages Bill which was passed by the Uganda Parliament in February 2019. A bill was also approved to repeal the Minimum Wages Advisory Board Act which doesn’t provide for an employee-employer led and a sectoral based minimum wage determination. Under the provisions of the new law, various sectors will help the Minister to set minimum wages every year. It provides for the establishment of a Minimum Wages Advisory Board, appointed by the Minister of Labour in consultation with the Public Service Commission and approved by Cabinet. READ HERE >>

Comment
It is rumoured that the Uganda minimum wage will be set at about US$35 per month. It has been said that existing Ugandan textile and apparel manufacturers currently pay an average of US$65 per month. I wonder if the law has protections that will stop existing manufacturers downsizing their workforces to enable them to engage new workers at the lower minimum wage rates!


ETHIOPIA – THE HAWASSA STRIKES, March 2019
It seems like Ethiopia’s flagship Hawassa Industrial Park (HIP) has been caught up in two strikes.

Strike One – concerning workers’ demands for increased pay, and an end to alleged abductions and sexual harassment. As was reported in last week’s edition of this blog (see “
African Cotton, Textiles & Apparel Monitor” No. 6. of 2019 SEE >>) - a series of wildcat work stoppages affected a number of HIP’s garment manufacturing factories in early March – some of the plants affected supply garments to global apparel brands and retailers including – H&M and PVH. Details of PVH's and H&M’s suppliers located in the HIP can be seen on their "factory" supplier lists - SEE - H&M >> and SEE - PVH >>. (NOTE: The PVH vendor list is only updated once a year – the new list should be available with effect from end March 2019.)

Strike Two – a political dispute involving the Ethiopian Federal Government, the administration of the Southern Nations, Nationalities & Peoples' Region (SNNPR); and, the people of the Sidama region of the SNNPR. Elements of the Sidama population are calling for their region to be made into one of the country’s federal states. The city of Hawassa – including the HIP - sits in the Sidama region.

In pursuit of its aims, Sidama activists called for a general-strike / stay-at-home between 13-15 March 2019 in the Hawassa area – this resulted in Hawassa businesses, public offices and schools being closed. Since 2018, the SNNPR regional state has been hit by a series of violent conflicts. Last June, it was reported that ten people died, 89 were injured, and 2,500 residents were displaced, due to violence that flared in Hawassa.


Comment
It must be remembered that these worker wild-cat strikes are not the first strikes to have affected HIP (nor indeed other Ethiopian industrial parks). I believe that there is a general code of silence about worker strikes in the country's textile and apparel industry; while few stoppages are reported upon for Ethiopia clearly lacks a collective of good labour journalists. You have to be an internet slewth, and have good contacts, in order to hunt down workstoppages - and to figure out what happened as a consequence of the strikes (were issues resolved? What happened to the strike's ringleaders after the strike was resolved?).

A potentially toxic mix – worker struggles for improved pay and working conditions, and ethnically based political struggles! Should they collide or coalesce? What then? The current wildcat factory floor protests should be seen as a worrying sign for many stakeholders – the government of Ethiopia and its parastatals; as well as factory owners and global brands that buy garments from them.

However, shop-floor protests related to wages and workimng conditions are by and large solvable. The main actors in these buyer driven value chains could take the lead.

If both PVH and H&M – members of Action Collaboration Transformation (ACT -
SEE >>) - are committed to centralised bargaining as a means to improving workers wages why do they not promote the development of non-statutory centralised bargaining arrangements for the HIP only?

It would be relatively easy to do – and would not need government consent! A centralised system of setting minimum wages per agreed occupation (e.g. general workers, machine operators, clerical staff, etc) could be established; non-statutory dispute resolution forums could be set up - disputes of interest could result in strikes, while disputes of right would be decided by binding arbitration.

Moreover, if the Ethiopian Industrial Parks Development Corporation (IPDC) / Ethiopian Investment Centre (EIC) do not allow union officials access to the park (there are rumors to this effect!) – apparel brands/retailers could threaten to suspend giving orders to country vendors, or get some of their suppliers to make a few union officials full-time employees of one or the other companies operating in the HIP (full-time union shop stewards, whose wages are paid for by the company where they are employed, are not uncommon).

Of course, it would mean that Ethiopian trade unions would have to step up to the plate and do some hard work growing their membership – agreements negotiated with unrepresentative trade unions are worth zero. The existing union(s) could be supported by their global sector union – IndustriAll (
SEE >>). And with IndustriAll. It needs to figure out how they can practically and consistently support Ethiopian unions and workers – and here I am not referring to the odd seminar or some public fanfare announcement that they have negotiated another framework agreement with a major global apparel brand/retailer.

If a proper strategy is developed to address workers’ wages and working conditions, it may head-off the potential spill-over effects of extra-parliamentary political struggles. For its possible that unattended wages and working conditions issues could be the fuel that extra-parliamentary opposition will use to pursue their own agenda.

I had significant experience of the intercept between the politics of political liberation and shop floor struggles when I was a full time official in South Africa’s independent trade union movement from the late 1980s through to (and well past) the (first) democratic transition. In South Africa, with relatively few cards in their deck, the extra-parliamentary (both domestic and exile) forces knew that they could extract maximum economic damage on the apartheid government by championing workers’ struggles. As a consequence, the independent union movement in South Africa became involved in more and more general strikes (in the local vernacular “stayaways”) whose principal aim was to damage the national/regional economies. To some extent my union managed to avoid – but not entirely – the activities of the extra-parliamentary opposition (by arguing that workers needed to identify that they were workers first and that party political allegiances came a distant second).

One can see more problems down the road for HIP. When political instability ramps up – often accompanied by violence - it will make things difficult for corporations. Global apparel brands and retailers may not allow their head office and regional expatriate staff to travel to the region – sourcing program leads, merchandisers, quality assurance and control personnel, social compliance auditors, etc. When I worked in Lesotho, I saw the restrictions that were imposed upon the expatriate staff by some brands and retailers when there was heightened political instability in the country. The security of expatriate staff is going paramount – for example it's known that some US brands/retailers staff located in Kenya have security details minding them and their families. In the most recent national state of emergency the Ethiopian government switched-off internet communications - the value chain manufacturers and brands/retailers know how difficult this made their operations.

Of course, there is little that foreign manufacturers and brands/retailers can do in the face of internal strife. This is something that the Ethiopian government must deal with.
SEE ARTICLE BELOW - IN THE PROJECT NEWS SECTION - ON SOME CONCERNING ISSUES THAT HAVE BEEN OBSERVED
IN ETHIOPIA'S HAWASSA INDUSTRIAL PARK
ZIMBABWE

COTTON/TEXTILE FOREIGN EXCHANGE ALLOWANCES
The Reserve Bank of Zimbabwe will allow exporters to keep part of their export proceeds, before compulsory conversion to local currency, for periods longer than the prescribed 30 days. Manufacturers can now retain 80% of their export proceeds; gold producers 55%; other minerals 50%; tobacco and cotton merchants for input schemes 80%; tobacco growers 50%, cotton growers 30% while horticulture, transport, and tourism will retain (80%). READ HERE >>

TEXTILE REBATES REMOVED
The Zimbabwean government has (via Statutory Instrument 39 of 2019 – READ HERE >>) advised that it will no longer allow a range of warp knit fabrics to qualify for customs tariff rebates. A number of textile and apparel industry customs tariff rebates were put in place by Zimbabwe via Statutory Instrument 151 of 2015. READ HERE >>

NEW TEXTILE/APPAREl TRADE PACT WITH SOUTH AFRICA
In November 2018 – after a year’s notice - South Africa terminated the Southern Rhodesia [sic] - South Africa trade agreement which was first concluded in 1964. Zimbabwe has now proposed that a further “special” bi-lateral agreement regulating textile and apparel trade be concluded. READ HERE >>

Comment
A crippling shortage of foreign exchange has severely impact upon the ability of Zimbabwe’s textile and apparel manufacturing industry. It will be interesting to see if the amount that value chain manufacturers can retain will be sufficient to enable them to buy raw material inputs (yarns, fabrics and garment trims); and, to upgrade their plant and machinery.

It's going to be unlikely that the South African government will agree to a separate trade protocol on textile and apparel trade – for if it does many other African states that trade with South Africa will also ask for one. Of course, the main agreement of the Southern African Customs Union (SACU) agreement of 2002 does preclude South Africa from unilaterally engaging in any trade agreements with any partners without the consent of Botswana, eSwatini, Lesotho and Namibia. So what are Zimbabwe’s options now? Well for sure the SADC Trade Protocol’s textile and apparel trade rules of origin will be strictly applied by the Zimbabweans.


MALAWI – GMO COTTON ONE STEP CLOSER? 12 March 2019
Malawi is inching closer to commercialising Bt cotton as research into the genetically modified crop is at an advanced stage. The Malawi Department of Agricultural Research (DAR) is conducting national performance trials into the crop to assess its performance under farmer’s conditions and determine the socio-economic analysis of the impact of the technology in readiness to developing a dossier for a proposal to release the technology through the Agricultural Technology Clearing Committee. The initial confined field-testing was completed through trials conducted at five sites across the country. Results from these multilocational trials were consistent and showed yield and bollworm protection of Bt cotton over conventional cotton varieties. The yield advantage was double. READ HERE >>


EAST AFRICA – BRAZILIAN COTTON PROGRAMME, 12 March 2019
A total of US$9m will be spent on the implementation of the Victoria Cotton Project, which is financed by the Brazilian Corporation Agency. The project, which commenced in 2017, is being rolled-out in Tanzania, Kenya and Burundi. A Brazilian diplomat commented: "We are here to utilise the techniques developed in Brazil in the Tanzanian environment". READ HERE >>


ETHIOPIA – SGS TO OPEN TESTING CENTRE IN HAWASSA INDUSTRIAL PARK, 9 March 2019
SGS, a multinational company headquartered in Switzerland, will establish a fabric and garment testing laboratory in Hawassa Industrial Park. Currently, manufacturers must send samples overseas to test their products, which is costly and time-consuming. READ HERE >>


SOUTH AFRICA – MB WORKWEAR MANUFACTURING ASSETS SOLD, February 2019
Over the past couple of weeks I have reported that a major South African workwear manufacturer – MB Workwear (SEE >>) - was facing significant financial difficulties. Its difficulties had also, apparently, impacted upon the Gelvenor Textiles manufacturing facility. In an effort to deal with its problems MB Workwear attempted, in late 2017, to set-up operations in Lesotho – but its efforts to jump to the top of a potential investor list that would have allowed it to rent a cheap industrial structure in the country came to nought. It was then announced, in early 2019, that MB Workwear’s manufacturing assets would be sold in an “end of lease” auction. It is now known that even before the auction could take place that all of MB Workwear’s assets were sold … so rumour has it … to the Pienaar Brothers (SEE >>).

Comment
I do not think that we have heard the last of MB Workwear. Where will it pop up next? It's likely that it has not sold all its assets. Has it kept its intellectual property and licensed branded products as assets? If so … will it be manufacturing its own products soon … or will they sub-contract out the manufacture to CMT plants?


LESOTHO – WOOL AND MOHAIR CHAOS, 16 March 2019
Lesotho’s wool and mohair farmers who sold their produce through the Lesotho Wool Centre (LWC) in are concerned that due to delayed payments, they are now forced to either sell their livestock or slaughter them to subsist. Farmers interviewed have said while they opposed the implementation of the new wool and mohair regulations, they were left with no choice but to eventually send their produce to the centre, with the hope that they would get to understand the new regulations. Under normal circumstances, they said they received their first payment as early as December while their last monies come through in January.

The government, through the Ministry of Small Business, Cooperatives & Marketing (MSBCM), released a statement in early March 2019 showing that there are over 40,000 recorded wool and mohair farmers in Lesotho, 13,000 of whom sold their produce at the Thaba-Bosiu centre. The ministry also indicated that an average production is about 45,000 bales per year, but only 18,554 bales were received by LWC, suggesting that other farmers may have decided to withhold theirs or send it somewhere else against the new regulations. Of the 18,554 bales received by LWC, “7 900 bales have already sold for M183m (US$12.68m). It showed that M16m (US$1.1m) has already been paid to some 1,740 farmers, which means that a total of 11,260 farmers are still awaiting their payments.

Wool and mohair Industry and the LWC came under the spotlight last year when the government introduced new regulations designed to boost the industry. Under the new regulations, which came into effect from September, farmers are obliged to sell their produce at LWC only. The new regulations were gazetted on 4 May 2018 to forbid anyone from trading in wool and mohair without a licence from the MSBCM. The regulations also stipulate that all the transactions should be done from Lesotho. READ HERE >>

Comment
It will be interesting to see how this ongoing saga unfolds. I think there is perhaps more to the new system of localised auctions than immediately meets the eye.


TUNISIA – THE DOWNSIZING OF AN INDUSTRY, 14 March 2019
The manager “threw the keys down and left, passport in hand,” says one of the former employees of the small garment factory in Ksar Hellal in the Tunisian Sahel. On 18 January 2018, Besma Marzouk lost her job, along with the other 60 workers at the B.Co.Tex. The Investment Law, last amended in 2016, embodies the spirit of the ongoing legislative process and the erosion of the status of Tunisian workers it has brought about. By granting a series of tax breaks to new local and foreign businesses for five years, the law made the closure of factories with no notice common practice. After the tax breaks expired, the Tunisian Forum for Economic & Social Rights (FTDES) estimates that only 50% of clothing companies have remained in business. READ HERE >>
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PROJECT NEWS
ETHIOPIA – HAWASSA INDUSTRIAL PARK
TEXTILES & APPAREL’S WORKFORCE TRAINING PROGRAMME


AN ASSESSMENT – WORRYING ISSUES OBSERVED
FUNDER: UK’s Department for International Development (DFID - SEE >>)
PROJECT IMPLEMENTOR: Enterprise Partners (EP - SEE >>)
PROJECT PARTNERS: Hawassa Industrial Park (HIP) Investors’ Association, the Ethiopian Textile Industry Development Institute (ETIDI), Southern Nations, Nationalities & Peoples' Region’s (SNNPR) (regional state) Bureau of Trade & Industry
PROJECT DURATION: overall EP programme 2012-2020; the training programme has run from about 2016 onwards
PROJECT WEBSITE: none – but the EP website contains details on the HIPSTER programme
HIPSTER DOCUMENT: “HIPSTER PROJECT ASSESSMENT” – released 5 March 2019 – SEE >>.

The Hawassa Industrial Park (HIP) sourcing, training and recruitment programme (HIPSTER) was developed in response to the expressed needs of investors faced with the challenge of navigating a labour market that was completely new to them. The programme’s General Objective was defined as follows: “Develop a market-based and inclusive labour information, registration and preliminary training system to facilitate the employment of 30,000 youth, mostly women, as operators in the HIP in three years.”

The specific objectives of the HIPSTER programme are:
  • The development of a system to match HIP labour supply and demand through sustainable sourcing, screening, grading, job placement and training mechanisms
  • The provision of basic soft skills induction training that improves performance on the factory floor and worker engagement, motivation and expectations
  • The development of a database system that improves the current recruitment pipeline system (sourcing, screening, grading and job placement) in terms of efficiency and effectiveness.

The review of the HIPSTER programme was done to measure the programme against the International Labour Organisation’s “fair recruitment initiative” principles (
SEE >>).

To read the HIPSTER review
SEE HERE >>.

Comment
I think that HIPSTER is a good intervention. Many African countries with textile and garment industry development ambitions can learn from it. DFID should do its best to share the HIPSTER programme set-up and roll-out methodologies with countries like Kenya, Tanzania, Ghana, Lesotho and eSwatini/Swaziland.

HIPSTER is, in my view, a far better intervention than many other bilateral and multi-lateral donor programmes which propose government funded and run training schools. Many of these are complete, unsustainable, disasters. Of course, HIPSTER still has to find a sustainability model – but I think it stands a far better chance than do state-funded and run industry training schools.

But the report on HIPSTER review report reveals some interesting and concerning issues.

report ad para 10: “… but the Ethiopian Investment Commission (EIC) took over the de facto responsibility for labour law enforcement, specifically through the One-Stop-Shop (OSS) service centre in the Hawassa industrial Park (HIP). This only became operational in the course of 2018 and was immediately inundated with complaints from workers. This suggests that a governance gap exists in the park as far as labour standards are concerned. Enterprise Partners has tried to involve the Bureau of Labour & Social Affairs (BoLSA) in the administration of labour in the HIP and the BoLSA has decided that they will include the HIP in their work plan and budget for 2019.”

Comment: Only now BoLSA has decided to get involved!? Bizarre and worrying! Is this simply bureaucratic incompetence? A lack of budget? Or a careful plan to let the initial stages of Ethiopia’s grand industrialisation initiative not be encumbered with problems associated with fair industrialisation? What is also puzzling is the fact that the EIC is still in charge of the industrial parks – why not the Industrial Parks Development Corporation (IPDC)? One hopes that there are no dual overlapping responsibilities – for this could cause problems.

report ad para 15: “… employees in park facilities were not sufficiently aware of the terms and conditions of their contracts, and did not have a copy of the[ir employment] contract.”


Comment
Surely the unions should be telling workers about their rights to have their own copy of their contract of employment; and what some of the contract provisions mean?

report ad para 18: “… workers hired through the HIPSTER process enjoy freedom of movement. However, the risk here is that ethnic groups may not be able to seek employment outside their home regions and there are real concerns that workers from outside the Southern Nations, Nationalities & Peoples' Region (SNNPR) region may face discrimination when seeking employment in the HIP. This is a concern for the new industrial parks in other regions as well and will need to be addressed by Government. Social auditors sent by brands and retailers will certainly check on this and the local authorities would be well advised to preempt any negative findings by social auditors.”


Comment
See the section above in this newsletter on the issue of politics and worker issues colliding!

report ad para 19: “… workers recruited through the HIPSTER process are free to terminate their employment and can go back into the system and be allocated a new job after 30 days. Also, they may specify which factories they would prefer, to work for. There are however continuing concerns about informal “no poaching” and blacklisting arrangements between HIP employers that could create a situation that resembles forced labour.”

Comment: “… resembles forced labour” – I guess just polite words for a softer version of “MODERN SLAVERY”. I have for a long time been banging a drum on the issues of “no poaching” and “blacklisting” in Ethiopian industrial estates. If true it's horrendous. I wonder if any brand/retailer social compliance auditors have picked this up - and if they have ... what have they done about it!

Well how bad could it be? Take this as an example. A local worker cannot get on with her expatriate supervisor (who cannot speak any local language) and wants to resign her job – but she cannot knowing that if she resigns she may not get another job in the area. This kind of practice could also dissuade anyone from becoming a shop floor worker rights activist (or even reporting any problems to the ILO’s Better Work programme) because they know that if they get dismissed, they may not find work again in the area.

The perverse effect of “no poaching” and “blacklisting” arrangements is that it also keeps wages low - skilled blue-collar workers, in the context of an informal restraint of trade arrangement, will realise that it will be fruitless trying to find another job with higher pay. And hey! In the “
African Cotton, Textiles & Apparel Monitor” newsletter (No. 6 of 2019 - 12 March 2019) where details of how incredibly low Ethiopia’s minimum wages are were released finding a better paying job on the basis of one's skills and abilities is important!

Its amazing people and organisations (including development organisations) reify the concept of the “market” – but when the bourgeoise determines unfair written/unwritten rules and practices then there is virtual silence! In this context, it's rare that one hears talk of “market failures”.

report ad para 20: “… grievance channels are a work in progress at present. The labour unit in the EIC-run OSS provides the main channel and the BoLSA has also received complaints. Trade unions offer a third option, but workers may not be able to access them since they do not have offices in or around the park.”


Comment: Astounding! The unions do not have offices in and around the HIP. Surely this can be resolved. Local unions could set one up rather quickly; and if they fail perhaps IndustriAll could add it to one of their global framework agreements that they have with the likes of H&M – that unions should be allowed on company premises trade union offices with power, and telecommunications.

Of course, Ethiopian trade unions need to up their game and undertake a significant recruitment initiative – I am not in favour of significant organisational rights been given to unrepresentative trade unions.
--------------------------------
FROM COTTON SEEDS TO CLOTHING
ENHANCING SUSTAINABILITY/INCLUSIVENESS/VALUE ADDITION
OF THE COTTON VALUE CHAIN IN EGYPT

FUNDER: Italian Agency for Development Cooperation
AMOUNT: US$1,471,644
PROJECT IMPLEMENTOR: United Nations Industrial Development Organisation (UNIDO)
PROJECT PARTNERS: including: Egyptian Ministry of Trade & Industry, the Ministry of Agriculture & Land Reclamation, the Filmar group (SEE >>), the Better Cotton Initiative (BCI)
PROJECT DURATION: Jan 2017 – December 2019
PROJECT WEBSITE: UNIDO Project Website

The Egyptian cotton is among the finest and most lustrous varieties and the highest quality fibre. Egypt’s textile industry has historically been considered of paramount importance to the country and its economy. Nonetheless, Egypt still plays a marginal role in the global textile value chain as it's textile industry is highly fragmented and it's textile products do not meet the needs of the international market. The industry suffers from a lack of innovation, high input prices, limited skilled labour, and scarce sustainable agricultural practices.

The proposed project aims at enhancing the sustainability, inclusiveness and value addition of the long-staple and extra-long staple Egyptian cotton value chain, by improving the economic, social and environmental performance of cotton growers and cotton processors, and strengthening support institutions. The project will capitalise UNIDO well established expertise on the value chain approach in Egypt and focus on the promotion of organic and non-contaminated cotton and local value addition (local content and processing), support resource efficient cotton processing, foster B2B linkages in the textile value chain, promote scientific research in the field of cotton, improve its quality, foster innovation in the textile sector, enhance the technical and entrepreneurial skills of Egyptian young women and men.

The proposed project will leverage Filmar's CSR ongoing Cotton-For-Life initiative, co-funded by Alexbank of Intesa San Paolo Group, and capitalise on its lessons learned, while scaling it up to upgrade the whole value chain, reach out to a larger number of producers and exporters, and build the capacities of the institutions involved. To learn more about the project.
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RESEARCH & BRIEFINGS

Striving to Transform Tanzania’s Cotton Sector”. David Booth. Overseas Development Institute (ODI). This briefing paper was funded by Gatsby Africa - Gatsby has engaged the UK's ODI to undertake a range of research related to the initiatives that they are involved in in East Africa. London, United Kingdom. February 2019.
Synopsis: Cotton growing and ginning is one of Tanzania’s top three agricultural export industries. It is a major source of livelihood for up to half a million smallholder farmers, mostly in the large region of enduring rural poverty lying to the south and east of Lake Victoria, known in Tanzania as the Lake Zone. The sector has been underperforming for 50 years, with productivity stagnating and international prices and therefore earnings falling in line with productivity gains in competitor countries.

Gatsby Africa's Cotton Sector Development Programme (CSDP) is an important effort to turn this situation around by addressing the principal causes of low productivity in cotton growing and ginning (production of cotton lint) in the Lake Zone. This briefing note reviews Gatsby's programme and presents the following key messages: Since 2007, the failures and successes of Gatsby’s programme in Tanzania’s cotton sector have shown the importance of (1) combining technical diagnosis with political insight and capability; (2) supporting indigenous problem-solving coalitions; and (3) adaptive programme management. Donors looking to maximise their impact should consider emulating the Gatsby funding philosophy – aiming for the big prizes and providing patient and flexible support. Gatsby should use the lessons from cotton to strengthen the political economy dimensions of the framework it has developed to identify and track the key conditions contributing to progress within a sector. The full briefing paper can be accessed HERE >>.


Is Technology Change Good for Cotton Farmers? A Local-Economy Analysis from the Tanzania Lake Zone”. Gupta, Kagin, Edward-Taylor, Filipski, Hlanze and Foster. Two of these authprs work for Gatsby Africa. In, “European Review of Agricultural Economics”. Volume 45, Issue 1. February 2018.
Synopsis: Technological change holds the potential to increase crop output as well as incomes of farmers and the communities in which they live. We carry out a local economy-wide impact evaluation of productivity-enhancing technological change amongst small-scale cotton producers in Tanzania’s Lake Zone. Our analysis reveals that demand constraints shift benefits from farmers to downstream processors while limiting positive spillovers within local economies. Excess cotton gin capacity does the opposite. Interventions to ensure markets for increased output should complement strategies to raise productivity if a project’s goal is to improve welfare in farm households and the communities in which they live. The full paper can be accessed HERE >>.


2017 Annual Survey of Textile & Apparel Factories in Tanzania”. Produced by the Gatsby Africa funded Tanzania Textile Development Unit (TDU). Dar es Salaam, Tanzania. June 2018.
Synopsis: A mini overview review of Tanzania’s textile and apparel programme covers the following areas: i) strategic context for the survey; ii) objectives and methodology; and, iii) an industry performance dashboard. The findings are presented under the headings: i) unlocking constraints for growth; and, ii) capacity analysis from fibre to fashion.
NOTE: This is not available on any website – if you want a copy contact: editor@africantextilesandapparel.com
DATA

SUB-SAHARAN AFRICAN APPAREL (HS61 & 62)
AGOA EXPORTS TO THE UNITED STATES
(in US$ - 2016-2018)
Source: USITC Dataweb

Some Comments
Kenya’s garment exports continue to climb. I assume that much of the growth in country exports have come from existing firms as it's known that not many new firms have established themselves in the country. I guess it could also be the case that some orders that may have been planned to go to Ethiopia have now been re-assigned to Kenya as Ethiopian production units are unable to resolve numerous problems.

Its likely that Lesotho’s exports would have been higher if it had not been for the fact that its factories lost nine days of production as a consequence of a series of wage strikes in August 2018. If the Lesotho authorities had been more efficient in the manner in which honours its undertakings to new investors, it's likely that a new garment factory would have come online a lot sooner and this would have significantly bumped-up its US exports.

Madagascar lost its AGOA privileges in January 2010; and these were restored in June 2014 - but it was only in December 2014 that it managed to put in place an acceptable AGOA 3rd country fabric visa system. Much of its massive growth in orders have generally come from Mauritian factories moving some of their order books to Madagascar.

Uganda’s exports to the US have dropped significantly. It's likely that it was Uganda Fine Spinners that lost these US orders.

Rwanda has now lost its AGOA apparel privileges because it refused to bow to the US' demands that it should continue to allow US worn clothing exporters to dump used clothing into its marketplace. Its certainly going to be hard for it to make-up almost US$3m worth of trade to the US by seizing domestic/regional opportunities and perhaps exports to the EU. Its main garment exporter was C&H Garments. It’s likely that the AGOA order book will have drifted to garment plants located elsewhere in the continent which are associated with “Ambassador” Helen Hai’s C&H Garments – most likely to Senegal.

Botswana’s US orientated garment industry has finally gone – its last major exporter (Carapparel) moved the remains of its Gaborone operations to Lesotho in 2018. While Botswana has some of the lowest minimum wage rates in the Southern African Customs Union – the land logistics of it suppling the US market made its exports unviable. However, Botswana has a huge opportunity to supply garments into the South African marketplace.

Tanzania remains a resilient AGOA exporter – although it's hard to believe that these exports come from effectively two firms – Mazava Fabrics & Production (part of the Winds group); and, Tanzania Tooku (part of the JD United group). Its surprising that it has been unable to build on this base!

eSwatini (nèe Swaziland) lost it AGOA eligibility in January 2015; and it regained it with effect from December 2017 – but it was only declared eligible for the special country fabric rule six months later on 3 July 2018. It predicted that its exports to the US will increase – especially from the Texray group (which has its own knit fabric mill and dyehouse); and the Zheng Yong (a jeans producer).

South Africa’s exports to the US is mainly from one product line – HS6115.96 ... socks! And most, if not all, come from a single manufacturer – FALKE (SEE >>). Between 2017 and 2018 sock exports to the US ramped-up by 27.5%. Well done Bert Pictor!!!!! – you have come a long way from being an HR manager at Romatex in the early 1990s; what fun battles we had then!
In the next couple of editions of this newsletter / blog the nature of specific countries’ exports to the US (at HS8-10) will be covered.
UPCOMING EVENTS
  • 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
  • 8th International Sustainable Industrial Areas - Conference - 8-10 April 2019. Addis Ababa, Ethiopia. For more information: www.siaconference.com
  • Source Africa - Trade Show - 12-14 June 2019. Cape Town, South Africa. For more information: www.sourceafrica.co.za
  • Premiertex Africa 2019 - Trade Show - 18-20 June 2019. Nairobi, Kenya. For more information: www.premiertex-africa.com
  • 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
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!
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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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