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(#14 / 2019  -  25 June 2019)
Lesotho's US Garment Exports Tumble
Zimbabwe Textile Firms to be Rescued
Botswana's Minimum Wage Adjustment

A new draft labour law allows for the dismissal of employees who have a record of coming to work late eight times, or who have are absent for five days without cause, within a six-month period.  The bill also proposes to extend the period of employee probation from 45 days to 60 days.

Drafted by the Ministry of Labour & Social Affairs, the Bill, that has been tabled in parliament aims to replace the existing 14-year-old labour law.  The Confederation of Ethiopian Trade Unions, Ethiopian Employers Federation, International Labour Organisation (ILO), the Federal Attorney General, and public enterprises have participated in the drafting process.

The proposed new law does not set a minimum wage.  According to the Ministry of Labour & Social Affairs the setting of a minimum wage requires a lot of discussion and study that takes into account the country’s economic development and labour market.  Instead, the Bill lays the
 ground work for a minimum labour wage by establishing a wage board comprised of the government, employees, trade unions and other stakeholders that will determine the minimum wage and is responsible for periodically revising it.  READ HERE >>

Labour laws need to be modernised - so it's a good that the law is going to be updated.  It is, however, going to be interesting to see which side of the class divide wins the most from this new legislation.  But given the current trajectory of the Ethiopian "developmental" state I do not think I will be pleasantly surprised!

As I have said previously – the introduction of a minimum wage in Ethiopia will take time as research will most probably have to be done first.  Then once a minimum wage is decided upon, it will be very low.  Then undoubtedly, many textile and apparel value chain employers will say that they will need a period of time to adjust to the introduction of the new minimum wage.

An attempted coup in Ethiopia has been suppressed.  In two separate attacks by rogue military officers the country's Army Chief of Staff was killed; as was the leader of the Amhara Regional State.  Heightened security measures were put in place, particularly in Addis Ababa and Amhara region.  Roads were closed, and telecommunications were disrupted.  READ HERE >>  The US Embassy in Ethiopia issued two security alerts for Darhir Bar and Addis Ababa.  READ HERE >>  Ethiopia’s internet has been largely disconnected starting 8:15 p.m. UTC Saturday, 22 June 2019 and having a nationwide impact as of 9:00 p.m.  READ HERE >>

But political tensions in Ethiopia are not only confined to its capital or the Amhara Regional State.  The Southern Nations, Nationalities, and People's Region (SNNPR) – where the "flagship" Hawassa Industrial Park is located – has also been wracked by ethnic tensions which have impacted on textile and apparel production.  For some background on the wider community problems in Hawassa READ HERE >>  and  READ HERE >>.

The shutdown took place late on a Saturday – so it is assumed that little disruption to manufacturing operations occurred.  However, if the emergency security measures put in place continue for some time, it will, undoubtedly, disrupt textile and apparel production.  In this context:
  • try running any manufacturing company – when you get orders from one time zone (i.e. the East), and you have to deliver in another (in the West) – and you are not able to access the internet.  Does one thank god for the fax (if you still have one)?
  • no doubt the political problems will put a brake on some of the travel plans of foreign factory owners that may want to visit their production facilities; as well as some of the staff of the apparel brands and retailers that purchase Ethiopian made the product.  Internal travel from retailer QC/QA inspectors, and social compliance auditors, could be disrupted.
  • it’s possible that travel disruptions may also impact upon road freight transport – raw materials (fabrics, trims, manufacturing equipment) being imported into Ethiopia; and the export of finished products.
  • what happens of curfews are imposed which make it difficult for workers to get to and from work.

It is, of course, possible that political instability may put a dampener on continued textile and apparel value chain investment.  I say “may” because it appears as if previous political instability in the country (especially pre-Abiy Ahmed), or numerous unreported wildcat work-stoppages, or significant manufacturing workforce turnover, or low factory productivity, or insufficient supplies of domestic cotton, or poor and expensive inland freight logistics, or irregular supplies of electricity, etc do not seem to have put many investors off from establishing textile and garment manufacturing operations in Ethiopia.

I guess all it requires is low wages, an under-skilled trade union movement, a very generous package of industrial incentives, a number of willing international donor organisations to fund some of the activities that a manufacturer would normally have to pay for themselves, some modern industrial parks where business can be located, beneficial preferential trade arrangements, and pressure from the apparel brands and retailers to invest in the country to make the country be highly attractive.

On politics: The recently (May 2019) released New York Stern School’s Center for Business & Human Rights report “Made in Ethiopia: Challenges in the Garment Industry’s New Frontier” (SEE >>) made the following recomendation: "Address ethnic tension in Hawassa and elsewhere. Prime Minister Dr. Abiy Ahmed needs to apply his ample political skill to defusing potential violence that could threaten Hawassa and other industrial parks."

I really hope that the Ethiopian government is able to work through the current problems.  If Ethiopia's industrialisation effort succeeeds so will many others in sub-Saharan Africa. 

The Government of Botswana has adjusted the country's minimum wages.  With effect from 1 July 2019 the minimum wage for a worker engaged in manufacturuing is P6.77 (US$0.63) per hour.  The minimum wages set for manufacturing only contains one band - minimum wages are not set for multiple occupations.  The last time the country's minimum wages were adjusted was on 1 November 2017.  The latest minimum wage represents a 16.9% over the previous minimum wage.

The board of Deneb Investments (SEE >>) has decided to dispose of a number of businesses it owns.  These are: Winelands Textiles (a.k.a. Hextex – SEE >>); Frame Knitting Manufacturers (a.k.a. FKM – SEE >>); First Factory Shops (SEE >>); and, Brand ID (SEE >>).  READ HERE >>

It's assumed that the main assets up for sale are Hextex (now only a former shadow of itself) and FKM.  In late September 2017, the Deneb group announced the closure of Berg River Textiles (BRT) which was located near to Cape Town.  More or less at the same time a major retrenchment exercise too place at Hextex.  It is thought that FKM is in a far healthier state – producing profits - than is Hextex. 

One can assume that Deneb’s financial heart is not into Brand ID.  This division owns the license rights to many international apparel and sportswear brands (e.g. Canterbury, Speedo, Columbia, Slazenger, etc).  A couple of South African apparel brands in the stable must have had their day – for example “Jonty’s”, and “Danie’s” - few apparel buyers must be interested in sporting relics.  More on the Brand ID sale can be  READ HERE >>.

The Deneb group has decided to hold onto Romatex Home Textiles (SEE >>).  I guess that this is a profitable business as it can take advantage of the customs tariff rebate that exists for the home textile industry.  This rebate allows Southern African Customs Union (SACU) home textile manufacturers to import select fabrics free of any tariffs and then sell the made-up output into South Africa free of any duties.  The fact that the consultants for the new South African textile and apparel industry strategy – a.k.a. the Masterplan-2030 – did not advocate for an expansion of the rebate mechanism to a range of fabrics not made in the Southern African Customs Union (SACU) is astounding.

It will be interesting to see what will happen to Hextex and FKM.  Will they be sold together as a package?  Who would want to buy them?  It’s likely that South Africa’s Industrial Development Corporation (IDC) may have already looked at buying both?  And, undoubtedly, it's likely that some of FKM’s customers may have already had a close look at the business (one of the rumoured companies is one of Southern Africa's leading blue collar workwear manufacturers).

Deneb is a Johannesburg Stock Exchange listed company whose rumoured controlling shareholder is another JSE listed company – HCI (SEE >>).  Many of the Executive, and Non-Executive, directors of both Deneb and HCI are former officials of the Southern African Clothing & Textile Workers’ Union (SACTWU).  SACTWU may still be a significant shareholder in DENEB and HCI.

Mauritius Budget Speech 2019/20:
"Expanding out Economic Space to Deepen Economic Diversification"
"158. ... Our aim is to further extend the production space of Mauritius beyond our frontiers in partnership with other African countries.  Africa Rising calls for massive investment, quality expertise and more trade."
"159.  With regards to creating new assets in Africa, we will: ... develop a Textile City on the 80 hectares of land in Moramanga, which the Malagasy Government has agreed to allocate to Mauritius ... develop projects to take advantage of the Industrial and Technology Park in Naivasha, Kenya. ... consolidate our ongoing initiatives in the Special Economic Zones in Senegal, Côte d’Ivoire and Ghana.READ HERE >>

I have, for a long time, suspected that it will be in Mauritius' industrial and trade policy to reduce the size of its textile and apparel manufacturing industry.  The country is going to concentrate on developing other economic sectors such as ICT, financial services, tourism, etc.

Exactly what resources the Mauritian government will bring to the table to promote its "Africa Strategy" is unclear - but its entirely possible that they will put in very little of their own money.  Instead it will help to mobilise funds from institutions such as the AFREXIM Bank and the African Solidarity Fund to support its private sector migrate their production away from Mauritius.

I have also heard that the Mauritius governing class, and other country stakeholders, may have been uncomfortable with large numbers of expatriates (many at operator level) being flown into the country to form the backbone of the textile and garment industry.  

Does this budget, and the fact that government allowed the minimum wages to significantly escalate in 2018 mean that the plan to shift the economy away from its textile and apparel (and sugar) foundation is now fully underway?

On Moramanga in Madagascar:
Already many head officed Mauritius garment firms get their orders done in Madagascar.  Its known that the Malagassy government has dreamt of developing Moramanga (117km or 3.5-hours by road from Antananarivo; 240km or almost 5-hours by raod to the countrys main sea port of Toamasina) as a textile and apparel manufacturing centre.  Some Malagasy textile and apparel value chain executives have said that the government will have a hard time developing a value chain cluster in this area as there are not enough workers living there.

On Naivasha in Kenya:
KenGen (READ HERE >>) has moved to diversify its revenue streams by inviting investors to set up export-only textile and apparels plants on a 309-acre industrial zone in Naivasha (about 75km west of Nairobi; the area has abundant geothermal power).  The KenGen Green Energy Industrial Park, which has four zones, is connected to Mombasa port via the standard gauge railway line and offers prospective companies direct connection to cheap electricity.  Under the new project, companies will lease land for development of labour-intensive industries that will have access to cheap electricity and hot water.  READ HERE >>   I guess that Mauritius may not want to put all of its off-Mauritius-development eggs in the Malagasy textile and apparel basket - for the country has a significant political insecurity (the country has had three military coups.  The last one, in 2009, resulted in the US withdrawing the country's African Growth & Opportunity Act (AGOA) privileges.

Conflict of interest and possible abuse of office concerns emerged this week after David Whitehead Textiles (DWT) judicial manager sold a 51% equity stake in the textile company without consulting shareholders and creditors of the company to a creditor at a grossly discounted price in RTGS dollars.  This comes at a time real and productive assets are being sold in US dollars.  It has emerged that Hofisi sold a controlling shareholding in the company to an investment vehicle — Agri Value Chain Zimbabwe (AVCZ) — which firm is controlled by PK Ganeriwal.  Ganeriwal is also the owner of Parrogate, a company that controls one of Zimbabwe’s largest cooking oil producers.  He also owns a number of cotton gins in Zimbabwe and Zambia.  Ganeriwal, whose company is owed Zim-RTGS$3m by DWT and is officially listed as a creditor, acquired the 51% equity stake for only RTGS$5,4m, a figure just above US$675,000 at the prevailing rate of US$1:RTGS$8.  READ HERE >>  and  HERE >>.

An investor from Italy has shown interest in investing in National Blankets and Cotton Printers, two of Bulawayo’s textile giants that have not been operating for years.  National Blankets has been under judicial management since 2012 due to viability concerns.  READ HERE >>

The Zimbabwe Asset Management Company (Zamco) says it is ready to disburse a US$5m recapitalisation facility to Merlin once the company is handed over to its shareholders by the judicial manager.  Towards the end of last year, the High Court in Bulawayo ruled that Merlin (Private) Limited was a fictitious and non-existent company that does not in any way affect the status of Merspin Limited.  READ HERE >>

When it comes to significant textile firms managed by a liquidator/judicial manager in Zimbabwe – rarely is it that things are simple!

Zimbabwe is losing millions of dollars through polyester fabric imports as local producers are no longer making the material.  The Manager of Archer Clothing (linked to Paramount Clothing  SEE >>) stated: "We are managing to supply all our customers but the only thing which may delay us is the coming in of polyester fabric from the Far East in countries such as China.  Our cotton is only 10% from Kadoma Textile Mills and we need the polyester, which we can’t get locally.  Some customers need the polyester and we don’t have polyester manufacturers in the country at the moment".  READ HERE >>

The Cotton Company (COTTCO) of Zimbabwe will invest more in tillage machinery as it moves towards enhancing yields.  COTTCO started offering tillage services to its farmers in 2018.  Those whose land was tilled by the tractors achieved better yields even though the rains were erratic.  With more tractors, they believe that can plant a bigger hectarage.  It was reported that it was evident that those using tractors achieved better yields.”   READ HERE >>


Local cotton firm, Southern Cotton, has been caught in a side marketing storm after it emerged that the company is targeting the commodity contracted by the Government.  The Government, through the Cotton Company of Zimbabwe sponsored nearly 400,000 farmers last year, a scheme it embarked on in 2015 to boost cotton production.

Side marketing takes place when parties to the contract violate the agreement, either when a farmer chooses to sell to other merchants or when a company buys from farmers it has not contracted.  Zimbabwe’s cotton industry almost collapsed as a result of the practice as many companies, including Cargill, closed shop.  Side marketing resulted in poor recoveries of the crop and made it unsustainable for merchants to continue investing.  READ HERE >>

Zimbabwean cotton farmers are advocating for payment in foreign currency to cushion them from rising costs of producing the crop.  They want an arrangement currently prevailing in the tobacco sector where farmers are paid in US dollars.  A cotton farmer from Mkwasine, said, “We are calling on the government to consider this issue of paying us in foreign currency seriously.”  He said the local currency, called the “bond note”, was losing value regularly.  READ HERE >>

The Cotton Institute of Mozambique (SEE >>) expects an 8.6% fall in raw cotton production in Mozambique this year.  According to the latest figures from the country’s National Statistics Institute, cotton in 2017 ranked 14th in terms of Mozambique’s main exports, totalling US$9.1m.  The 2018/19 season will see fewer producers and a smaller area: 100,000 hectares compared to 180,835 in the previous growing season, with 170,000 farmers in the field against 228,133 last year.  The 8.6% decline is expected both in the production of seed cotton (from 65,653 to 60,000 tons) and of cotton already in fibre (from 24,948 tons to 22,800).  READ HERE >>

To revitalise its flagging cotton industry, the Cotton Institute of Mozambique is seeking investors to revive large-scale production in the country’s central Zambezia province.  The aim is to transform Mozambique into one of the biggest cotton producers in the world.  READ HERE >>

The government has announced a new payment system for cotton farmers as one of the steps towards overhauling the sub-sector that employs about 500,000 farmers across the country.  Under the new system - which was formally announced by the Tanzanian Prime Minister - farmers will be required to open a bank account into which their payments will be made.  Under the new system, Agricultural Marketing Co-operative Societies (Amcos) will be responsible for coordinating the buying and selling processes on behalf of their members.  READ HERE >>

Nwoya District officials suspended the operation of two commercial farms in the district over recruitment of child labour.  Interview comments: “People came and convinced my parents that I was going to be collecting eggs at the farm; my parents accepted because they could not continue to support my school fees.  But when I started working, I was sent to pick cotton and sometimes sunflowers," she said.  “My work was terminated because she could not pick 30 kilogrammes of cotton as required daily”.  READ HERE >>

Mr Price has released its final results for the 52 weeks ended 30 March 2019.  Headline earnings per share (HEPS) and dividends per share (DPS) increased by 6.2%.  “We are pleased to be able to deliver solid earnings growth and increase our dividend to shareholders in what has been a very tough year for retail.  Despite this, both our apparel and homeware segments outperformed the market and gained market share on an annual basis.  For the first time our retail sales exceeded R20bn and profit before tax R4bn,” said it's CEO.

Some data: Local store sales were up 3.8% while non-South African store sales grew 12.1%, aided by the acquisition of the Kenyan franchise stores in May 2018.  By opening 82 new stores and expanding 11, weighted average new space grew 3.1%.  After closing 17 stores and reducing the size of 30, total weighted average space was up 1.4%, taking the total number of corporate owned stores to 1,323.

The apparel segment increased RSOI by 3.8% to R15.6bn (US$1.086bn).  Operating profit increased 3.4% off a strong base and the operating margin declined marginally from 18.1% to 18.0%.  Sales in MRP Apparel grew 3.1% (comparable 0.1%) to R12.6bn (US$847m).  Online sales grew at 30.2%, with 25.1m visits to www.mrp.com throughout the year.  Miladys grew sales 4.0% (comparable 3.1%).  MRP Sport reported strong sales growth of 9.7% (comparable 6.4%), with online sales growing at 43.8%.

The retailer indicated that the retail environment in South Africa is likely to remain under pressure in the short term as flat real wage growth and low levels of disposable income continue to challenge the consumers’ ability to spend.  The national elections delivered a positive outcome which we hope will lead to reformed economic policies that will encourage business growth and job creation.

With regards its out of South Africa sales Mr Price commented that its performance had been erratic - although they stated that it has good long-term potential.  It advised that its non-South African growth has been driven by the acquisition of its Kenyan franchise stores.  They indicated that its largest market, Namibia, faces ongoing economic challenges.  Mr Price indicated that it is evaluating its Nigerian operations in the light of an independent detailed analysis undertaken.
Source:  Mr Price Group - "Analysts' Presentation" - 31 May 2019.  SEE >>

Outside of Africa Mr Price commented that organic growth had proved challenging ... and "distracting".  They indicated that starting from scratch meant that they had no local knowledge and that it took years before results impacted on group earnings.  On 3 April 2019, the Mr Price Group Limited board approved the withdrawal of financial support to the Australia operations and as a result, the MRP Retail Australia (Pty) Ltd directors put the company into administration on 2 May 2019.  The Australian stores ceased trading on 30 April 2019.
  READ HERE >  and  READ HERE >>

Its been a torrid time for some South African retailers in Australia - why can they not get it right?  South African retailer Woolworths has performed terribly.  As for Mr Price - this is their second Southern hemisphere foray that ended in failure.  In 2003 Mr Price shuttered its retail venture in Chile!

And ... Mr Price evaluating Nigeria! Nigeria appears to be providing many South African companies with headaches.

South African retail giant, EDCON, is selling its shareholding in the clothing chain Edgars Zimbabwe.  It’s doing so to realign its operations and to stay afloat.  EDCON owns a 41% stake in Edgars Zimbabwe.  Untu Capital, is reported as being interested in buying the Zimbabwe Edgars’ retail, manufacturing and micro-finance business.  Edgars has 25 branches located throughout Zimbabwe.  It also controls 25 Jet Stores, club micro-finance, and the Carousel garment manufacturing factory in Bulawayo.  While the value of the acquisition remains under wraps, approval of the deal would enable Edgars to source much-needed foreign currency and to recapitalise the Bulawayo factory.  READ HERE >>

According to the EDCON CEO, the reason what the retailer is still going:  “Not a single person wanted the deal to fail”.  Following the successful R2.7bn (US$180.5m) refinancing of retailer EDCON’s debt, EDCON’s CEO anticipates a future where the Group can once again “become independent and sustainable.”  The CEO also acknowledged the involvement of Etienne Vlok, national industrial policy officer at the Southern African Clothing & Textile Workers’ Union (SACTWU), whom he said was “integral in helping to pull the deal across the line. It was a true act of leadership, as they had the least money to lose”. READ HERE >>

South Africa’s Competition authorities placed several conditions on the EDCON group restructuring – many of them related to store retrenchments and local sourcing.  READ HERE >>

Given the publicly acknowledged positive hand that SACTWU played in the restructuring one wonders if the union and EDCON came to any agreement related to EDCON buyers (and their agents) only buying garments from South African clothing manufacturing establishments that are registered with, and complying with, the relevant bargaining councils (bargaining councils regulate minimum industry wages and working conditions).

Of course the EDCON CEO must realise that SACTWU does have a direct interest in the survival of EDCON.  Many of its members who work in factories making garments for EDCON - who would have lost their jobs if EDCON had hit the wall.  It has also got to be remembered that SACTWU has direct financial interests (it owns Trade Call Investments (TCI)  SEE >>;  and, indirect interests (see story, above, for comments related to SACTWU's shareholdings in HCI and perhaps Deneb) in South Africa's textile and apparel industry.  It could be the case that some of these firms supply product to EDCON - either directly or through sourcing intermediaries.  Of course what must not also be forgotten is that many of SACTWU's members have retirement funds invested in investment vehicles that have significants interest in commercial retail space that is rented by EDCON stores.  Just saying!  But, nonetheless, WELL DONE Etienne Vlok!

Its been reported that South Africa's Industrial Development Corporation (IDC [SEE >>] - which reports to the country's Ministry of Trade & Industry) owned Colibri Towels (SEE >>) is undergoing a major technological upgrade.  Apparently a number Picanol woven looms are being installed at the plant - some have estimated that the upgrades will cost more than R100m (US$7m).  It's rumured that it's most probably also going to be the case that the IDC owned Glodina towelling plant (SEE >>) will also have new machinery installed.

It will be interesting to see how private sector owned Zobatex (SEE >> - based in the South African town of Ladysmith) - one of the few South African based towelling manufacturers left and now the only non State Owned Enterprise (SOE) left - will be able to compete with the IDC's towelling plants that have been power boosted with cash on steroids. 

I am sure that the Colibri-Glodina alliance will most probably take orders away from Zorbatex rather than undermine imports coming from Pakistan and India.  Perhaps Botswana's Nortex (SEE >>) may also be a victim to the massive upgrades of state owned enterprises - so much for some South African government strategies which promote "regional integration".

In May 2019 South Africa's competition authorities approved that the IDC could take over struggling retailer EDCON's interest in Celrose.  The value of the deal was not announced.  Celrose consists of a garment manufacturing facility (Celrose - SEE >>) and a footwear manufacturing plant (Eddels - SEE >>).  There is now confirmation that the IDC is now going to supply additional funding to both plants.  South Africa's highly respected "Shoes & Views" publication (SEE >>) has recently reported:
n response to a query about the IDC investing a substantial amount in a Pietermaritzburg shoe factory, Zama Luthuli, head of corporate affairs at the IDC, wrote:  "As you may be aware, IDC recently acquired Celrose from the EDCON group.  Eddels Shoes was part of the acquisition.  IDC will be supporting the expansion of Celrose and Eddels by providing funding for plant and machinery as well as working capital.  Unfortunately, we can’t at this stage provide further details on the funding and amounts involved."

Many other manufacturers in the textile and apparel value chain now have to compete with a major SOE with exceptionally deep pockets and an apparent willingness to liberally fund its textile "assets".  One often hear stories of value chain firms going to banks in order to loan cash for upgrades or working capital and they return with empty hands and bleeding knees.

Broader Comment:
I like government interventions - but in my view they must be rational.  It would be interesting to understand what criteria the IDC uses when it decides to make a shareholder type investment, or when it loans any company public funds.

Clearly employment is one criteria - losing a substantial numbers of jobs in a part of the country where there are few new jobs available may be a reason to invest if the private sector is not prepared to take over an ailing enterprise.  Also, investing in an enterprise that would significantly strengthen the entire textile-apparel value chain, which another private sector company may not want to do, would also be something that should guide the IDC.  But investing in bog standard plant, when others were prepared to invest seems,  irrational

The illustrious editor of "Shoes & Views" commented in a recent article:
Jensen Belts is the fourth significant Cape Town leather industry company to close in little over 2 years - Über Gruvi closed in 2017, Chic Shoes closed last year, and Green Cross - which last year announced its intention to close, did so earlier this year. All had received substantial assistance from the IDC. S&V has asked the IDC whether it needs to relook at its funding programme."   READ HERE >>

Against all of this is the fact that, surprisingly, the consultants engaged to develop the Retail-Textile-Clothing-Footwear-Leather "Masterplan-2030" did not make any comments on the IDC interventions in the value chain.


The Cotton Egypt Association (SEE >>), the organisation behind “Egyptian Cotton”, has launched a further initiative to actively root out non-genuine goods from the supply chain.  The organisation has begun naming and shaming manufacturers who fail their rigorous accreditation scheme through a new ‘Black List’ on their website.  They are also set to launch a worldwide task force of secret shoppers who will purchase products marked as Egyptian Cotton from retailers both instore and online, which will then be passed along for testing.  Only products made from 100% Egyptian cotton can carry the trademarked pyramid cotton logo.  Already one Pakistan-based towel manufacturer who failed the test has had its license suspended.  READ HERE >>

A New York judge has ruled on litigations involving Walmart, Target, Bed Bath & Beyond, for selling linens falsely labelled as “100 percent Egyptian cotton.”  The complaints brought before the court alleges that Walmart knew the cotton was mislabelled as far back as 2016, while Target and Bed, Bath & Beyond knew for months.  Judge Vincent Briccetti agreed with claims that buyers nationwide overpaid for intentionally mislabelled cotton produced by Welspun India, one of the world’s largest textile manufacturers, which these consumers bought at these brands.  READ HERE >>

LESOTHO – WOOL WOES,  29 May 2019
The South Africa Wool Testing Bureau in Port Elizabeth has added to the troubles of the embattled Lesotho Wool Centre (LWC), saying its operations do not meet internationally accepted testing standards for certification.  The Bureau stated: “Those regulations specify specific methods of sampling the wool, there are no certified calibrated scales, no machines to take samples in the correct manner - in this case, we feel that those aren’t met”.  The LWC accused his competitors - South African wool brokers - and the Bureau of ganging up against him.  About 40,000 Lesotho wool and mohair farmers say the LWC hasn’t paid them, and they have embarked on a campaign in South Africa to call on buyers to boycott their produce, and to put pressure on the Lesotho government to repeal regulations that force them to export through the LWC.  READ HERE >>

The CEO of the Swaziland Cotton Board is urging African leaders to put their political egos aside and support agricultural biotechnology in the overall interest of their people.  Taking a cue from South Africa, eSwatini moved to adopt regulations that would allow it to apply biotechnology.  The kingdom passed the Biosafety Act in 2012 and finally released its first GM product, Bt cotton, in 2018.  The CEO noted that in just the single season since GM cotton was introduced, “it has been able to double the ginnery consumption, meaning production has doubled by only planting additional 250 hectares of cotton under irrigation.  The ginnery throughout has doubled from 750 tons to 2,000 tons this season only from increasing the [cultivation] area by 250 hectares.  Secondly, the ginnery has employed 120 seasonal workers who will have a job for the next three months. Furthermore, the lint that is produced by the ginnery is consumed locally by our spinners who are expected to increase the employment from 850 to 1,400 this season.  READ HERE >>

Some of these claims are absurd – claiming output increase was solely attributable to GM cotton (what about good weather; farmers deciding that the returns from growing other crops are better); the claim of spinning mill employment is wrong – as far as I am aware the sole cotton spinning mill in eSwatini - Spintex has not operated for more than a year!

By the end of May 2019, the US Agency for International Development (USAID) funded East Africa Trade & Investment Hub (EATIH) grant to Generation Kenya (SEE >>) prepared 1,724 Kenyans to gain employment as sewing machine operators (SMOs).  Of this total, 1,372 already have jobs at apparel factories.  Kenya’s apparel manufacturing industry employs over 40,000 workers.

Yet, there remains a shortage of 10,000 to 15,000 skilled workers, 60% of whom are SMOs.  While vocational training programs exist to help fill this gap, they have been ad hoc and have not fully met employers’ needs.  In response, some companies have established in-house training units.  Their trainees, however, are often unsuited to garment operations, leading companies to feel they are wasting resources and effort.  As a result, Kenya’s apparel sector continues to lack a skilled workforce that can maximise the industry’s potential to drive economic growth and trade.  To address this gap, Generation Kenya, with support from the EATIH, developed an SMO training program.  The program is designed to address both soft skills, such as positive and reinforcing mindsets, behavioural skills and technical sewing skills.  The program is also selective.  Generation Kenya screens applications and chooses trainees to reduce the number of trained graduates who fail to meet industry expectations.  READ HERE >>

The Head of Ethiopia’s state-run investment body says it is time the government settles on a minimum wage among others to protect the interests of workers.  He added that the Ethiopian Investment commission was currently working with the relevant ministry and other agencies in efforts to achieve that goal.  READ HERE >>

The Ghana Minister for Trade & Industry has stated that the serious operational challenges that were confronting the Akosombo Textiles Limited (ATL - SEE >>) which led to its near collapse have been addressed with the company no longer facing the risk of total collapse.  The company, he said, is currently benefiting from a three-year exemption on VAT (Zero-rated); Import Duty Waiver and concessions on raw materials imports and the importation of machinery and equipment; as well as deferred VAT payment on imports to improve the cash flow situation of local textile manufacturing companies.  READ HERE >>

Mali is on track to harvest a record 2019/20 cotton crop of 800,000 tonnes, up about 22% percent from 2018/19, the agriculture ministry has said.  READ HERE >>

Togo’s cotton production in the 2018/19 season increased by 17% to 137,000 tonnes, the government said, but fell short of its original target of 140,000 tonnes.  READ HERE >>


Zambia Ambassador to Ethiopia has invited one of the leading textile companies in Ethiopia’s Bole Lemi industrial export zone – Jay Jay Textiles - to invest in Zambia.  The Ambassador said Zambia required value addition to the cotton the country grows.  Jay Jay Textile Regional Manager, K.P. Raju, apparently expressed interest to invest in Zambia and assured that the company would work with the embassy and undertake further assessment of the investment climate in Zambia.  READ HERE >>

A textile company in Surat City, in the Indian State of Gujarat, is willing to invest US$15m in Zambia in setting up a textile facility. “The investment might create 400 jobs,” Sanjoo Dying & Printing Mills  Director said.  READ HERE >>

It is interesting that Zambian Ambassadors are now trying to solicit investments in the value chain.  If only Ambassadors from other African states would do the same (e.g. Lesotho, Mozambique, eSwatini, Tanzania, Ghana, etc).

The Chinese Huajian Group has taken over the management and operational activities, from the Ethiopian Industrial parks development Corporation, of the US$61m Jimma Industrial Park (located 350km South West of Addis Ababa).  The first phase of the operation will focus on running the already built nine manufacturing sheds inaugurated back in November 2018.  The Park remained vacant for more than half-a-year until Huajian came to its rescue. The takeover agreement includes setting up a technical and vocational education and training centre.  READ HERE >>   and  READ HERE >>.

I guess institutions like the World Bank will be clamouring for the Ethiopian government to conclude more deals that would allow private sector investors to take over more of the operations of other government-funded industrial parks.  One wonders if this 15-year contract to manage the park had anything to do with the possibility that the Ethiopian Government may have been unable to service the massive Chinese debt that it has built up related to its broader industrialisation project.  An interesting article can be seen  HERE >>  relating to Ethiopia’s and Kenya’s struggles to repay the debts for the SGR railways that were funded by Chinese loans.

The Solidaridad (SEE >>) development project together with Cotton made in Africa (CMiA – SEE >>), Danish Ethical Trading Initiative (SEE >>), and MVO Nederland (SEE >>) will start a new project to promote a sustainable cotton and garment value chain, from Ethiopian cotton to European consumers.  The “Bottom-Up” project aims to contribute to a value chain that generates business growth, improves working conditions, promotes labour and environmental standards, and responsible purchasing practices in the cotton and textiles industry in Ethiopia and Europe by 2021.  The project is supported by the EU and aims to benefit 2,000 cotton farmers, 2,200 rural workers and 17,000 garment workers.  READ HERE >>

The Cotton On fashion retailer group has received the “Responsible Retailer Initiative of the Year” award as a result of its sustainable cotton program in Kwale County, Kenya.  The Group received the accolade at the 2019 World Retail Awards, as part of the 13th World Retail Congress held in Amsterdam.  The Group launched the Kenya Cotton Program in 2014, in partnership with Business For Development (B4D), Base Titanium and the Australian Department of Foreign Affairs & Trade.  The program aims to improve the livelihoods of the Kwale community by increasing agricultural productivity in the region and creating a pathway out of poverty.  Since its inception, the program has been the catalyst for significant economic activity, employment and social development in the region, so much so the Kenya Government has announced plans to replicate the model nationally. The program launched with only 15 farmers and today more than 2,500 farmers are engaged, with 10,000 farmers to be supported by 2020.  READ HERE>>  More details on the project can be found  HERE >>   and  HERE >>  and the Australian Government’s take can be seen  HERE >>.

It would be interesting to understand what Cotton-On’s commitment is to the Kwale initiative.  It seems that the most significant financial backers of the initiative have been other organisations.  Cotton-On’s involvement appears to be that some of the manufacturing vendors in its supply chain have agreed to purchase Kwale grown cotton; and, for the retailer to scoop the positive publicity!

ETHIOPIA – KANORIA AFRICA TEXTILES ADVERTORIAL, June 2019 Leveraging state-of-the-art facilities to sustainably manufacture over 12 million meters of denim each year, Kanoria Africa Textiles PLC is driving diversification across Ethiopia.  READ HERE >>

“… with Abiy’s Ethiopia aiming to become the world’s next low-wage paradise, inequality could increase dramatically. Foreign direct investment, while highly regulated and limited to certain sectors (mainly infrastructure, construction, agriculture, and textile), has taken on a significant role over the past ten years, growing from US$265,000 in 2005 to nearly US$4bn in 2018.  With no private sector minimum wage in Ethiopia, low wages are seen as Ethiopia’s “comparative advantage” in the global race to the bottom, with the Ethiopian Investment Commission reporting that “the average wage of workers in the leather factories is US$45 per month, while the minimum wage in Guangdong is about US$300.” 

“In a particularly telling convergence between the aid-industrial complex and Western foreign policy agendas, these low-labour-cost industrial parks double as European migration-control tools.  Donors have pledged to mobilise US$500 million for two industrial parks, as long as Ethiopia reserves a third of the projected 100,000 jobs for refugees.  The necessary proclamation permitting refugees to work in the formal labour market was passed in January 2019.  This was advocated for by Western governments who would never dream of proposing a 30% refugee quota on job-creation schemes at home”. READ HERE >>

Interesting - 33,000 jobs in two industrial parks solely for refugees. I wonder which parks – existing ones? some say two new parks will be built near to existing refugee camps?  Will the jobs reserved for refugees have an effect on keeping wages at low levels?

Ethiopia may serve as a prime 21st century test case to demonstrate what happens if the focus is on investment in the infrastructure, factories, logistics and business incentives without a corresponding investment in the policies, social infrastructure, social dialogue and worker representation that means jobs are not exploitative. … more needs to be done to ensure that workers enjoy decent standards of work, are paid a decent wage, are treated with respect and have the opportunity to join a union if they wish to.

These principles must be embedded in the formative roots of labour practice and policy in the textile industry in Ethiopia.  Getting this right now means that the country can sustain sector growth in the long-term, while also benefiting owners, workers, families and their communities.  READ HERE >>

In May 2019 the New York Stern School’s Center for Business and Human Rights published “Made in Ethiopia: Challenges in the Garment Industry’s New Frontier”.  The report recommended:

For Government:
  • Address ethnic tension in Hawassa and elsewhere. Prime Minister Dr. Abiy Ahmed needs to apply his ample political skill to defusing potential violence that could threaten Hawassa and other industrial parks.
  • Craft and implement a long-term economic plan for strengthening the apparel industry. The elements include developing a domestic supply chain, shoring up industrial parks, and diversifying into other sectors.
  • Establish a minimum wage that ensures decent living conditions for garment workers. This must be done gradually so as not to drive away foreign manufacturers.
  • Streamline infrastructure and administrative processes. High rail freight rates and a recalcitrant customs service both demand attention.
For the Foreign Manufacturers and Western Brands:
  • Align business models with Ethiopian realities. Western brands should develop long-term supplier relationships which allow factories to improve efficiency over time.
  • Build worker dormitories that offer subsidiSed rent. The lack of decent housing is the most pressing form of worker deprivation in Hawassa.
  • Provide more extensive training on both hard and soft skills. Evidence of the need for more training comes in the form of low efficiency numbers and high attrition rates.
  • Promote more Ethiopians more quickly into middle-management jobs. Doing so would alleviate the tension between managers from East and South Asia and their Ethiopian charges.
  • Foster workers’ councils that provide a real employee voice and a venue for grievances. The companies should pay for expert training for council members on how to run an effective representative committee.

The full NY Sterm Ethiopia garment sector report can be accessed  HERE >>.

Various industry commentators are now interrogating the report.
The mainly Asian garment industry commentator - David Birnbaum  SEE >>  and  SEE >>  - has now published a short opinion piece on the Ethiopian textile and apparel manufacturing sector plan of his LinkedIn page.  Some vignettes from his input:
“The problems shown in the [NY Stern] report are indeed serious. However, I am concerned that important facts, unique to the garment industry, are being overlooked.  This has resulted in an incomplete analysis that disregards fundamental characteristics of what PVH and industry players are attempting to do.”
“Why did PVH and the other players go to Hawassa in the first place?   I suggest that the report’s accusation that PVH was motivated by cheap labor is totally incorrect: PVH is well known throughout the industry for their outstanding ethical record. In this regard, everyone in the industry is aware of their efforts to build an industry in Ethiopia based on compliance, sustainability and transparency.  The issue of cheap electricity is a prime consideration within the industry.”
“It is understandable that because the people at Stern Center have limited knowledge of the industry, they are unaware of PVH’s reputation; PVH’s plan; and the importance of electricity in both the textile and garment production processes.  However, you do not have to be an industry expert to know that if, like PVH, you are in the designer label business, whether your product is garments, jewellery or body care, your greatest asset is you label.  The idea that PVH management would be so incredibly incompetent, so uniquely stupid, as to jeopardize their label reputations to save 20¢ on CM, truly boggles the mind.  Come on guys!"
“In a real sense, the question is less about the sewer’s income and more about her expenditure.   As pointed out in the report, the cost of living at Hawassa including housing, food and other necessities as so high as to leave the sewer with little or no money at the end of the month.  At the end of the day, it matters less what you pay your worker, and more the benefit the worker achieves from his or her work.”
“The matter of Industrial Action:  This is truly the worst.  In Brooklyn workers go on strike to achieve more:  Shorter hours, better conditions, higher wages or making Iron Man’s birthday a public holiday.  In Hawassa workers go on strike when they conclude that things will never improve.  Here industrial action is truly an attack on the factory and specifically its management.  It is a statement:  We hate you.  You should all drop dead.”

“There is much about the Stern Report that I disagree with.  However, there is one important area where there can be no disagreement.  The problems raised in the report are real; they are serious; and the success of the entire Hawassa project may well rest on the ability to solve the problems."

“Hawassa and our industry are in need of professional help. We do not need assistance on the garment production side. We are quite adept in that area.  The problems at Hawassa shown in the report are not garment problems.  They are of a different order and to solve these problems we need outside specialists:  behavioural-psychologists, sociologists, social-economists, specialists in Ethiopian culture and professionals with specific knowledge and experience in political risk-analysis and negotiation.”
The full Birnbaum piece can be READ HERE >>  (requires (FREE) membership of LinkedIn).
(2018;  year-to-date January-April 2019;  in US$)
  • Lesotho:  One can see the effect of the September 2018 increase of 37.4% to Lesotho's minimum wages.  Unless Lesotho firms improve their productivity will continually drift away.
  • Ethiopia: the juggernaught gets going!

"Corporate Commitments to Living Wages in the Garment Industry".  Remi Edwards, Tom Hunt & Genevieve LeBaron. Sheffield Political Economy Research Institute (SPERI), University of Sheffield.  May 2019.
We find that living wage commitments and action taken by garment companies varies widely, with some taking more meaningful steps than others.  There are signs of progress but we identify seven significant obstacles to the payment of living wages:
  • Corporations have outsourced their living wage commitments to multiple external initiatives, which have unenforceable standards. Company policies are often out of step with these initiatives.
  • There is widespread inconsistency and confusion amongst corporations over the definition of a living wage.
  • Corporations lack living wage benchmarks and most lack a ‘roadmap’ for achieving their living wage commitments.
  • Corporations are reliant on social auditing for compliance and enforcement of living wage commitments, a tool known to be flawed and to produce misleading depictions of labour standards in supply chains.is extremely limited.
  • There is lacking transparency among corporations about the wages that are actually paid to workers throughout their supplier networks.
  • There is weak enforcement of freedom of association rights which may disempower workers from raising concerns about unmet wage commitments.
  • Commitment and progress towards living wages in non-garment industry global supply chains.

Tailored Wages 2019: The State of Pay in the Global Garment Industry".  Published by the Clean Clothes Campaign. 
Since the beginning of this century, global brands sourcing clothing from low wage countries around the world have acknowledged on paper that wages paid to workers should be enough to meet their basic needs.  Yet, two decades on, workers and their families remain in stark poverty.  The garment industry has continued for all this time to use workers’ low cost labour to make mass profits. Their so called ‘commitments’ to ensure wages are enough have made little or no real difference.  READ HERE >>

Trump Tariffs on China - Clothing and Footwear Next in Line
A coalition of nearly 200 executives representing 138 small, medium, and large companies in the fashion industry sent a letter to President Trump opposing tariffs on the textile, apparel, footwear, and accessories industry.  READ HERE >>  and  READ HERE >>


Ethiopia Cotton Production”. US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS).  Washington DC, United States.  May 2019.
Report Highlights: Cotton production for marketing year 2019/20 is forecast at 262,000 bales (57,000 metric tons), 8% higher than the previous year.  The increase in production is due to an increase in area harvested.  Attractive domestic prices coupled with a growing textile and apparel industry, and the recent approval of Bt cotton seed varieties for commercial cultivation all add a positive stimulus to expand local production.  Consumption is forecast to increase to 295,000 bales (64,000 metric tons) with thriving investments in the textile industry.  While imports are forecast at 38,000 bales or 8,000 metric tons.  Imports in the short-run are expected to be marginal as the country struggles to maintain its depleting foreign exchange reserves.  The full report can be  READ HERE >>.

"The Politics of Industrial Policy in a Context of Competitive Clientelism: The Case of Kenya’s Garment Export Sector".  Matthew Tyce.  In Journal of African Affairs.  January 2019.
Synopsis:  The success of Kenya’s garment export sector relative to other African countries challenges a growing pessimism regarding the prospects of devising and implementing industrial policy in contemporary Africa, particularly in contexts characterized by Competitive Clientelism.  Kenya became sub-Saharan Africa’s fourth largest exporter of garments by value during the last two decades, catching up with major players like Lesotho and South Africa while converging on the two largest exporters, Mauritius and Madagascar.  Nuancing existing explanations for the sector’s growth, which emphasize external factors like trade regimes and donor interventions, this article assigns a central role to the state and the balance of power that underpins it.  The interests of key actors within Kenya’s political settlement aligned in a way that allowed the country’s Export Processing Zones (EPZ) programme to be relatively insulated from political pressures, giving the Export Processing Zones Authority (EPZA) sufficient autonomy and coordination capacities to administer a highly-conducive business environment for predominantly foreign garment firms.  However, while the sector’s employment and foreign exchange contributions have ensured ongoing political support, the resulting increase in garment firms’ holding power has made them more assertive in demanding policies that are not only decoupled from learning processes, but detrimental to other industry players.  The full paper can be  READ HERE >>  (subscription required).

In Search of a Better Life: Self-Control in the Ethiopian Labour Market”.  Christian Meyer.  Research funded by: UK Department for International Development (DFID), the EC, the European University Institute, the Institute for the Study of Labour, New York University Abu Dhabi, and the World Bank.  20 November 2018.
Synopsis:  This paper investigates whether present bias correlates with savings and job search behaviour in a population of low-skill workers in Ethiopia.  The author conducts a field experiment with 460 women who begin employment in the ready-made garment industry. Most are rural-urban migrants without work experience for whom the job represents a stepping stone into the labour market.  Almost all workers plan to use their jobs to save money and to look for higher-wage employment, but many fall short of their intentions.  He proposes self-control problems as a candidate explanation.  The full paper can be READ HERE >>.

Christian Meyer, the author of the paper above, is also managing a research project on the Hawassa Industrial Park. The “Hawassa Industrial Park Community Impact Evaluation” project is being done with Morgan Hardy (NYU Abu Dhabi).
Synopsis:  The Government of Ethiopia has embarked on an ambitious industrialisation strategy based on the creation of special economic zones as centres of export-oriented light manufacturing.  The flagship industrial park of this strategy is located in the city of Hawassa, in Ethiopia's Southern Nations, Nationalities & People’s (SNNP) Region.  At full capacity, the Hawassa Industrial Park will provide employment to 60,000 workers from the wider region, most of whom will be women aged between 18 and 35.  Relatively little is known about the impact of such industrial employment opportunities on the economic, physical, and social well-being of workers and the largely rural, agricultural communities from which they are recruited.  This project uses two large-scale randomized control trials to evaluate these impacts.  For more details  READ HERE >>.
  • 3rd Pan-African Cotton Conference - Conference - 26-28 September 2019.  Abuja, Nigeria.  For more information: www.cotton-house-africa.org
  • Origin Africa 2019 - Trade Show - 28-30 October 2019.  Dar es Salaam, Tanzania.  For more information:  www.originafrica.org
  • Destination Africa - Trade Show - 9-11 November 2019.  Cairo, Egypt.  For more information:  www.destination-africa.org
  • Messe Frankfurt 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

Apparently Messe Frankfurt is studying the possibility of establishing a textile trade show in Egypt.
If it does it will add to its existing African portfolio of textile and apparel trade shows (it already owns value chain trade shows in Ethiopia, and two in South Africa).
What will then become of Egypt’s Destination Africa?
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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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