Most of the clothes we adorn every day have a cotton component in them and as such, it is the single most sought after raw material for the textile industry. Last month saw #BuyKenyaSuperSale do rounds on the interwebs. It was a three day sale on designer clothes made in the EPZs, available to the locals for purchase at KICC. Kenyans thronged  in large numbers to get a piece of the pie at dirt cheap prices. These intricately done pieces were retailing between KES 100 and KES 600. Imagine grabbing Calvin Klein, Tommy Hilfiger, Puma, Victoria Secrets at such prices! Most Kenyans usually get to wear such at the tail end of the cycle as ‘Mitumba’ hence the numbers explain the enthusiasm. I choose to deliberately pose the question, how many clothing items in your closet or your house at large are actually new? If it’s to the upwards of 70 percent, then you surely deserve a pat on the back. The rest, well the socks need some pulling up. But then again, are the clothing items made locally? That is a question to be answered in another forum.

Large textile firms have set up shop in the continent. Case in point? Swedish firm H&M has moved part of their production to Ethiopia. Ayka, a Turkish garment manufacturer which produces textiles for German Company Tschibo made an investment of USD 160 million in Ethiopia. It employs about 7000 people scalable to 10000 largely attributed to cheap labor compared to China.  PVH, which produces Calvin Klein and Tommy Hilfiger are utilizing the infrastructure that is EPZ in Kenya.  

A recent report penned by McKinsey intimates that East Africa has the potential of exporting garments valued at a staggering USD 3 billion by 2025. The apparent potential of the local consumption of domestically manufactured textiles remains as the elephant in the room. Going by the turnout at KICC, it goes to show that indeed there is a market for locally produced items. The choices are limitless from handkerchiefs, innerwear, dishcloths, towels and clothes for any occasion. The potential is enormous if a lot of effort is channeled towards this sector. The report release is in the wake of a bulk import of 100000 tons of ‘mitumba’ ranging from shoes, clothes and accessories annually from abroad, going by official reports. It is a worrying trend going forward.

A background check on the core of the apparel industry sheds light on the dynamism of this industry. Undoubtedly, cotton is one of the most important agricultural crops in Africa. This is supported by the number of countries growing this perceived ‘white gold’. 37 being those that grow the crop, out of which, 30 are exporters.

It is the single most important raw material in the textile industry whose contribution to the world economy cannot go unmentioned. Africa in general contributes 16 percent of the global textile industry. In 2015 alone, USD 1.6 trillion was earned from it, 60 percent being supplied by Asia Pacific countries.

Burkina Faso heavily relies on cotton, which accounts for 71 percent of all its exports. Benin and Mali are also major exporters of the crop. The irony of such nations is that they score poorly on the UNDP Human Development Index that ranks 187 countries. The three countries are ranked 181st,, , 165th and  176th respectively. A nexus between the ever fluctuating and dwindling market prices of the commodity and poverty levels, up to  8 percent on some West African countries, has been established as opposed to an upward trend that was once experienced in the early 1990s.

Nigeria, a classic example of a once vibrant cotton regime is now a shadow of its former self. According to allafrica.com, Nigeria experienced a boom in the period between 1985 and 1991. This period was characterized by an annual growth rate of 67 percent , with textile mills totaling to 180. They were responsible for employing about 350,000 people, a quarter of what the entire manufacturing sector employed back then.

The sector is in a sorry state today. Only 25 mills are operational and operating at a mere 40 percent of the installed capacity. Those gainfully employed by this once vibrant sector fell sharply to only  25000 people.

Factors that led the industry to its knees are quite predominant right across most African countries that once had a vibrant textile industry. Key among them being an influx of cheap fabric from China and India. This forced many entrepreneurs out of business because the competition was too stiff to keep up. There was a short-term reprieve when the Federal government of Nigeria introduced an import ban on fabric. It failed because of a thriving smuggling system that fed into a growing demand of 85 percent of local consumption. This was a double edged sword because it managed to drive citizens out of business as well as denying the government revenue streams.

Financial constraints also played a role in the possible decline of this industry. Credit availed by local banks was highly priced at about 30 per cent. This compared to credit availed to Chinese in the same sector, at 6 percent and below, better draws the picture of the influx of the cheap fabric as well as the stagnation of the sector that eventually led to an ultimate collapse.

Nigeria is plagued by frequent power outages. Power is key in any manufacturing industry and if it’s an impediment, it eats into the bottom line of the industry. According to International Textile Manufacturing Federation, power contributes to 15 percent of the production costs.

Redundant technology is widespread across Africa. Spindle speeds in Africa stands at 10,000 while China and India have double that, 20,000 to be precise. This coupled with energy deficiencies can visibly send an entire industry six feet deep.

It is not all doom and gloom though for this once revered sector. Some interventions have been put in place to possibly resuscitate the sector that is on its death bed.

The interest in of international brands to set up shop in the continent perhaps is an indicator of good tidings as mentioned earlier. Vlisco, a Dutch label which makes the colorful wax print fabrics that are in high demand in Central and West Africa, produces only a third of its product in the continent. This is according to Jan Van der Horst, a key personnel in the company. The company outsources the deficit from outside Africa, showing there’s demand but supply falls short by about 67 percent.  The continent has the capacity to be one stop shop for the entire value chain.

Olam International, whose headquarters is based  in Singapore, is a renowned multinational agribusiness company known to have vast interest in the industry. It has an agenda of developing the cotton industry in Africa. Currently, it employs over 2 million farmers right across the continent and provides key inputs, credit, seed, fertilizer and securing a market for the harvest notwithstanding. An investment of USD 40 million worth of processed cotton covering 120,000 farmers was channeled to Southern Africa countries.

Initiatives by Aid By Trade Foundation, whose initiatives includes but not limited to engaging small scale farmers in the production of cotton as part of their fair trade agreements is a welcome move. It has also taken upon itself to teach farmers on the environmentally friendly practices through an active engagement with experts. Furthermore, it has market for the produce (textile companies) who purchase the raw material. Out-grower schemes have also been involved to ensure that logistics are properly handled. These include storage, processing and transport facilities. These schemes help clear marketing obstacles for farmers and ensure they get better prices for their produce.

Locally, the government has initiated EPZ pods that is meant to pool local designers who can bring in their skill set and harness from the EPZ infrastructure. Investors in these zones are entitled to at least 10 year corporate tax holiday and 25 percent corporate tax thereafter, a 10 year withholding tax holiday, stamp duty exemption, 100 percent investment deduction on initial investment applied over 20 years and VAT exemptions on industrial inputs. A local manufacturer who doesn’t fall under this net has to bear the aforementioned costs and this is translated on the price tag of the item. So the next time you see a designer charging an arm and a leg on garments, you’ll be best advised why.

Going forward, I would love to see an end to the running battles between Nairobi County ‘askaris’ and hawkers. In a nutshell, a structure that formalizes the informal sector with a bias to this industry would see organized revenue streams for both national and county governments. This can only be made possible through capacity building of the entire value chain. Researchers, including data scientists, should study market trends on effective raw material and finished products for the farmer and consumer respectively. There should also be policy formulation on a framework that pits textile industry as a key contributor to GDP and imparting relevant skills on the contributors to the industry. Additionally, there should be modernization of the manufacturing process as well as incentivizing inputs in this sector to ensure that the farmer and the end user maximize utility on prevailing constraints.

This will grow the local apparel industry. This is because designers will be able to produce their designs in large scale at a cost that can easily loop the ‘mitumba’ traders into stocking them since the very same second hand clothes are locally made in EPZs and end here at the end of the cycle. This shows that we indeed have the skillset. The other stakeholders have a part to play to ensure that it is a cohesive process.

Image courtesy of http://newsofthesouth.com