W2 Textiles Policy Brief by Building Bridges

THE AfCFTA AND TRANSFORMATIVE INDUSTRIALISATION WEBINAR SERIES

BUILDING THE TEXTILES AND CLOTHING VALUE CHAINS POLICY BRIEF 2021, Cape Town

Linkoping House 27 Burg Road Rondebosch 7700 Cape Town T +27 (0) 21 650 1420 F +27 (0) 21 650 5709 E mandelaschool@uct.ac.za www.mandelaschool.uct.ac.za

Design: Mandy Darling, Magenta Media

Contents Introductory Note........................................................................................................................................... 2 Speaker Bios .................................................................................................................................................... 3 Executive Summary ....................................................................................................................................... 8 1. Introduction ................................................................................................................................................. 9 2. The current state of and constraints in the development of cotton, textile, and apparel RVCs in Africa ........................................................................................................................ 10 Cotton growing and ginning.................................................................................................................. 10 Textile production .................................................................................................................................... 11 Apparel production and trade ...............................................................................................................13 3. Opportunities and requirements for building regional cotton, textiles and apparel value chains in Africa ........................................................................................................... 16 Cotton, textile and apparel sectors designated as priority sectors.............................................. 16 Leveraging on domestic and regional markets .................................................................................17 E-commerce...............................................................................................................................................17 Shift from GVCs to RVCs.........................................................................................................................18 The role of African lead firms, the inclusion of informal retailers and associated services...................................................................................................................................18 Increasing global demand for African fabrics ....................................................................................18 Value addition .......................................................................................................................................... 19 Sustainable sourcing and production ................................................................................................. 19 Outward-oriented global market-driven and inward-oriented market-driven value chains ................................................................................................................... 19 4. SWOT Analysis ........................................................................................................................................ 20 5. Conclusion and policy recommendations: ..........................................................................................21 References .....................................................................................................................................................24

Introductory Note AfCFTA and Transformative Industrialization Dear Reader, 2020 proved to be a challenging year for people across the world. Of note the impact of the Covid-19 pandemic on families, communities and nations reminded us of the need to strengthen democratic governance and pursue development sustainably. The African Continental Free Trade Agreement presented a unique opportunity to explore the challenges and opportunities for better integration of regional value chains in the pharmaceutical, agricultural and textile industries. Successful delivery of our four-part webinar series was made possible through partnership with the Centre for Competition, Regulation and Economic Development (CCRED) at the University of Johannesburg, the Centre for Comparative Law in Africa (CCLA) and the Policy Research in International Services and Marketing (PRISM) at the University of Cape Town, Trade and Industrial Policy Strategies at the University of Pretoria, the Toyota Wessels Institute of Manufacturing Studies (TWIMS) in Durban, the Nigerian Institute of Advanced Legal Studies and the Africa International Trade & Commerce Research in Nigeria. We are especially grateful to our distinguished speakers who shared their experience and recommendations, thereby contributing to

vibrant discussions during our webinar series. We had the opportunity to relay these recommendations to the Secretary General of the AfCFTA Secretariat, H.E. Wamkele Mene, in December 2020. This Policy Brief on Building the Textiles and Clothing Value Chains, reveals Africa’s capability in the cotton, textile and clothing sector. It also emphasises the opportunity the AfCFTA provides for coordinating efforts to build regional value chains in this sector. We would like to thank Ms Vuyiswa Mkhabela, a member of our research team on the AfCFTA and Transformative Industrialisation Project, who compiled this policy brief. This work forms the foundation in our efforts to build a network of experts working on issues related to transformative and sustainable industrialisation through the Industrialisation and Development Forum. In 2021, we will continue this series to explore digitisation and opportunities for green industrialisation. We hope you enjoy reading this report and look forward to your comments. If you would like to receive more information about this ongoing project, please contact Ms Mabel Nederlof-Sithole, who is leading our Building Bridges Programme (mabel.sithole@uct.ac.za). Click here to view webinar videos. Warm regards, Faizel Ismail

Building the Textiles and Clothing Value Chains • POLICY BRIEF

Speaker Bios (In order of appearance) Ms Mabel Nederlof-Sithole (Programme Manager, Building Bridges) Mabel Sithole is the Building Bridges Programme Manager at The Nelson Mandela School of Public Governance at the University of Cape Town (UCT). She is pursuing a PhD in Political Studies at UCT with a focus on women’s leadership in Southern Africa. She has over 15 years’ experience working in human rights, public policy and development in Africa. Mabel obtained her first degree in Politics and Administration from the University of Zimbabwe in 2007, where she also served as president of the Model United Nations Club. She obtained an Honours Degree in Public Policy (with distinction for her thesis which analysed public opinion about the role of the police in protecting refugee rights in South Africa) and a Masters in Development Studies, from the University of Cape Town. Her current research interests focus on leadership and governance in Southern Africa. In 2020, she was named one of the top five finalists in the Accenture Rising Star Awards in the public/ private service category. She is also an established musician (Mae Sithole), recipient of the ConcertsSA Mobility Fund and was named one of Cape Town’s Top 5 Innovative Female Musician Innovators by Of Africa Magazine.

in Development Studies from the Institute of Development Studies (IDS), Sussex; and BA and LLB Degrees from the University of Kwa-Zulu Natal (Pietermaritzburg) in South Africa. He was re-appointed to serve as the Chair of the International Trade Administration Commission (ITAC) for five years (2019-2023). He has served as the Ambassador Permanent Representative of South Africa to the WTO (2010-2014). Prior to this he was the Deputy Director General for International Trade and Economic Development (ITED) in the Department of Trade and Industry (dti). As South Africa’s Chief Trade Negotiator since 1994, he led the new democratic South Africa’s trade negotiations with the European Union (EU), Southern African Development Community (SADC), Southern African Customs Union (SACU), and several other bilateral trading partners including the US, India and Brazil. He was also South Africa’s Special Envoy on the South Africa-USA AGOA negotiations between January 2015 and June 2016. Ms Natasja Ambrosio (Head of Sustainability, Mr Price Group)

Prof Faizel Ismail (Director, The Nelson Mandela School of Public Governance)

Natasja Ambrosio is the Founder and Director of the Mr Price Foundation. She is a member of the Retail-CTFL Master Plan, the BUSA (Business Unity SA), the Economic Policy Committee and Macro-Economic Task team, and a founding member of the South African Cotton Cluster (SACC) where she serves as a member of the Steering Committee. She is a LINC Fellow, focusing on the Children’s Sector of South Africa. Natasja is also pursuing a PhD with GIBS Business School.

Professor Faizel Ismail is Director of the Nelson Mandela School of Public Governance. He currently teaches at the University of Cape Town in the School of Economics, the Faculty of Law and in the Graduate School of Business. He has a PhD in Politics from the University of Manchester; an MPhil

She initiated an RSA small-scale cotton farmer development programme. 276 farmers produce sustainably grown cotton procured by Mr Price Group. The Foundation also delivers the Youth Manufacturing and Retail Skills Development Program, which equips unemployed youth with skills for apparel and footwear retail and manufacturing. She pioneered the re-introduction of physical education into public schools in RSA and is a recipient of the Mail & Guardian Investment in the Future: Corporate Award (2009) with three programmes of the Mr Price

Foundation. She was also a finalist in the ABSA Supplier Development Awards. Mr Hamma A. Kwajaffa (Director-General, Nigeria Textile Manufacturers Association of Nigeria) Hamma A. Kwajaffa has over 30 years of professional experience in human capital management, covering both the private and public sector of the Nigerian economy. He is a graduate of the University of Maiduguri (1986) with a PGDE plus many other certifications and training in Nigeria, China and India. Mr Kwajaffa is an associate of Chartered Institute of Personnel Management of Nigeria and member of Biotechnology of Nigeria. In his working career, Mr Kwajaffa has headed the human capital management function of many organisations covering ceramics and textiles. He is currently the Director General of the Nigerian Textile Manufacturers Association. He is an accomplished human capital management specialist. Dr Anthony Mveyange (Director, Research and Learning, Trademark East Africa Ltd) Anthony Mveyange is a passionate development economist whose research and policy foci include (but are not limited to) inequality, poverty, natural resources, international trade, trade policy, economic growth and development in Africa. He has over 10 years’ experience in designing and evaluating projects and programmes, policy advisory, designing and overseeing thematic research-related programmes to generate the robust and reliable evidence base necessary for making credible and well-informed policy decisions. As Research and Learning Director at Trademark East Africa (TMEA), based in Nairobi,

Kenya, Anthony is directing research and learning strategy in 10 Eastern African countries (Tanzania, Kenya, Uganda, Rwanda, Burundi, Ethiopia, South Sudan, Malawi, Somaliland and Eastern DRC). Anthony also leads a six-country research initiative funded by Bill and Melinda Gates Foundation through the African Economic Research Consortium (AERC). Before joining TMEA, Anthony worked as a research economist in the World Bank Research Development Group in Washington, DC and he is also one of the founding members of the Network of Impact Evaluation Researchers in Africa (NIERA) based in Nairobi, Kenya. Anthony was recently nominated by the World Manufacturing Foundation as among 12 global experts to produce a White Paper on restoring global value chains in the wake of the COVID-19 crisis, and he is also a contributor to Africa in Focus at the Brookings Institute in the United States. In the past, Anthony consulted for the World Bank Group, Strategic Impact Evaluation Fund of the World Bank, United Nations University World Institute for Development Economics Research (UNU-WIDER), and Amref Health Africa. Mr George Ndira (Consultant, former East Africa Community Principal Industrial Economist) George Ndira holds a master’s degree in International Development Studies from University of GRIPS, Tokyo, Japan specialisation in Industrialisation, and a B.Sc. degree in Mechanical Engineering, from the University of Nairobi. He is currently working as a consultant focusing on regional value chain development, and design of effective policy tools for industrial and economic transformation. Previously, George was the Head of Industrialisation and SME Department at the East African Community Secretariat for a period of 10 years until 2019. He led the formulation of the East African Community Industrialisation Strategy and Policy, and the Charter for the SME Development in the EAC. He worked on many devel-

Building the Textiles and Clothing Value Chains • POLICY BRIEF

opment programmes targeting regional value chains, key among them include: agro-processing, mining, automotive, cotton & textile, leather and pharmaceuticals. Over the last 15 years of work and professional engagements, Mr Ndira has built extensive networks with key development partners including World Bank, AfDB, EABC, UNIDO, TMEA, UNDP, GIZ, COMSEC, EABC, UNECA, AUC, EU, ITC and UNCTAD. Previously, he worked as the senior manager heading research and planning division at the Export Promotion Organisations in Kenya, where he led the formulation of the national export strategy (NES) for the country. He served as a technical advisor in the formulation of the Kenya Vision 2030 Development Blue Print. Mr Ndira’s main areas of professional interest include: SME development industrial policy for economic transformation and value chain development strategies. Mr Issifou Dado Doko (Agronomist; Rural and Economic Development Expert; former Deputy Permanent Secretary, Cotton Interprofessional Association (AIC); former Executive Manager, National Council of the Cotton Producers (CNPC), Parakou Benin Cotton Association – Benin Republic) Issifou Dado Doko is an agricultural engineer with more than 25 years of experience in the implementation of agricultural and rural development projects and programmess in West Africa.

Prof M.T Ladan (Director General, the Nigerian Institute of Advanced Legal Studies) Prof Ladan is the Director General of the Nigerian Institute of Advanced Legal Studies (NIALS). He is a Professor of Law with over 33 years’ experience in teaching and Research in comparative jurisprudence, public international law relating to regional economic integration law and practice, environment, energy, natural resources, human rights, cybercrime, gender and sustainable development laws in Africa. Prof Ladan is a member of many renowned associations including World Jurist Association, Washington DC, USA; IUCN Academy and Commission on Environmental Law; Association of African Environmental Law Scholars; a Hubert Humphrey Fellow, USA; and Nigerian Society of International Law. He is also the deputy chair, National Committee on the Implementation of International Humanitarian Law Treaties (IHL) and National Committee on the Justice Sector Reform Implementation Committee (2011-to date). Prof Ladan has consulted and served as a technical resource person for many Organisations including UNEP Kenya, UNICRI, ECOWAS Commission, UNDP, UNHCR, and UNICEF Nigeria. He has authored over 18 books, 85 journal articles and over 100 national and international conference/seminar papers presented within and outside Nigeria.

Dr Andrew Mold (Chief, Regional Integration and AfCFTA Cluster, Regional Office for Eastern Africa, United Nations Economic Commission for Africa, Kigali, Rwanda) Andrew Mold is chief of Regional Integration and the AfCFTA for the office for Eastern Africa of the United Nations Economic Commission for Africa in Kigali. His main areas of research are international trade, regional integration, foreign direct investment and development strategies. Cde Issa Aremu (Vice President, Industrial Global Union; General Secretary, National Union of Textile, Garment and Tailoring Workers of Nigeria) Comrade Issa Aremu is currently serving as the vice president representing sub-Saharan Africa on the Executive Committee of IndustriALL Global Union. Other vice presidents represent Asia-Pacific, Latin America and the Caribbean, Middle East and North Africa, North America and Europe. He has 30 years of active trade union experience as an organiser, trade union educator, industrial revival advocacy and the General Secretary, National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN) and NEC Member Nigeria Labour Congress (NLC). Cde Aremu is a strong advocate of re-industrialisation of Africa campaigns. His stance is visible as he co-organises the annual Africa Industrialisation Day (AID) as declared by United Nations Industrial Development Organisation (UNIDO) across different states of Nigeria. Cde Aremu has always been a trailblazer as right after his education he was the pioneer head, Economics/Research Department, Nigeria Labour Congress (NLC), 1987–1989. He later served as a two-term elected vice president, Nigeria Labour Congress (2007–2015). In 2005, he was a member of the prestigious

National Institute for Policy and Strategic Studies (NIPSS) of Nigeria. Cde Aremu has served in various labour market bodies: Tripartite Committee on National Minimum Wage, 2000 and 2009–2010; the board of Michael Imoudu National Institute for Labour Studies (MINILS); member, Presidential Committee on the Revival of Textile and Garment Industry, 2002; Kaduna State Government Special Committee on the Revival of Textiles and Cotton Industries; National Labour Advisory Committee (NLAC); and International Committee, Nigeria Labour Congress (NLC). He is an alumnus of George Meany Labour Centre, Maryland, Washington, USA. He has a number of publications that include: Reflections series on labour and trade unions; industry and economy; Africa and global affairs; good governance and democracy, among others. Mr Simon Eppel (Researcher, Southern African Clothing and Textile Workers Union) Simon Eppel is a trade unionist and holds the position of Director of Research within the SA Clothing and Textile Workers’ Union (SACTWU). He is involved in a range of policy-related and practical activities that aim to produce more secure, sustainable, meaningful and growing employment for the union’s members based on the principle and practice of decent work, and provides assistance on collective bargaining and membership matters in the union. Simon serves as a COSATU and SACTWU representative on several industry and Nedlac task teams and bodies, including on trade-related matters. He trained as a social anthropologist and received an MPhil in Development Studies from the University of Cape Town (UCT).

Building the Textiles and Clothing Value Chains • POLICY BRIEF

Dr Olumuyiwa Alaba (Trade expert; Board member ITRC and TRALAC) Olumuyiwa Alaba is an economist with specialisation in trade development. He has about two decades of experience in teaching, research and advisory in trade policy, trade facilitation and trade development. Dr Alaba has been active in providing supportson various donor-funded technical assistance on trade to governments at national, regional and continental levels for about two decades. He currently serves as a member of the Board of Directors of the Trade Law Centre of Southern Africa (TRALAC) and a member of Board of Trustees of the International Trade and Research Centre (ITRC). He is the current lead, Trade Thematic Group of the Nigeria Economic Summit Group (NESG). He was a long-term technical assistant on trade policy issues to the Minister of Finance in Nigeria. He has served as the lead and technical advisor on various donor countries and agencies’ supports in Nigeria, Africa and globally on trade policy process, implementation of trade facilitation agreement, free trade area, trade competitiveness and trade standards.

Dr Taffere Tesfachew (Advisor, Ethiopian Investment Agency) Taffere Tesfachew, PhD, is an inter-national consultant on trade- and d eve l o p m e n t - re l a t e d issues. Until May 2016, he was director of the Division on Africa and Least Developed Countries, UNCTAD, where he led a team of economists who conducted research and analysis for two major annual reports, the ‘Economic Development in Africa Report’ and the ‘Least Developed Countries Report’. He has also authored and co-authored articles on a range of topics. Dr Tesfachew holds a PhD in development economics from the Institute of Development Studies, University of Sussex.

Executive Summary Transformative industrialisation remains a development imperative for Africa, and the textile and apparel sectors and value chain represent a significant opportunity for economic transformation and employment generation. Considering the promise the African Continental Free Trade Area (AfCFTA) holds for regional integration, and transformative industrialisation, this policy brief examines the prospects for developing competitive and sustainable cotton, textile, and apparel regional value chains (RVCs) across the continent. This policy brief builds on the insights drawn from the second instalment of the AfCFTA and Transformative Industrialisation Webinar series titled “Building Textiles and Clothing Value Chains” hosted by the Nelson Mandela School of Public Governance. Several industry stakeholders have provided insights during the webinar from across the continent, representing various value chain segments. Discussions points raised during the webinar are further explored through country-specific and regional secondary research focused on exploring productive and competitiveness constraints and opportunities faced by the cotton, textile, and apparel sectors in the African continent. This policy brief is complemented by the “Building Textiles and Clothing Value Chains” summary report and video, which can be found on the Nelson Mandela School of Public Governance website.

Building the Textiles and Clothing Value Chains • POLICY BRIEF

1. Introduction Lopes and te Velde, (2021) have argued that while Africa’s share of manufacturing valueadded between 2000 and 2017 reflects a slight decline from 12.6 to 11.3% of GDP, its overall level of industrial growth since 2000 has been significant. The combined apparel and footwear market in sub-Saharan Africa (SSA) is estimated to be worth US$31 billion in 2019. However, the industry is still in its infancy and its constraints to growth deserve specific attention (Chege, 2019), especially since Africa’s production and exports of textile and apparel products have been significantly smaller than other low-income regions. The development of competitive and sustainable regional cotton, textile and apparel value chains on the continent requires a closer assessment for several reasons. Firstly, even though disputed, various arguments advocate that labour-intensive value chains traditionally presented a unique stepping stone for countries seeking to pursue export growth in the early stages of industrialisation. As a pathway for industrial development and export growth, the textile and apparel sectors have already been crucial for a handful of African economies such as Lesotho, Eswatini, Ethiopia, Madagascar and Mauritius. However, this narrative seems to exclude several African economies with many textile and apparel manufacturers faced with stagnant growth, stiff competition from cheap imports and second-hand clothing, inadequate infrastructure and factory closures, and job losses. Secondly, this value chain deserves specific attention as the textile and apparel sectors represent the second largest number of jobs

in developing countries after agriculture. A large percentage of this workforce comprises women and youth, thus providing employment opportunities for women and youth. Thirdly, the apparel sector comprises mainly micro, small and medium enterprises, which can rapidly generate jobs – both skilled and unskilled. Fourthly, this value chain has the potential to contribute to economic transformation and diversification of economic activity. Fifthly, sourcing regionally and being closer to markets is becoming more crucial in pursuing export-oriented industrialisation, mainly in the post-COVID-19 era. Lastly, this value chain deserves specific attention as most African cotton growers, textile and apparel manufacturers have either continued to export raw materials (cotton), produce low-value-add products for domestic and regional markets or have integrated into low-value-add production in global value chains (AfDB, 2016). The rest of the paper is structured as follows. Section 2 presents the current state of and constraints in the development of cotton, textile and apparel RVCs in Africa. Section 3 outlines opportunities and requirements for building regional cotton, textiles and apparel value chains in Africa. The existing position of the development of regional cotton, textiles and apparel value chains on the African continent is summarised through a strengths, weaknesses, opportunities and threats (SWOT) overview in Section 4. Section 5 presents the conclusion and policy recommendations.

“Industrialisation, labour issues and supportive institutions should be at the heart of trade policy.” Mr Simon Eppel (Researcher, Southern African Clothing and Textile Workers Union)

2. The current state of and constraints in the development of cotton, textile and apparel RVCs in Africa The development of cotton, textile and apparel RVGs relies on understanding the complexities associated with each distinct segment of the value chain: firstly, cotton growing and ginning; secondly, yarn, thread and fabric production; and lastly, apparel production. The development of the various segments of the value chain varies across countries and economic regions in Africa. The following section will provide an overview of the development of each value chain segment and the constraints that have hindered this value chain’s development.

Cotton growing and ginning Benin, Côte d’Ivoire, Burkina Faso and Egypt are the largest exporters of cotton on the African continent and feature in the list of the top 10 cotton exporting countries in the world (Table 1).

Africa produces about 6% of the world’s total cotton. Much higher cotton yields are produced in West Africa than in East and Southern Africa. However, some internationally competitive textile companies are in Eastern and Southern Africa (UNECA et al, 2019). Approximately 70% of cotton exports1 from Africa are made up of primary intermediates embodying limited value addition. While Africa is a net exporter of cotton fibres, it consistently reports a trade deficit in yarn, and even more so in cotton fabrics. (UNCTAD, 2019). IntraAfrican trade accounts for only 15% of cotton exports and 12% of imports, which stresses the shallowness of regional integration. There are some exceptions to this shallow integration across some regions. Southern Africa is the main exception to this pattern, with several countries participating in RVCs2.

Table 1: The Leading Cotton (HS code 5201) Exporting Countries in The World (US$ thousand) Exported value in 2015

Exported value in 2016

Exported value in 2017

Exported value in 2018

Exported value in 2019

3,889,859

3,959,656

5,827,921

6,545,933

6,147,102

1,290,394

1,215,457

1,357,711

1,587,344

2,638,323

819,538

1,175,908

1,580,300

1,809,247

1,099,575

1,860,425

1,345,732

1,673,933

2,203,316

1,075,032

Greece

326,646

344,201

394,017

399,474

588,744

Benin

262,474

174,966

351,992

444,315

450,398

Côte d’Ivoire

235,500

192,631

206,898

286,030

361,653

Burkina Faso

286,575

398,883

336,173

318,765

351,795

477,102

222,136

281,638

92,790

126,764

168,057

Exporters United States America

Brazil Australia India

Uzbekistan Egypt

86,642

90,875

Source: Trade Map, 2020

1 The composition of cotton imports is such that approximately 12% of cotton imports are accounted for by primary intermediates; 16%, by yarn; and 72%, by cotton fabrics. 2 Zambia and Zimbabwe export mainly cotton fibres. Lesotho, Mauritius, South Africa and Eswatini trade in cotton yarn and fabrics. Ghana and the Niger also provide examples of regional cotton and textile value chain integration – most of their cotton exports are fabrics exported to Benin and Nigeria (UNCTAD, 2019).

Building the Textiles and Clothing Value Chains • POLICY BRIEF

Shallow regional integration has resulted from supply-side constraints faced by the cotton segment of the value chain. The cotton value chain is faced with many production constraints mainly due to the value chain’s dependence on costly imported inputs from Europe and China such as pesticides and fertilisers. Additionally, the use of unsuitable farming practices, the lack of updated quality assurance protocols and adequate testing equipment, incorrect use of land, outdated machinery, and limited technical support have contributed to the declining quality and yield of African cotton with some exceptions such as Egypt. Poor quality and lower cotton yields have implications for textile production – increasing production costs for spinning factories.

the integration of African apparel manufactures into GVCs. The influx of relatively cheap Chinese textiles used as intermediate inputs initially contributed to apparel production and export development. However, over the past decade, the influx of imports has crowded out local textile production in countries such as Nigeria, Ghana, South Africa and Ethiopia (He, 2020). As shown in Table 2, relative to the three major trade partners, intra-African textile trade only kept a modest share, and this share has been decreasing.

Textile production

“The patterns of consumption of second-hand clothing seen in the past few decades in East Africa are not traditional and have resulted from the impact of structural adjustment programmes that came about in the 1990s and 2000s. These adjustments resulted in a surge of imported clothing and secondhand clothing into the region.”

The textiles segment is the weakest component of the cotton, textile and apparel value chain across the RECs (Xiaoyang, 2015). Trade liberalisation, changes in terms of trade since the early 2000s and the expiration of the Multi-Fibre Arrangement (MFA) in 2004 have substantially weakened this segment of the value chain quite drastically in terms of production, exports, employment and contributed to the premature deindustrialisation of the sector (Morris et al, 2015; Black et al, 2020; He, 2020). As illustrated in Table 2, Chinese share in African total textile imports rose continuously from 1995 to 2017, with China rising to be the largest textile exporter to Africa. The increase in Chinese textile imports contributed towards

Dr Andrew Mold (Chief, Regional Integration and AfCFTA Cluster, Regional Office for Eastern Africa, United Nations Economic Commission for Africa, Kigali, Rwanda)

Table 2: Shares of main African trade partners in African textile imports. Year

China (%)

Intra-Africa (%)

EU11 (%)

India (%)

United States (%)

Japan (%)

1990

0.27

0.17

68.47

5.66

0.03

7.64

1995

17.54

4.25

57.13

4.44

4.13

0.99

2000

20.46

6.29

42.15

6.58

2.27

0.72

2005

33.53

5.25

32.94

5.61

1.39

0.73

2010

40.51

4.25

22.55

6.08

2.21

0.89

2015

51.58

3.18

15.36

7.08

1.22

0.70

2017

51.16

2.99

16.10

7.15

1.21

0.67

Source: He, 2020. Derived from Comtrade data

The importation or smuggling of counterfeit African wax-printed fabrics has shifted local consumption away from locally produced textiles towards cheaper imports. This shift in consumption has further threatened the development of textile and apparel production in many African countries such as Ghana, Uganda, Zambia and Nigeria (Alderin, 2014; Langevang, 2016). Counterfeit fabrics have not only crowded out African producers of original African printed fabrics but have also infringed on designers’ intellectual property rights. The lack of adequate mechanisms in place to stop illicit trade worsens the situation. Furthermore, local campaigns and government procurement efforts have been inadequate in stimulating or boosting local textile and apparel production. In addition to the smuggling of counterfeit and cheap fabrics, the dumping and selling of second-hand apparel have crowded out local textile producers and further weakened this segment of the value chain across the continent. Especially since Africa has one of the largest second-hand markets in the world, it is estimated that almost 70% of garments that are donated globally are exported to Africa, mainly imported from the US, Europe, India and Pakistan (Lu, 2015; CO DATA, 2018; Banik, 2020). East Africa imports over $150 million worth of used clothes and shoes, with Ghana’s Kantamanto Market being the largest secondhand clothing market in West Africa with 5 000 individual shops. (Okoye, 2017; Banik, 2020; Wolf, 2020). The trade of second-hand apparel has also been prominent in most of Africa, including Kenya, Malawi, Mozambique, Nigeria, Rwanda, Ghana Senegal, Eswatini,

Tanzania, Zambia and Zimbabwe. However, it is a much smaller proportion of the market in South Africa, Africa’s most industrialised economy, where imports have been restricted (Brooks, 2015). Supply-side constraints have further weakened the textile sector across the continent. These constraints are as follows: infrastructure deficits (water and electricity) and outdated equipment and technology, which has limited the production of product varieties or quality demanded by modern markets. Upgrading equipment is hindered by complicated importing and procurement procedures and the high cost of modern equipment and credit (International Trade Centre, 2016; Bennett et al, 2011). Furthermore, high transport costs and lack of speed and flexibility in transport systems have constrained just-in-time production across supply chains and have limited market access for textile and apparel producers (AUC & OECD, 2019).

“A sustainable and competitive cotton, textile and clothing value chain can only be realised through building up cotton conversion and transformation capabilities in the industry.” Mr Issifou Dado Doko (Cotton Association – Benin)

Table 3: Apparel exports from selected SSA countries to the world (US$ million) 2000

2002

2004

2006

2008

2010

2012

2014

2016

2017

Madagascar

364

241

563

580

691

384

496

581

648

698

Mauritius

1,017

967

998

903

993

791

831

876

732

667

Lesotho

146

348

494

418

370

362

382

405

431

442

Kenya

140

307

288

270

224

267

425

378

375

Eswatini

102

191

143

136

156

162

192

154

193

Ethiopia

118

Source: Black et al, (2019) based on Data from UN Comtrade

Building the Textiles and Clothing Value Chains • POLICY BRIEF

Apparel production and trade Apparel exports from Africa to the rest of the world totalled nearly US$9 billion per year in 2015–2017 (UNCTAD, 2019). Since 2000, many SSA countries have developed and expanded export-oriented apparel industries designated predominantly at developed markets in the USA and EU (Black et al., 2019). Table 3 illustrates the increase in apparel exports to the world from selected SSA countries and shifts in the composition of apparel exporters. A combination of factors has driven the development and expansion of export-orientated apparel industries in select SSA countries: favourable global trade policy regulations (the MFA and preferential trade agreements with the USA3 and EU), GVC dynamics and national industrial policies supporting exporting and attracting FDI (Black et al, 2019).

Preferential trade agreements such as AGOA have been central in integrating African-based manufacturers into GVCs and stimulating the apparel export sectors in Ethiopia, Kenya, Lesotho and Eswatini. However, entry into GVCs has threatened to lock countries into low-value segments within GVCs. As a buyerdriven value chain, firms in both the textiles and clothing sectors sell to specific and usually very demanding customers, produce according to specified parameters and protocols, must meet deadlines and lead times set elsewhere, and hence most of their operations are determined by external forces which lock them into specific value chains. As shown in Figure 1, SSA apparel exporting regions, except East Africa and East African islands, have composed of basic apparel products such as t-shirts and trousers. East Africa on the other hand, has the preferred

–

Dynamism of garment export industry

Figure 1: Differences among African countries’ apparel sectors

East Africa: Kenya, Ethiopia, Tanzania, Uganda

West Africa: Ghana, Nigeria, Cote d’Ivoire

–

Southern Africa: South Africa, Lesotho, Botswana, Eswatini

East Africa islands: Mauritius, Seychelles

North Africa: Egypt, Morocco, Tunisia

Sophistication of garment export industry

Source: Adapted from McKinsey (2016)

3 The third-country fabric provision under AGOA has been critical in allowing SSA countries to qualify for duty-free treatment even if apparel manufacturers use yarns and fabrics produced by non-AGOA countries and regions. This special rule is critical because most SSA countries still have no capacity to produce capital and technology-intensive textile products (Lewis & Schneidman, 2012).

mix of high dynamism and decent sophistication with Ethiopia gaining prominence as the next apparel sourcing hub4. Northern African countries are better positioned as producers of more sophisticated apparel predominately for the EU market. However, Northern African countries do not have dynamic apparel sectors and consist almost entirely of final apparel products whereas textiles and other intermediate products make up only a tiny proportion (except in Egypt). Furthermore, Egypt’s and Morocco’s apparel sectors have experienced economic downgrading5 while Tunisia has increased its export unit values but lost market share (Bernhardt, 2020). Even though West Africa is the largest exporter of cotton on the African continent, this region is the worst positioned to compete globally as apparel producers due to weak value chain linkages and cotton beneficiation. Across the RECs, weak value chain linkages, low value addition and lack of diversification in markets and products have therefore constrained textile and apparel manufacturers to low-value and productive functions in GVCs and limited the development of RVCs. Although the global North remains an important market for most SSA countries – integrated into GVCs – a significant cotton, textile and apparel regionalisation trend has taken off in Africa. Intra-SSA trade in apparel has grown more than four-fold since 2005 to account for approximately 34% of the region’s total apparel exports. Comparatively, exports to the developed North have decreased by 30% over the same period, shifting from 92% to 66% of the sector’s export share (Godfrey, Nadvi & Pasquali, 2020). The growth in intra-SSA trade has been driven predominantly by Southern Africa. Similarly, the EU has lost its relative importance as an apparel export market for Egypt, Morocco, and Tunisia, with all three countries managing to diversify their export baskets and markets (Bernhardt, 2020). Several factors have driven regionalism in the cotton, textile and apparel sector in SSA. Firstly, South Africa has emerged as an economic hub and regional end market. Secondly, tariff-free entry into the South African market through SADC and SACU regional trade agreements

“Opportunities for the growth of the cotton, textile and clothing value chain and intra-African trade can only be achieved if capabilities and capacity issues are addressed.” Mr George Ndira (Consultant, former East Africa Community Principal Industrial Economist)

has created opportunities for South African retailer buyers to source across the region6. In turn, it will create new forms of regionally embedded FDI primarily from South Africa (into Lesotho and Eswatini) and Mauritius (into Madagascar). (Black et al, 2019; Godfrey et al, 2020). RVC linkages and supplier chain networks in SSA have been limited to Southern Africa as East African apparel manufacturers have not been able to export to South Africa primarily because they are not SADC members and therefore are unable to take advantage of tariff-free entry to this regional market. There are several supply-side constraints at a micro level that have contributed to weak linkages across the value chain and regions. In turn, this threatens the productive competitiveness of cotton, textile and apparel producers. These constraints include, firstly access to, and the cost of competitive finance. It is generally challenging for producers to obtain credit for investment or working capital. In the Southern African Customs Union, many banks are not prepared to finance the textile and apparel industry at rates that are affordable to borrowers, given the historical risk profile of the industry (World Bank, 2015). The high cost of capital, when available, not only deters new investment in the production of yarn, fabric and other inputs, but it also increases the costs of existing production. Furthermore, for Kenyan and other textile and apparel producers on the continent, integration into RVCs is hindered by the insufficient financial resources available to undertake the necessary trade promotion activities (International Trade Centre, 2016).

4 In 2016, Ethiopia was listed for the first time as a top destination for global apparel buyers (Bangladesh and Vietnam have led this list). 5 Moving from high-value activities to relatively low-value activities 6 Creating supply chains from Lesotho, Eswatini, Mauritius and Madagascar

Building the Textiles and Clothing Value Chains • POLICY BRIEF

Secondly, the lack of required basic, technical and managerial skills across the value chain in areas like efficient farm practices, weaving and textile manufacturing has hindered the competitiveness of the value chain (UNECA et al, 2019; International Trade Centre, 2016; Morris et al, 2015). Building regional value chains requires an adequate skilled labour force across countries. For instance, a study on South African firms expanding cut-make-and-trim operations to Lesotho indicated the lack of skills at all levels of personnel, from basic machinists to technical and managerial staff, as an essential investment consideration as the lack of skills could challenge productivity and efficiency levels and in turn constrain competitiveness (Morris & Staritz, 2013). Furthermore, skills development is constrained by the existence of

few training institutions which produce market required qualifications and skills (Advisors & Vaid, 2011). Building competitive cotton, textile and apparel RVCs has been further constrained by the lack of country-specific industrial policy and the lack of policy harmonisation across RECs, particularly concerning industrialisation policies (Woolfrey & Byiers, 2019). Furthermore, the AfCFTA currently has no programme governing industrial policy and a mechanism to deal with the lack of industrial policy coordination that is likely to occur at a continental level (Odijie, 2019). The absence of coordinated national and regional policy frameworks limits foreign direct investment and coordinated development of the value chain.

3. Opportunities and requirements for building regional cotton, textiles and apparel value chains in Africa Constraints hindering regional cotton, textile and apparel value chains in Africa are complex and vary across value chain segments, countries, and regions. However, there are various opportunities present that would aid in the revival of national cotton, textile and apparel sectors as well as the development of regional cotton, textile and apparel production networks and value chains. These opportunities are discussed below.

Cotton, textile and apparel sectors designated as priority sectors The pursuit and development of RVCs require buy-in and support from both public and private stakeholders. In collaboration with private sector stakeholders, governments have undertaken several key policies and measures to facilitate the long-term development of their national cotton, textile and apparel sectors and create opportunities for the development of regional cotton, textile and apparel value chains. Firstly, the cotton, textile and apparel sectors’ designation as priority sectors for export, employment generation and industrial development by many governments across the continent has signalled governments support for sector and value chain development. (Morris et al, 2015; International Trade Center, 2016; Advisors & Vaid, 2011). Secondly, cross-regional infrastructural investments focused on addressing national and regional infrastructure deficits have been undertaken by developing transport linkages, addressing utility constraints, and structuring main economic activities along major corridors, such as the Mbabane-Manzini Corridor in Eswatini (UNECA et al, 2019).

“There is a need for Africa to produce what it wears and wear what it produces.” Mr Barnabas Jatau (Deputy Director Federal Ministry Industry and Investment)

Thirdly, Special Economic Zones (SEZs) aimed at attracting textile and apparel FDI and creating industrial hubs have been developed across the continent (Traub-Merz & Jauch, 2006; International Trade Centre, 2016; AUC & OECD, 2019; Zeng, 2019). For instance, the Ethiopian Government has partnered with foreign private firms to create a range of worldclass eco-industrial parks, such as the Hawassa and Dire Dawa Industrial Parks, to stimulate agglomeration economies and attract foreign textile and apparel manufactures and domestic industrialists (Oqubay, 2015; Gebreselassie, 2020). It has been argued that the government’s investment into the development of industrial parks and the young labour pool has placed Ethiopia well to house the next textile and apparel manufacturing hubs of the world (International Trade Centre, 2019). These zones and industrial parks in Ethiopia and across the continent provide textile and apparel manufacturers the opportunity to take advantage of subsidised production for local and export production. Providing manufacturers with a package of incentives such as tax holidays, duty-free importation, low fees for public services like water and electricity supplies, and provision of infrastructure can provide investors with better investment conditions than they receive elsewhere (Traub-Merz & Jauch, 2006). Research on SEZs’ success has been mixed as investment, development and operation of such infrastructure is dependent on various political and economic factors. These zones can, however, be an effective instrument to promote industrialisation and structural transformation. Furthermore, infrastructure developments have been undertaken to create industry clusters and regional concentrations of cotton, textile and apparel industries. For example, the Kenyan Government has launched the Naivasha Textile City project to build a textile city in the Naivasha area. This region has access to uninterrupted geothermal power and inexpensive steam, making it an attractive textile project location – spinning, fabric manufacturing and processing (Ken Invest, n.d). Fourthly, buy-in and support for the strengthening of national cotton, textile and apparel

Building the Textiles and Clothing Value Chains • POLICY BRIEF

sectors and the development of RVCs have been gained from trade unions. The importance of this value chain has been advocated for by trade unions across the continent such as the Industrial Global Union, National Union of Textile, Garment and Tailoring Workers of Nigeria and the Southern African Clothing and Textile Workers Union. These trade unions, support value addition trade and the need for inter-African trade. Through their support, trade unions can play a crucial role in advocating for trade policy focused on maintaining existing jobs and creating new job opportunities in labour-intensive and value addition sectors. However, unions need to gain literacy on issues related to trade, industrialisation and the role they can play in advocating for job creation and decent work in the value chain.

Leveraging on domestic and regional markets Africa is one of the fastest-growing consumer markets globally with rising income, middle class, household consumption and demand for goods and services. The African consumer market is expected to reach US$2.1 trillion by 2025 and US$2.5 trillion by 2030 (Signé & Johnson, 2018; Signé, 2019). Even though changing demographics, an increase in urbanisation, larger cities and improving business environments differ across the continent, these factors will contribute to expanding the retail sector on the continent, in turn providing growth opportunities for national cotton, textile and apparel sectors and contributing to the development of RVCs.

E-commerce The retail sector’s expansion globally and on the continent is being reshaped through the acceleration and expansion of e-commerce and online marketplaces. In 2017, the Africa e-commerce sector generated US$16.5 billion in revenue, and it is predicted that revenue in the sector in Africa will rise to US$47 billion by 2024 (Deloitte, 2016; McBain, 2020). These online marketplaces have been further supported by the continued growth of internet penetration across the continent. These trends allow retailers to leapfrog traditional retail models and connect with customers worldwide while sourcing products closer to their operations.

Shift from GVCs to RVCs Increasing supply-side constraints in Asia have resulted in the relocation of textile and apparel production to East and Southern Africa. Relocation and investment into textile and apparel sectors in Africa provide local manufacturers the opportunity to integrate into GVCs. Additionally, the outbreak of the COVID-19 pandemic and disruptions to global supply chains have indicated the need for access to suppliers closer to the production and markets. This has highlighted the need to strengthen RVCs to diversify risk, reduce vulnerability, increase resilience and foster industrial development (Fortunato, 2020; Godfrey & Pasquali, 2020).

The role of African lead firms, the inclusion of informal retailers and associated services Global apparel retailers and international sourcing networks source from across the globe and play a vital role in directing investment across regions and the value chain. African retailers might not have the resources of global multinationals, such as Inditex, to extensively source across regions, however, the AfCFTA and the disruption in global value chains due to Covid-19 have provided African retailers with the opportunity to gradually build strategic supplier partnerships with regional manufacturers and actors in other segments of the value chain. These strategic partnerships will allow African retailers to expand their retail presence in continental markets while investing in supplier development strategies

that promote building inclusive RVCs. Growing production of apparel manufacturing factories in countries such as Ethiopia, Eswatini and Lesotho provides entrepreneurs in these countries with the opportunity to provide associated services such as buying houses, testing houses, technical consultancy, brokerage services, export marketing and training. These associated services could further encourage and support African retailers to source locally and regionally. In many countries across the continent, the value chain comprises small women- and youth-owned informal retailers (Gregorio & Moungar, 2018). There is, therefore, an opportunity to integrate informal retailers into the formal economy through the provision of business incubation, increasing access to finance, and connecting informal retailers to other producers, suppliers, and retailers.

Increasing global demand for African fabrics Traditional and cultural textiles are becoming more and more part of international fashion, and therefore, increasing global demand for African textiles (Hagen-Jurkowitsch & Sarlay, 2010). This increase in demand provides an opportunity for the stimulation of African textile production. Various governments have also focused on protecting and stimulating demand for local textile and apparel manufacturers by banning second-hand clothes and counterfeit fabrics. For instance, the Ghanaian government has formed a Joint Anti-Piracy Task Force, which raids markets every few months and burns counterfeit and smuggled

Building the Textiles and Clothing Value Chains • POLICY BRIEF

material (Yeebo, 2015). Furthermore, Ghanaian firms have partnered with a Ghanaian tech company, mPedigree, to help customers distinguish between counterfeit cloth and locally produced fabrics (Yeebo, 2015). The incorporation of specialised DNA into fibres and fabrics, each with its unique code that can be detected by specialised scanners at border entry points is another measure being taken in order protect local customers against counterfeit fabrics (Yusuf, 2012). The development of such measures provides an opportunity for building competitive textile production for African and international markets.

Value addition There is scope for further value addition in the value chain, particularly for yarn and textile production as well the production of embroidery, sequins and other trims (Advisors & Vaid, 2011). Trims and accessories for textile and apparel manufacturing are sourced from East Asia. Therefore, there is an opportunity for the local production of accessories and trims to ensure timely delivery of inputs required for production and improving industry’s productivity and efficiency. Furthermore, the textile and apparel sectors require a mix of fibres; however, limited technical fabrics and synthetics are produced in Africa. There is, therefore, an opportunity for Africa to develop capacity in the production of synthetics and technical fabrics.

Sustainable sourcing and production Globally, consumers are increasingly demanding ‘green products’ – products produced in energy-efficient facilities and with the use of environmentally friendly, socially considerate and sustainable production practices. Therefore, apparel companies are under increasing pressure to create sustainable and transparent sourcing practices and share that information with consumers. Global brands such as Adidas, Gap, H&M, Levi’s, Nike, Stella McCartney, Target and Timberland have led sourcing from energy-efficient facilities (Global Development Solutions & World Bank Group, 2015). The growing shift towards sustainable and responsible sourcing has significant implications for purchasing practices, from planning to negotiation and order placement (McKinsey, 2019). Changing trends towards sustainable sourcing practices provide Africa with an opportunity to differentiate its value chains

based on sustainable “green” infrastructure and production practices. This differentiation could potentially be the continent’s competitive advantage – promoting Africa as a sustainable textile and clothing production region. Governments across the continent have partnered with other governments, international organisations and local industry stakeholders to undertake projects focused on building sustainable value chains. For instance, “Bottom UP!” a collaborative project between Solidaridad, Cotton made in Africa, and Danish Ethical Trading Initiative and funded by the European Union was launched in 2019. This project is set to benefit approximately 17,000 apparel workers in Ethiopia by creating a sustainable, transparent and inclusive cotton and apparel value chain from Ethiopian cotton to European consumers (Cotton made in Africa, 2019; Gebreselassie, 2020).

Outward-oriented global marketdriven and inward-oriented marketdriven value chains The development of RVCs can be driven by both outward-oriented global market-driven and inward-oriented market-driven value chains. Inward-oriented market-driven value chains are aimed at producing products for regional markets and have the potential for investment which allows the transfer of technical knowledge and skills across borders. Outward-oriented global market-driven value chains provide countries with the opportunity to build up capabilities and coordinate production across the region. This coordination is based on which countries can supply inputs to produce the final product to penetrate the global market. This type of value chain still requires rethinking as it will still be exogenously driven and controlled by foreign multinational corporations. Outward-oriented global marketdriven and inward-oriented market-driven value chains both provide opportunities for countries to build RVCs. However, each type of value chain will necessitate a different policy approach and direction. Furthermore, for textile and apparel manufacturers to take advantage of global or regional orientated value chains, manufacturers need to create more dynamic and sophisticated apparel and textile products. This will require manufacturers to diversify and upgrade products by increasing competitiveness and operating according to world-class manufacturing.

4. SWOT Analysis Considering the constraints and opportunities discussed, the existing position of the development of regional cotton, textiles and apparel value chains on the African continent is summarised through a strengths, weaknesses, opportunities and threats (SWOT) overview presented below.

Table 4: SWOT Analysis Strengths • Raw material availability, particually cotton

Weaknesses

• Land suitable for cotton cultivation

• High operating costs due to obsolete technology and equipment

• Preferential trade and market access agreements

• Poor infrastructure (water, energy, and transport)

• Investment-friendly policies, regulations, and incentives, such as the development of SEZs

• Weak border control and monitoring – leading to dumping and smuggling

• Political commitment for the development of national textile and apparel sectors – designated as priority sectors

• Weak supply chain linkages

• The development and growth of RVC and regional supplier networks in Southern Africa.

• Access to, and the cost of competitive finance

• Textiles and apparel manufacturers have relatively low productivity and inefficient manufacturing processes

• Availability of low-cost labour

• The lack of required basic, technical and managerial skills across the value chain

• Integration into GVCs means many firms are very good at adhering to international standards

• In some cases, lack of country-specific industrial policy and the lack of policy harmonisation across RECs

• Growing consumer market

• Low quality cotton and cotton yields • Limited cotton beneficiation/ alue addition and textile production • Lack of diversified and technical textile and apparel production

Opportunities

Theatres

• Job creation, particually for youth and women

• High competition from dumping pricing from Asia

• Regional trade agreements and preferential market access (US, EU, the African RECs)

• Political insecurity and instability

• Growth of retail e-commerce and changing retail environment

• Lack of a harmonised regional strategy for CTA value chain development

• Shift from global to regional sourcing – sourcing closer to markets

• Influx of second-hand clothing

• The role of African lead firms in driving regional sourcing and supplier networks • Development of associated services like buying houses, testing houses, technical consultancy, brokerage services, export marketing and training • Increasing global demand for African fabrics • Production of apparel trims and accessories like labels, buttons, zippers or hooks • Sustainable production and sourcing – regional investment shift • RECs can develop regional production networks through both outward-oriented global market-driven and inward-oriented market-driven value chains • Textile and apparel manufacturers through increasing competitiveness and operating according to world class manufacturing can diversify and upgrade product offerings and value chain functions

• High costs of doing business

• Cheap imports of textile • Entry into GVCs threatens to local apparel manufacturers in low value addition functions of the VC • FDI from Asian investors limited to rent seeking investment • The rules of origin of various trade agreements

Building the Textiles and Clothing Value Chains • POLICY BRIEF

5. Conclusion and policy recommendations: The discussion above has provided an overview of the development of the cotton, textile and apparel value chain in Africa and explored the opportunities in global and regional trends that have created a positive environment for this RVC to expand and advance the project of transformative industrialisation in Africa. The policy recommendations provided below are based on the academic literature reviewed above and the very rich and insightful discussions held in the webinar series hosted by the Mandela School. The following policy recommendations are not meant to be prescriptive but instead highlight the type of interventions required and aim to encourage further discussion on how these interventions can be further developed through collaborative efforts between governments, private sector, value chain stakeholders and academia.

Building capabilities and competitiveness Providing cotton producers and textile and apparel firms on an individual or collective basis with funding, technical assistance and support focused on engaging in clear programmes aimed at raising their competitiveness levels is essential for the development of RVCs. Such programmes and support should include: • World-class manufacturing programmes: Setting up continuous improvement learning networks/benchmarking clusters with clothing and textiles firms aimed explicitly at bringing their operational performance into line with world-class manufacturing principles and techniques – eg quality, lead times, inventory control, supply chain improvements.

“There is a need for a new model in building competitiveness and sustainability in the cotton and textile value chain.” Ms Natasja Ambrosio (Head of Sustainability, Mr Price Group)

• Support for modernisation: Productivity and machinery incentives should be provided to upgrade or install new machinery across the value chain. • Skills development in textile and apparel sectors: Leveraging off existing research and programmes, government, retailers, technicians, design academies and manufacturers must collaborate in identifying curriculum and skills gaps in pre-production, technical and managerial capabilities. Findings from the curriculum and skills gap assessment should be used to expand and improve technical education and training, and develop a curriculum focused on building pre-production, technical and managerial skills capabilities required across the value chain. • Skills development in cotton production: Cotton farmers should be provided with training and mentoring focused on technical and sustainable farming practices. • Promoting greater value addition in the sector by providing support schemes/fiscal incentives for value addition. Additionally, clusters focused on creating value chain synergies for value addition should be established and promoted. To understand what type of value addition is required across the value chain, research and feasibility studies must be conducted to identify import substitution opportunities in the textile and apparel sectors.

Creating linkages across the value chain • Intra-regional trade programmes must be actively promoted to establish competitive regional production and sourcing networks. Programmes should focus on coordinating strategic partnerships between different countries in the regions, as well as, between cotton, textile and sector associations. • Set up regional clothing and textiles information hubs that will provide the following sets of information and services: market information on global and regional buyers to help exporting firms link into global and RVCs more effectively and sector trade intelligence to assist exporting firms in understanding changes in global and regional trends, prospective customers, new emerging markets, etc.

Facilitating access to finance • Governments, central banks and financial institutions should provide integrated access to financial services that combine financial access with business advisory and management services. • National development finance institutions should broaden their scope to include regional capacity-building initiatives that support greater regional infrastructural development and regional ownership and participation.

and at reasonable costs while fostering synergies amongst businesses across the value chain.

Government procurement and the promotion of local buy campaigns

• Research should be conducted with the private sector to develop innovative private sector-led programmes to remove bottlenecks to financial access.

• Targeted government procurement is required whereby governments can put into place mechanisms which allow for the preferential procurement of national and regional textiles and apparel. Therefore, existing “buy local” procurement campaigns should be strengthened and promoted at a national, sub-national and local level and extended to include regional procurement of inputs and final goods.

Creation of inclusive value chains: upskilling of women, youth and persons with disabilities

• Partnerships and synergies should be built between relevant national, sub-national and local government departments, retailers and the local fashion industry to develop and promote “buy local” campaigns.

• Programmes should be put into place to ensure that productive capabilities of small- to medium-sized clothing design and production businesses are developed, particularly those owned by women, youth, and persons with disabilities, by upskilling entrepreneurs through the provision of financial and non-financial training and assistance and the creation of market access opportunities and linkages.

• Appropriate policy interventions should be developed in phasing out second-hand clothing from markets. Interventions are also required to develop IP rights mechanisms that protect traditional African fabric designs and the textile sector.

• Junior to senior management training programmes should be put in place targeted at women, youth and persons with disabilities already participating in the formal textile and apparel manufacturing sector. The programmes’ objective is to upskill women and persons with disabilities so that there is proportionate and inclusive representation across occupations in organisations.

• There are several outstanding technical issues which need to be resolved, namely the tariff liberalisation schedules, rules of origin, the development of guidelines on infant industries and the treatment of goods produced in SEZs. There is a need to leverage the complementary relationship between the AfCFTA Secretariat and RECs to resolve these outstanding issues. A review and assessment of regionally established commitments, guidelines and protocols can be undertaken to negotiate on continental commitments, guidelines and protocols.

Infrastructure • Governments should continue to address infrastructure deficits and develop existing national and regional infrastructure. The cost of doing business should be assessed and firms should be encouraged to set up SEZ operations. Furthermore, government SEZ policy should be centred on adopting a cluster-based development approach where suitable infrastructure is provided to the businesses operating within those zones

Addressing outstanding technical issues

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