Africa's Cotton and Textiles:
“TRENDS AND CAUSES - A GLOBAL
PERSPECTIVE
by
Fred Kong’ong’o
African Cotton and Textile Industry Federation (ACTIF)
Cotton in Africa Seminar ,Arusha Tanzania
6th September , 2007
ACTIF
End of MFA:- the ‘Catalyst’
Regional supply chain
Linkages, industry strategies
Public/Private sector partnerships
Unified voice
ACTIF” is formed on the following principles:

“Africa-Wide” view, not geographically restrictive

Emphasis on private sector “ownership” & strong allegiance of nationally
based trade institutions

Endorses Public/Private sector partnerships

Builds cooperation, interaction, partnerships, alliances, networks and
market linkages

Collects market data, generates information exchange, shares regional
expertise

Addresses post MFA challenges and increases competitiveness in the
global post-quota environment

Maintains focus on trade issues, promotes investment

Encourages diverse international participation & alliances
ACTIF: Program Areas
Investment & Finance
•
Credit options, sources
•
Regional/pan-African/International
•
‘Smart’ partnerships
•
Public sector involvement
•
Provide technical support
Deliberations in Maseru, Lesotho
ACTIF
“ACTIF”
Inter Regional Trade & Supply Chain
Linking with Mauritius
•
Data base (region + Africa)
•
Market intelligence information systems
•
Market access & linkages
•
Skills based training initiatives
•
Cottonafrica.com - participation
ACTIF
ACTIF
“ACTIF”
SA - TZ Exchange
4.
Production, Ginning & Lint Trade
•
Fair-Trade issues
•
GMO, research , share
•
Information – quality, prices, market
information, production
•
“Niche” market development
-organic Cotton
•
Information / technology exchange
ACTIF
ACTIF: Networking-Dialogue
International Cotton Advisory Committee
International Textile
Manufacturers Federation
Supporting Regional
Industry Strategies
World Textile and Apparel: A
History of Protectionism
End of global
quotas
ATC commits to
quota removal
EEC n US sign
some bilateral
MFA instituted
under trade law
LTA under GATT
signed
US initiates STA
formal restrictions
UK & US restrict
imports
The Reality Check
 A metamorphosis of unparalleled proportions
 China awakes
o
Consumes 42% of world cotton production
o
76% of world textile machinery supply
o
CAPACITY TO CLOTHE THE WORLD
Spindles
CHINA
INDIA
PAKISTAN
SSA
67 million
37 million
12 million
<1 million
What Africa is Up against?
 China:
o High skilled/very productive labour, Undervalued
currency, mass production/economies of scale, great
Government support , unfair trade practices
 India textile industry up-gradation fund
o
o
o
Soft terms (20years),Subsidized interest rates (5%)
Capital subsidy (10%), High skilled/productive labour
Recent development – Rupee appreciation support
 What thereafter?
o
o
o
China market share to grow
SSA to decline
Sustainability?
 ACTION – level the playing field
 Currency corrections
 Fight subsidies
 Fair Trade
HOWEVER:AFRICA’S COTTON, TEXTILE AND
APPAREL INDUSTRY
Offer best answer to poverty alleviation through value addition
BUT
Technology/Research
Poor infrastructure/
High cost of doing
business
In Reality
LESS competitive advantage
Information/
Trends
WORD LEADERS SPECIALIZED IN MASS
DFQF for all LDC’s – A Great Disaster

LDC’s include Bangladesh & Cambodia
o
o

They are already super-competitive
Need no preferences
Seriously erode, weaken and undermine trade
preferences given to Africa by EU & US
TREND: MARKET FOR THE BIG AND SMALL



Small
 Eco/Organic Cotton-textile-Huge demand
 Fair trade –cotton products, Big market
 Consumers demand: the story behind the product
 Big volumes but multi-colours trend
Big
 Mass production, big stores
 Africa answer is in the niche’
Some African competitive Advantage
 Good climate
 Produce more lint than capacity to convert
 Trade preferences
 Ethnic/traditional designs
 Abundant labour force/Raw materials
 Positive focus on Africa (Millennium development etc)
 Great economic growth potential
 Return on investment great if you get it right
What next ?
Governments
•Get private sector input before policy change/trade
agreements
Private
sector
•Develop
sectorol approach:
•Diversifyaproducts,
niche, high end
‾Setinspecial
cotton
& textiles
industry
incentives
•Invest
original
design
not contract
manufacturing
Development
partners funds/loans
‾Cotton-textile
•Build
trust develop
reliability
•Develop
synergies
instead
running parallel programs
•Build
•Investinfustructure
in human resource development
•Joint
approach
•Create
skill
based
training institutions
•Change
with
the trend
•Use
local solutions totrade
local barriers:
problem Develop regional supply chain
•Remove
•Invest inregional
quality assurance
and logistics
•Support
and
encourage
public-private
sector
initiatives
•Invest
in research
good(SA,
agronomic
practices
•Produce
for local, and
regional
COMESA
)and
international market
WORLD ORGANIC COTTON MARKET
Rapid growth seen in organic market
Estimated Global Retail Sales
Organic Cotton Products
Millions USD ($)
3,000
2,500
2,000
1,500
1,000
500
0
2001
Estimated Global Retail
Sales (millions USD $)
Source; Organic exchange
2005
2006
2007
2008
2001
2005
2006
2007
2008
245
583
1,073
1,911
2,618
WORLD ORGANIC COTTON MARKET
Who’s Designing Sustainable and
Organic Textiles?

Katherine Hamnett
Rogan Gregory
Linda Laudermilk
Stella McCartney
Diane Von Furstenberg

And more….




Brands increasing activity on
organic
In 2005:
• More than 30 retailers and brands with
significant organic cotton programs.
• More than 1200 small and medium sized
companies were also in the market.
In 2006:
• Brand demand continues to build with
C&A, Cotton Ginny, Reebok, Levi Strauss,
Pottery Barn entering market.
• Wal-mart and Nike have largest organic
cotton programs
In 2007:
• New brands and retailers entering
market include Target, Victoria Secrets,
LLBean, Sainsbury, Barney’s
• Existing brands such as C&A, M&S,
Nike, Next, Nordstrom, Wal-mart,
Woolworth’s South Africa significantly expand
their programs
Fairtrade Clothing
•2000 tonnes Fairtrade cotton from
West Africa this year + 80 tonnes
Fairtrade Organic
•Over 3000 tonnes next year
22 million Fairtrade garments
•Relationships at trader level
booked by
+’ve logistics, volume, language
& S to farmers
-‘ve informationMflows
(price, quality, volumes, impacts)
£100m RSV.
10% of the M&S cotton business.
Source :M&S
Finally

Think big! Plan long term!
Speed/Economy of scope will be key
Regional Supply chain best for Africa

Remember – Buyer is key (market driven)





Attract Buyers
Incentivise Buyers
Connect to Buyers – ??
Brand Africa … Buy Africa … Market Africa
1
Aggressive Strategy
Visionary
Thank You for your
attention