The Story of African Seed Cotton

Today Africa is a destination of second hand clothing. Kenya alone imports over 75 million piecess of second hand clothing and distributes not domestically but in the regional market of eastern and central Africa. This is really shameful that Africa in fact produces just over 5.58 % of the total world production of the cotton fiber but only converts 30% into yarn, fabric and apparel for domestic and regional consumption see table below:

Source ICAC

The cotton produced in Africa is spun and woven in Asia, converted into apparels and shipped to USA and EU to be worn for 2-3 years and shipped back into Africa as used clothing to clothe 70% of Africans .

Historical Background:

Cotton, Textile and Apparel sector has witnessed major changes on global policy front over last decade or so, causing major shift in manufacturing and trade patterns. With Multi Fiber Agreement (MFA) being phased out, several countries in Latin America, Europe and Africa lost their share in global trade mainly to Asian countries of China, India, Bangladesh, Vietnam, etc. The LDC and developing countries in affected geographies were the worst hit, where many units closed down as they were no more viable, creating large-scale unemployment. Among these countries were several major cotton producing nations, which started exporting raw fiber without any value addition. Such countries were mainly from Africa – Burkina, Egypt, Zimbabwe, Mali, Nigeria, etc. and Central Asia – Uzbekistan, Turkmenistan, etc.

Importance of the textile and apparel sector:

Cotton, Textile and Apparel sector is one of the important sectors in developing countries across the globe, specifically for those, which have been bestowed with Cotton as one of the natural resources. It not only fulfills one of the basic human needs i.e. clothing, but also provides large-scale employment, specifically at the start of value chain (farming and ginning) and towards the end (apparel manufacturing). The figure below depicts the scope of value addition and employment potential across the CTA sector value chain.

The fact that the annual trade Globally in this segment is in excess of US$ 500 billion also provides opportunity to countries to earn valuable foreign exchange.

Steps taken by various countries for sector development:

At present, the countries where manpower is still inexpensive and cotton fiber is abundantly available like China, India, Pakistan, Brazil, Uzbekistan, etc. are focusing significantly to grow the industry. Ambitious schemes specific to this sector are being launched by federal governments in these countries to boost manufacturing for domestic consumption as well as exports. Similar steps are being taken by countries in Africa as well e.g. Government in Sudan has announced a large package for rehabilitation of many of the textile units, Uganda is implementing a special National Textile Policy to increase investments and make units more competitive in the country, Ethiopia has successfully transformed itself into an investor friendly destination for attracting FDI, etc. On similar lines, Nigeria has also earmarked a fund of N100 billion (~ US$ 650 million) for Cotton, Textile and Garment Industries Revival Scheme. One of the most important impacts of this scheme had been the reopening of the United Nigerian Textile Plc factory in Kaduna, which has recalled thousands of laid off workers.

Cotton was introduced in Kenya in the year 1902 by British Colonial administration. In 1953 the Cotton Lint and Seed Marketing Board was established by the government, whose major role was to undertake production, processing and marketing of the cotton sector. At the same time, the Cooperative Unions were also formed to handle primary activities like input supply and payment to the farmers.

At the time of Kenya’s independence (1963) the industry was dominated by private ginners. Over the next ten years, Government provided a lot of support in the form of a well-organised marketing system and timely payments. In addition to this, the Government also invested in a number of textile mills, which supplied to the large apparel manufacturers.

Till 1991, the Cotton Board of Kenya controlled Kenya’s cotton industry. In 1991, the government decided to liberate the sector and allowed private investors to participate. As a result of this, the government support started declining, which ultimately resulted in the decline in cotton production. In recent years, the production has picked up a bit but has been marred by low market demand and lower returns to farmers.

  Cotton Production In Kenya  ( In MT) ( 1970-2012)  DATA source: National Cotton Council, USA

   GDP per Capita Income 1960 – 2010

Today, cotton is mainly grown in Arid and Semi-Arid Areas where there are limited economic activities. It is grown mainly by small-scale farmers in Western, Nyanza, Central, Rift Valley, Eastern and Coast provinces of Kenya. An estimated 200,000 farmers grow most of the cotton on holdings of less than one hectare. Majority of the production takes place in the Eastern zone comprising Coastal, Eastern and North Eastern regions. These regions contribute to ~85% of the production. While the Western zone, comprising Nyanza, Rift Valley and other western regions, contribute to about 15% of the seed cotton production. In Eastern Kenya, the cotton crop is sowed in the month of October whereas in Western regions it is sowed in March.

Necessity for a sector development plan and its key components:

Earmarking a fund for the sector is the foremost step required to be taken by government having sincere plans for revitalization of the sector. Beyond that comes the requirement of a broad vision for the sector, a set of guiding principles to make best use of those funds. While rehabilitating the units may be important where maximum funds need to be committed, but in order to achieve sustainable growth it is important to address the other issues also, to help industry to go that extra mile. This is specifically true for CTA sector where any unit’s viability is a function of several interlinked parameters of raw material, manufacturing and marketing; hence the desired way is to take a holistic view rather than a stopgap arrangement.

The requirement is of developing a comprehensive sector strategy, which addresses the various issues in the sector in most efficient manner. The issues can be high power cost, lack of marketing linkages, low technology level, lack of skilled workforce, absence of incentives to attract FDI, lack of support infrastructure, protection of domestic industry, export incentives, raw material allocation, weak supply chain linkages, etc.

The development of such a strategy will require:

1. Mapping of the current status of sector
2. Identification of key gaps
3. Benchmarking against global leaders
4. Developing interventions to address the issues holistically
5. Preparing a roadmap for its implementation

How ACTIF can help?

The African Cotton and Textile Industries Federation (ACTIF) is a not for profit regional industry/trade body formed in June 2005 by the Cotton, Textile and Apparel sectors from Eastern and Southern Africa covering the COMESA, SADC and the EAC trading blocks, and currently includes members of National Associations from 25 countries (Botswana, Burundi, Cameroon, Cote d’Ivoire ,  Egypt, Ethiopia, Kenya, Lesotho, Ghana, Madagascar, Mozambique, Namibia, Nigeria, Sudan, Mauritius, Malawi, Madagascar, Mozambique ,South Africa, Swaziland, Serra Leone , Tanzania, Uganda, Zambia and Zimbabwe).

ACTIF’s milestone achievements include

• MOUs with COMESA and with the East African Community for trade development along the Cotton, Textile & Apparel (CTA) value chain
• Key contributor to the COMESA CTA strategy and now officially recognized as an implementing partner of the strategy
• Participated in EPA negotiations and developed draft RoO for apparel exports to EU under EPA
• Successful developed a common position white paper for our 20 member countries on AGOA
• Currently engaged in an advocacy project towards the sustainability of AGOA in East Africa and also to our other member countries supported by TMEA.

With the funding support of Center for Development of Enterprise (CDE), ACTIF has recently conducted a CTA sector supply side analysis of four countries in Eastern Africa – Kenya, Sudan, Tanzania and Uganda. This comprehensive study is on the similar lines what needs to be done in Nigeria as well.

With the mandate to pursue development of textile sector in Africa, liaison with international donor partners, network with international consultants and experience of doing similar strategy work, ACTIF is well suited to assist Bank of Industry, Nigeria for development of CTA Sector Strategy for Nigeria.

Given the mandate, ACTIF along with partner international and local consultants would start with conducting a comprehensive mapping of Nigeria textile sector. This step would be followed by a fact-based analysis along with benchmarking with global best practices. The ultimate outcome of this exercise will be:

1. An As-is analysis of Nigerian textile industry
2. Key risks and mitigation strategy
3. Identification of opportunities in the sector
4. Interventions for sector growth
5. Implementation road map