TRALAC - Trade Law Centre

Zimbabwe: Exclusion from AGOA haunts Textile Sector

Thursday, 04 November 2004

Source: Financial Gazette (Harare)

Zimbabwe's exclusion from the Africa Growth and Opportunities Act (AGOA) is still haunting the local textiles industry, four years after the promulgation of the trade agreement between the United States of America and Africa.

AGOA, signed into law by former US president Bill Clinton, allows duty-free entry of a range of African goods into the US market.

Zimbabwe is the only southern African nation which was excluded from AGOA because of its alleged bad human rights record.

The local textile industry, facing fierce competition from the booming Asian textiles industry, said it is still feeling the negative effects of the exclusion.

According to the Zimbabwe Textile Manufacturers Association (ZTMA), trade barriers such as AGOA and the stiff competition from Asia have contributed to a decline in exports.

The industry, which used to employ more than 22 000 workers now employs only 12 000, with 85 percent being employed by the eight large firms within the sector.

The current overall structure of the textiles industry in Zimbabwe consists of eight large companies, four medium sized ones, 11 smaller companies and 100 marginal businesses.

The eight large firms, which account for 83 percent of textile capacity, are operating at less than 45 percent of capacity, ZTMA said.

"The anchor of the textile industry is at present the local market which has increasingly come under serious threat from unfair imports," ZTMA said.

Players in the sector said 86 percent of output is locally utilised with 14 percent, mostly from large firms, being imported.

Despite the foreign currency squeeze, imports continue flowing into Zimbabwe at the expense of raw materials for local benefaction, ZTMA said.

"The sector currently finds itself subjected to barriers in accessing international trade agreements such as AGOA," ZTMA said.

"Opportunities lie in the working of remaining prospects in international trade particularly in the area of niche marketing and vacuums left by AGOA. Much work could be implemented in improving the country's image and poor international perceptions, thereby attracting investment and markets," ZTMA said.

The industry is faced with the challenge of creating new markets at the same time recovering old ones. "Expansion of the sector can only be achieved if there is a market for the product," ZTMA said.