TRALAC - Trade Law Centre

Namibia: Factory Closure to Affect 11,000

Thursday, 24 March 2005

Source: New Era (Windhoek)

About 49 Namibian service providers stand to lose their businesses with the threat of closure of the Rhino Garments textile company in April.

This will bring the total number of job losses to around 11 000, warned An-drew Ndishishi, Permanent Secretary of the Ministry of Trade and Industry.

Rhino Garments, which is a subsidiary company of Ramatex Namibia, is in the process of wrapping up its business in Namibia, after losing out on USA buyers who are under pressure not to buy Namibian garment products, because of letters sent by union representatives complaining about apparent labour violations and a negative environmental impact due to textile production here.

Ndishishi went so far as to say that there are people who want to destroy the nascent African textile industry. As proof, he referred to a letter received by him in December last year from the World Economic Processing Zones Association (WEPZA), which was sent out to members of the association.

Among others, the letter reads in a warning tone: "This year [i.e. 2005] is so important that international labour is planning to spend millions of dollars to try to destroy your zones' ability to operate. They think they can do it!"

This year in January, the World Trade Organisation's textile and clothing quota system of over 40 years came to an end. Under the Multifibre Agreement, which created a quota system, the export of clothing and textiles is limited . This means that quota-restricted countries like China may see growth in textile industries, while in others, it could lead to established investors struggling or even collapsing, warned the WEPZA letter.

This has caused large closures of textile companies in Africa, notably Lesotho where more than 22 000 people have lost their jobs between June last year and January this year. Similarly, in Kenya about 20 000 people are likely to lose their jobs.

In 2003, Africa's total textile and clothing exports were worth US$2.3 billion, according to the WTO, making it less than one percent of world trade.

African textile industries did not expect the quota system to come to an end so soon, and have failed to become competitive before the system ended.

But, said Ndishishi, despite this, Namibia's textile industries were not threatened by this, because the Ramatex and other textile outfits are integrated projects where the development of the products are from the raw cotton to the final garment.

"The threat now is the lack of markets for these products. It is therefore unacceptable that local players are chasing away our markets," he emphasised.

Referring to the letters sent to about nine USA buyers and distributors, Ndishishi said the implications are devastating for Namibia.

"Even if there were labour violations [at the textile factories in Windhoek] it is unacceptable that a citizen of this country seeks help from foreign institutions to intervene. We have the machinery and capacity to deal with issues internally. If problems come as a result of this sort of behaviour, foreign organisations will not come to the rescue."

Ndishishi pointed out that the Ramatex international group has factories in Cambodia, China and Malaysia, all of which have no problems with their buyers, except now for the Namibian suppliers.

LaRRi director, Herbert Jauch, was doubtful if the letters sent to garment buyers have moved Rhino Garments to want to close down its operations here. He argues that textile industries globally are very "mobile", and that with the Multifibre Agreement, textile companies may prefer to move to China where production costs are rock bottom.

"The letters may thus not at all be responsible for the strategic decision by Ramatex to withdraw from Namibia," he said.

"But we will see in the coming months what will develop."

Jauch also claimed that the letters to the buyers did not call for a boycott of Namibian garments, but rather called for international attention to labour and environmental conditions at these factories.

Jauch said there is no guarantee that Ramatex Namibia would stay for the long haul, despite its integrated production, suggesting that Namibia should rather now concentrate on skills and technology transfer while Ramatex is still operative inside the country. "Relying just on foreign investors is just too high-risk."

Ndhishishi, however, pointed out that Ramatex Namibia has so far not given any indication if it plans to withdraw from Namibia. He further said that the Namibian government has invited USA buyers to come and do their own inspection into the production processes here.

"But this company [Ra-matex Namibia] is a world-class company. I am not sure that they will bring a N$100 million investment just to go and violate their own standards. They have also not restricted any auditing from any buyer."

Another negative result, said Ndishishi, is that foreign investors in future may not trust Namibia's laws and labour unions, nor its ability to sustain investment on a long-term basis.

"It requires all efforts from the local authorities, trade unions, government, the general public as well as the media to create an investor-friendly environment in the country. I accept that there will always be antagonistic labour relations, but we should try to rely on the institutional framework inside the country to resolve disputes," Ndhishishi urged.



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