TRALAC - Trade Law Centre

Kenya: A Murky Future for Textile Workers

Sunday, 01 May 2005

Source: Inter Press Service (Johannesburg)

The silence in the room was deafening. Thousands of sewing machines lay unused in one of the production units at Upan Wasana, a textile factory located in Ruaraka, on the outskirts of the Kenyan capital, Nairobi.

The reason for this inactivity: something Kenyans are calling the "Chinese tsunami".

Following the conclusion of the World Trade Organisation's (WTO) Multi-Fibre Agreement on Dec. 31, 2004, Upan Wasana has experienced severe difficulty in competing with lower-priced goods produced in China.

The agreement was set up in 1974 to give textile firms in Europe and the United States some protection from those in countries with lower production costs. Within these restrictions certain developing states were awarded textile quotas that gave them a guaranteed - albeit limited - share of the market in wealthy countries.

Now, it's each man for himself.

As a result, all but 275 of Upan Wasana's 2,160-strong workforce have been retrenched. Managing director Bandu Udalagama says a reduction in orders from the United States amounting to 800,000 dollars in the past four months has forced the layoffs.

"We have lost so many orders because of the high production costs in this country which cannot be matched with China, which has low cost production," he told IPS. "With this huge loss, the company cannot afford to keep paying its staff.hence the decision to dismiss a number of them."

Another Kenyan textile firm, United Aryan, faces similar difficulties.

"Previously we were manufacturing 300,000 pieces every month. But now, due to reduced business, we do only 150,000 to 130,000 pieces," said General Manager Amit Bedi. "This, coupled with the high production costs - water and electricity - (means) we are soon going to have to lay off workers."

Such comments make Joseph Orieda, one of the 2,500 employees at the factory, fear the worst.

"If we are laid off, the effect will be adverse. So many people who depend on us are going to suffer," he said.

"We are scared every day at what may happen to us due to China's hold on the textile industry. These are some of the issues that need to be seriously addressed during this year's Labour Day, let alone salary increments," added Orieda, who has worked in the textile trade for the past 12 years. The world is marking International Labour Day Sunday (May 1).

This situation prompted industry representatives, government officials and other concerned groups from about 20 countries in East, Southern and West Africa to gather in Nairobi last week (Apr. 27-28). The meeting, the first of its kind, sought to explore ways in which Africa could counter the threat posed by China's textile industry.

"So far, 6,000 jobs have already been lost, and four major factories - which were well-established - shut down. Others are relocating to other countries," Jas Bedi, chairman of the Kenya Apparel Manufacturers and Exporters' Association, told IPS at the meeting.

Participants resolved to form a regional textile federation to voice their concerns about China's trade practices in the textile industry to the WTO, in the hope that the body will take action in the matter.

This came a few days after the European Union said it might impose limits on Chinese textile imports under a WTO provision which states that countries can restrict the growth of these imports if they are proved to be disrupting markers. Reports indicate that European imports of certain clothing items from China have increased by more than 500 percent since the beginning of the year.

"We cannot let China drive the whole world out of business. It is time to speak in the same voice with our governments in order to protect the textile industries in Africa, including Kenya," Bedi said.

Kenya's private textile firms have replaced 10 state-owned textile companies which collapsed during the 1970s and 1980s, also because of competition from cheaper imports which are referred to locally as "mitumba".

In addition to benefiting from the Multi-Fibre Agreement quotas, these companies have flourished under the United States' Africa Growth and Opportunity Act (AGOA) - an initiative set up under former American President Bill Clinton in 2000 to promote development on the continent.

Under AGOA, states in sub-Saharan Africa that meet certain requirements, such as respect for human rights and the rule of law, are allowed to export a variety of goods to the U.S. duty free. This has prompted Africa's share of apparel and textile imports to the U.S. to grow from 0.95 percent in 1999 to 2.5 percent during January 2005, according to the 'US-Africa Trade Report' for March 2005.

However, there are fears that the economies of scale that Chinese producers have access to, the sophistication of their factories, and the low wages paid to their workers will overwhelm any advantage that African producers enjoy as a result of AGOA. India is also poised to seize a large share of the global textile trade with the expiry of the Multi-Fibre Agreement.

"Africa needs to explore ways of becoming competitive and comparative. This will involve things like cutting down their production costs and labour costs in order to be at par with China," Finn Holm-Olsen, a regional advisor on AGOA, told journalists at the Nairobi meeting.

Added Nehemiah Ng'eno, permanent secretary in the trade and industry ministry, "I do agree that we need to encourage lower costs of production in the textile industry in order to be competitive."

However, Kenya's textile firms are concentrated in the country's Export Processing Zones (EPZs), introduced in 1990 in a bid to attract investment to the country. The EPZs offer incentives such as tax exemptions - but have also been criticised for creating an environment in which workers' rights are disregarded.

A report issued in February 2004, 'The Manufacture of Poverty: The Untold Story of EPZs in Kenya', accused EPZ firms of underpaying workers and blocking their efforts to unionise. The report was issued by the Kenya Human Rights Commission.

The question that begs asking is whether Kenyan textile workers will tolerate even lower pay in a bid to maintain their foothold in the global textile trade.