TRALAC - Trade Law Centre

Malawi: Clothing and textiles become unstitched

Friday, 15 June 2007

Source: IPS NEWS

Following the liberalization of the global trade in textiles and clothing between 1994 and 2005, Malawi has seen an influx of second-hand clothing on the local market. But while consumers have been happily buying cheap items on almost every street corner, the country's textile industry has been steadily collapsing.

Despite Malawi being among the developing states allowed to export textiles and garments to the US market under the preferential access provided by the Africa Growth and Opportunity Act (AGOA), the country's textile industry is still failing to advance.

Jacqueline Chipembere (23) from Malawi's capital Lilongwe is one of thousands of Malawian consumers who have stopped buying apparel made in their country. She says second hand clothes are a lot cheaper than the garments made in Malawi.

‘‘I only have to pay something like one US dollar for a second-hand blouse but to buy a garment that is made here I have to part with a minimum of 15 US dollars," she says.

Up to 65 percent of Malawians are living in poverty, which means having less than 1 US dollar per day. Most people would rather spend the little they have on necessities other than clothing.

The lack of internal markets is not the only problem that Malawi's textile industry faces. Chairperson of the Garments and Textile Manufacturers Association of Malawi, Kantilal Desai, who owns a textile company called Knitwear Industries, says that AGOA has favourable conditions which offer tangible incentives for African countries to continue their efforts to open their economies and markets.

But Malawi is still failing to export much under the trade arrangement.

There is no investment from the private sector in the textile industry. Currently, Desai's own company has orders amounting to 6 million US dollars which it cannot fill. ‘‘We lack machinery and trained personnel to handle current market demand,'' he said, adding that there was need for more private investment in the industry.

The Malawi Investment Promotion Agency (MIPA), a body that works towards attracting, facilitating and encouraging both foreign and local investment, has been calling on investors to start large-scale cotton farming on estates.

Presently cotton is mostly grown by smallholder farmers. Two districts of Chikwawa and Nsanje, located in Malawi's Lower Shire valley, produce about 31,144 tons of cotton out of a national total of close to 50,000 tons.

According to MIPA, the cotton produced is not enough to meet the ginning capacity that is available in the country. The three ginning companies, Great Lakes Cotton Company, Clark Cotton and Iponga, use only 30 percent of their processing capacity.

Many farmers in Malawi are becoming reluctant to grow cotton. They feel that it is not as profitable as other crops since cotton prices are low. Cotton is Malawi's third biggest export product, with tobacco being number one. The pricing problem is currently dogging both tobacco and cotton.

Maliko Sagawa, a farmer from one of the country's cotton-growing districts in Chikwawa, says that cotton buyers appear to have formed a cartel to fix prices.

‘‘We do not make much profit from our sales. Actually, I am thinking of abandoning cotton farming and maybe growing some other crop that will be more viable,'' says Sagawa.

There seems to be more farmers who are making similar decisions. In March last year, the country's largest textile manufacturing company, Mapeto David Whitehead and Sons Malawi Limited, sent its staff on leave due to the scarcity of cotton. The company uses about 1,200 metric tons of cotton a year.

Last month, the Malawian government ruled that the minimum price of cotton this year should not be less than three cents. Last year's price was two cents per kilogramme but the cotton buyers protested and boycotted the procurement. The buyers argued that they have to pay taxes and so need to pay less than what the government was prescribing.

Principal secretary in the ministry of agriculture, Patrick Kabambe, told the press that it was impossible to reduce the prices as they were agreed to at the highest government level. The buyers were left with no choice but to buy the cotton at the recommended price.

James Chuang, the ambassador for Taiwan, has since promised to help Malawi's textile sector by assisting with the growth of organic cotton which, he says, has a high potential on the international market.

Malawian president Bingu wa Mutharika is supportive of the plan. He says that Taiwan, as Malawi's trade partner, will help grow organic cotton on a large scale. Mutharika has encouraged companies to utilize locally grown cotton to feed into the textile manufacturing rather than exporting it.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Malawi’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.