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Botswana: 5000 workers lose jobs as textile factory closes down

Botswana: 5000 workers lose jobs as textile factory closes down
Published date:
Wednesday, 18 November 2009

Around 5 000 workers employed by Caratex Botswana, a textile company, will lose their jobs when it closes for good in December.

Mr. Craig Chow, Managing Director of Caratex Botswana, said last week in an interview that the company was set to close its factories as conditions have become difficult to continue production. Chow said the last workday will be 10th December 2009.

“The recession has hit the industry very hard and competition is now very strong and buyers are becoming realistic and opting for cheaper goods.” Chow lamented the delay in setting up a new incentive scheme to enable them to compete with international manufacturing giants such as China and India.

He said their exports are not able to compete with Chinese and Indian manufacturers because these countries have better efficiencies. “China offers a 17 percent rebate for manufacturers to encourage exports; they have cheap labour and better work efficiencies.”Chow said they had sent a proposal to government for incentives to improve productivity and efficiencies.

He said if incentives were provided - in the form of rebates - they would continue production as that would allow them to formulate a long-term plan.“We need at least a five- year policy plan. Right now we do not know what support we will get and we are not sure of finance.

AGOA and the Cotonou agreement are not enough for us to continue, and you should remember they mostly benefit the buyer; it’s a one-sided benefit. We would be glad if the system was kept as before; or an alternative scheme was brought to replace the DCCS (Duty Credit Certificate Scheme).

”For more than 10 years Caratex Botswana ran a successful business, buoyed by the incentives under the DCCS, which expired in April this year; to date no new scheme has been established. The objective of the DCCS was to enable textile and clothing manufacturers to compete internationally, independent of government subsidies.

Caratex Botswana is a joint venture company that came into being in 1998 and was for a long time one of the most successful of its kind, which created employment for thousands of local people.The company increased its employees from 500 in 2001 to 1,300 in 2003; currently Caratex's six factories employed more than 5,000 employees.

For years, Caratex and its five subsidiaries have been expanding production to take advantage of the elimination of import duties under the AGOA. It exported its products to the USA and the EU under the AGOA and COTONOU agreements, and in the region to the South African market; most of the big chain stores in South Africa were supplied by Caratex. According to information from AGOA, “The AGOA trade regime has helped a lot in terms of improving the quality of products, providing an opportunity to compete in a world market and substituting aid for trade.

The textile business in the Southern African Customs Union (SACU) area, of which Botswana is a part, is supported by duty credit certificates (DCC). These require participants to show export growth and to comply with the export requirements.”The textile and apparel industry in Botswana is an important contributor to economic activity in the country employing over 8,500 workers and generating export sales of over P300 million in 2003. Caratex was reportedly the country’s second biggest employer; the textile sector had been one of the major contributors to GDP, along with diamonds, beef and tourism.

Chow said the gradual run down of the factory had begun and total closure would follow after the stock had been finished. But he added that they have a good foundation to restart production if conditions should become favourable.




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


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