TRALAC - Trade Law Centre

Botswana textile body targets Asian competitors

Wednesday, 22 October 2014 Published: | Isaac Pinielo

Source: Mmegi Online (Botswana)

The newly established Botswana Textile and Clothing Association (BTCA) aims to eliminate the existing competition in the textile and clothing industry, especially those from Asian companies.

According to BTCA president, Mohammad Shahid Ghafoor, the association aims to help local textile and clothing manufacturing companies sustain themselves in a highly competitive market.

Ghafoor noted that Asian countries have a competitive advantage in terms of lower labour costs supported by efficient production, availability of vast and cheaper sources of raw materials.

“Competition from Asia is tough. However, in our efforts to help local companies, we will engage developing skills of the industry with the help of the relevant stakeholders,” he said.

Ghafoor also indicated that companies will be capacitated on the benefits of using modern technology for efficiency and economies of scale production. He pointed out that implementation of the medium to long-term strategy would assist to ascertain how best to address the sector’s needs. He, however, bemoaned the sluggish penetration of local companies into the international market.

There is presently only one company, Carapparel Botswana, which has taken advantage of the African Growth and Opportunity Act (AGOA).

Carapparel currently employs about 1,000 workers and operates a 5,000 square metre factory in Broadhurst Industrial equipped with 1,500 industrial sewing machines. The company manufactures knitted and woven garments for men, women and children for local consumption and export to USA market.

AGOA was signed into law in May 2000 and it offers tangible incentives for African countries to benefit from opportunities in the US market to continue their efforts to open their economies and build free markets.

Ghafoor said many barriers prevented other local companies from trading in the US because the US market is “very competitive and demanding”.

He further explained that Botswana is landlocked thus the cost of logistics are too high, making it difficult for companies to import raw materials and export finished products.

“There is a lack of capacity to supply the quantity needed for export to the US which far surpasses the quantity in which local companies have the capacity to produce,” he said.  Ghafoor said some of the reasons many manufacturers don’t take advantage of AGOA are due to high transport costs to Botswana.

He further explained that competition is high, which makes it difficult to compete since Botswana exports and sources raw material from outside the country, thus making the set prices uncompetitive.

He noted that almost 100 percent of Botswana goods that penetrate the US market are textile and clothing merchandise, adding that AGOA is playing an important role in making access easy for these goods to enter the US market.

Ghafoor said the local industry is faced with challenges that include lack of access to finance, high operational costs, uncoordinated niche markets to tap into and build strong enterprising culture particularly for Small, Medium and Micro Enterprises (SMMEs).

“We hope that the association will benefit the textile and clothing industry of this country by promoting the development of a globally competitive and sustainable textile and clothing sector in Botswana,” he said.

He added that the association will increase domestic, regional and international market share for Botswana textiles and clothing.  The local textile and clothing industry has not performed well in the past.

Minister of Trade and Industry Dorcas Makgato-Malesu recently announced that there will be another stimulus package for this sector, meant to assist companies with wages, boost operational efficiency and improve productivity.

 

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