TRALAC - Trade Law Centre

Looking beyond AGOA for African textiles and clothing

Wednesday, 08 June 2016

Source: Fin24 (South Africa)

Source Africa, now running for its fourth consecutive year, kicked off on Wednesday at the Cape Town International Convention Centre.

At the pan-African trade event for the textile and clothing industry, the African Growth and Opportunity Act (Agoa) was in the spotlight during a seminar. African trade and market growth in the textile and apparel sector after the renewal of Agoa until 2025 was discussed.

Moderated by Clay E. Hickson, vice president, strategy and business development of Worldwide Responsible Accredited Production (Wrap) in the US, the panel provided insight into trends and market growth under Agoa, the challenges presented to the African market, opportunities to maximise the renewal period, and, notably, the critical efforts of strengthening African trade and the economy beyond Agoa.

Sustainable development and social and environmental compliance were identified as the key factors transforming not only the textile and apparel sector, but also a range of industries throughout the globe. It is for this reason that Wrap and other compliance certifications are seen as a stamp of approval for buyers and investors.

It was stated that audits alone will not bring compliance, and that these social and environmental matters require collaboration in order to achieve continuous improvement across the value chain.

The 10-year AGOA renewal has resulted in increased confidence within the business community, particularly in terms of investor interest and companies sourcing from Africa. Large companies, such as the likes of Vanity Fair and PVH who traditionally buy worldwide, are now setting up in countries like Kenya and Ethiopia.

Tanzania

Tim Armstrong, investment promotion director of the textile development unit of the Ministry of Industry and Trade in Tanzania, highlighted the fact that the biggest cost to the textile and apparel industry is delay, placing due importance on speed to market.

Tanzania has, to date, led growth under the Agoa agreement at $29m in trade as well as 71% growth. The cotton-rich country is leading the way in terms of sustainability, catering strongly to the increased desire for ecological transparency throughout the supply chain.

The region’s minimal use of pesticides has resulted in growing interest from the likes of the Better Cotton Initiative and Cotton Made In Africa.

Mauritius

Geerish Bucktowonsing of Enterprise Mauritius expressed pride in Mauritius’ sustainable edge and leading position in terms of exports to the US, despite it being a small country.

He attributes much of the region’s growth to their flexibility in terms of orders, quality of product, and absolute adherence to industry norms and standards. He also attributes much of the nation’s success to the tenacity, passion and commitment of the entrepreneur to adapt to changes in the market.

Challenges

A number of poignant questions were posed around the African market’s approach to Agoa. Many of Africa’s challenges are infrastructural, strained further by the lack of qualified workers in the region. A member of the audience noted that productivity is the key to unlocking Africa.

A key challenge addressed was the Trans-Pacific Partnership (TPP). In addition to challenges such as infrastructure and productivity, this trade agreement presents countries such as Vietnam and Malaysia as direct competitors to African countries.

Shakeel Meer, divisional executive: chemicals and textiles of the Industrial Development Corporation (IDC) in SA, stated that while TPP is a reality, it is no reason for panic.

He, and the rest of the panel, urged African countries to treat TPP as an opportunity for growth, and to boost the continent’s competitive advantage in the textile and apparel sector.

Beyond Agoa

Nancy Whitney, deputy office director of USAID and the Southern Africa Regional Economic Growth Office, said Agoa was initially intended as a springboard for African growth and development into the global economy.  

She emphasised that it is essential for Africa to maximise the opportunities presented by Agoa, and more importantly, to develop the local market. This could involve addressing restrictions between African countries to support inter-regional trade, and removing barriers such as customs and trade barriers.

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