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Africa's Cotton and Textiles : “ TRENDS AND CAUSES - A GLOBAL PERSPECTIVE

Africa's Cotton and Textiles : “ TRENDS AND CAUSES - A GLOBAL PERSPECTIVE. by Fred Kong’ong’o African Cotton and Textile Industry Federation (ACTIF) Cotton in Africa Seminar ,Arusha Tanzania 6 th September , 2007. ACTIF. End of MFA:- the ‘Catalyst’ Regional supply chain

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Africa's Cotton and Textiles : “ TRENDS AND CAUSES - A GLOBAL PERSPECTIVE

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  1. Africa's Cotton and Textiles:“TRENDS AND CAUSES - A GLOBAL PERSPECTIVE by Fred Kong’ong’o African Cotton and Textile Industry Federation (ACTIF) Cotton in Africa Seminar ,Arusha Tanzania 6th September , 2007

  2. ACTIF End of MFA:- the ‘Catalyst’ Regional supply chain Linkages, industry strategies Public/Private sector partnerships Unified voice

  3. ACTIF” is formed on the following principles: • “Africa-Wide” view, not geographically restrictive • Emphasis on private sector “ownership” & strong allegiance of nationally based trade institutions • Endorses Public/Private sector partnerships • Builds cooperation, interaction, partnerships, alliances, networks and market linkages • Collects market data, generates information exchange, shares regional expertise • Addresses post MFA challenges and increases competitiveness in the global post-quota environment • Maintains focus on trade issues, promotes investment • Encourages diverse international participation & alliances

  4. ACTIF: Program Areas Investment & Finance • Credit options, sources • Regional/pan-African/International • ‘Smart’ partnerships • Public sector involvement • Provide technical support Deliberations in Maseru, Lesotho ACTIF

  5. “ACTIF” Inter Regional Trade & Supply Chain • Data base (region + Africa) • Market intelligence information systems • Market access & linkages • Skills based training initiatives • Cottonafrica.com - participation Linking with Mauritius ACTIF

  6. ACTIF

  7. “ACTIF” • Production, Ginning & Lint Trade • Fair-Trade issues • GMO, research , share • Information – quality, prices, market information, production • “Niche” market development -organic Cotton • Information / technology exchange SA - TZ Exchange ACTIF

  8. ACTIF: Networking-Dialogue International Cotton Advisory Committee International Textile Manufacturers Federation Supporting Regional Industry Strategies

  9. World Textile and Apparel: A History of Protectionism 1962 1977 1974 1995 2005 UK & US restrict imports 1950s 1961 EEC n US sign some bilateral ATC commits to quota removal End of global quotas LTA under GATT signed MFA instituted under trade law US initiates STA formal restrictions

  10. The Reality Check • A metamorphosis of unparalleled proportions • China awakes • Consumes 42% of world cotton production • 76% of world textile machinery supply • CAPACITY TO CLOTHE THE WORLD Spindles

  11. What Africa is Up against? • China: • High skilled/very productive labour, Undervalued currency, mass production/economies of scale, great Government support , unfair trade practices • India textile industry up-gradation fund • Soft terms (20years),Subsidized interest rates (5%) • Capital subsidy (10%), High skilled/productive labour • Recent development – Rupee appreciation support • What thereafter? • China market share togrow • SSA to decline • Sustainability? • ACTION – level the playing field • Currency corrections • Fight subsidies • Fair Trade

  12. HOWEVER:AFRICA’S COTTON, TEXTILE AND APPAREL INDUSTRY Offer best answer to poverty alleviation through value addition BUT Technology/Research Poor infrastructure/ High cost of doing business Information/ Trends In Reality LESS competitive advantage

  13. WORD LEADERS SPECIALIZED IN MASS DFQF for all LDC’s – A Great Disaster • LDC’s include Bangladesh & Cambodia • They are already super-competitive • Need no preferences • Seriously erode, weaken and undermine trade preferences given to Africa by EU & US

  14. TREND: MARKET FOR THE BIG AND SMALL • Small • Eco/Organic Cotton-textile-Huge demand • Fair trade –cotton products, Big market • Consumers demand: the story behind the product • Big volumes but multi-colours trend • Big • Mass production, big stores • Africa answer is in the niche’ • Some African competitive Advantage • Good climate • Produce more lint than capacity to convert • Trade preferences • Ethnic/traditional designs • Abundant labour force/Raw materials • Positive focus on Africa (Millennium development etc) • Great economic growth potential • Return on investment great if you get it right

  15. What next ? • Governments • Get private sector input before policy change/trade agreements • Develop a sectorol approach: • Set special cotton & textiles industry incentives • Cotton-textile funds/loans • Build infustructure • Create skill based training institutions • Remove regional trade barriers: Develop regional supply chain • Invest in research and good agronomic practices • Private sector • Diversify products, niche, high end • Invest in original design not contract manufacturing • Build trust develop reliability • Invest in human resource development • Change with the trend • Invest in quality assurance and logistics • Produce for local, regional (SA, COMESA )and international market • Development partners • Develop synergies instead running parallel programs • Joint approach • Use local solutions to local problem • Support and encourage public-private sector initiatives

  16. WORLD ORGANIC COTTON MARKET Rapid growth seen in organic market Source; Organic exchange

  17. WORLD ORGANIC COTTON MARKET Who’s Designing Sustainable and Organic Textiles? • Katherine Hamnett • Rogan Gregory • Linda Laudermilk • Stella McCartney • Diane Von Furstenberg • And more….

  18. Brands increasing activity on organic • In 2005: • More than 30 retailers and brands with significant organic cotton programs. • More than 1200 small and medium sized companies were also in the market. • In 2006: • Brand demand continues to build with C&A, Cotton Ginny, Reebok, Levi Strauss, Pottery Barn entering market. • Wal-mart and Nike have largest organic cotton programs • In 2007: • New brands and retailers entering market include Target, Victoria Secrets, LLBean, Sainsbury, Barney’s • Existing brands such as C&A, M&S, Nike, Next, Nordstrom, Wal-mart, Woolworth’s South Africa significantly expand their programs

  19. Fairtrade Clothing • 2000 tonnes Fairtrade cotton from West Africa this year + 80 tonnes Fairtrade Organic • Over 3000 tonnes next year • Relationships at trader level • +’ve logistics, volume, language • -‘ve information flows to farmers (price, quality, volumes, impacts) 22 million Fairtrade garments booked by M & S £100m RSV.10% of the M&S cotton business. Source :M&S

  20. Finally • Think big! Plan long term! • Speed/Economy of scope will be key • Regional Supply chain best for Africa • Remember – Buyer is key (market driven) • Attract Buyers • Incentivise Buyers • Connect to Buyers – ??

  21. 1 Brand Africa … Buy Africa … Market Africa

  22. Thank You for your attention Aggressive Strategy Visionary

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