How West Africa can position itself as a leader in textiles and clothing
What are the factors underpinning West Africa’s potential to be a regional leader in textiles?
CHRISTIAN SCHINDLER: West Africa is not traditionally known as a destination for manufacturing textiles or garments. Now that nearshoring is gaining traction in the industry, several factors are working in favor of the region’s efforts to capture a share of China’s market share. The most obvious of these is the abundance of cotton grown in the region. West Africa’s geographic location is attractive compared to Asian destinations, given its proximity to North American and European markets. Additionally, it offers favorable trading terms under programs such as the EU’s Generalized System of Preferences and Everything But Arms, and the US Africa Growth and Opportunity Act.
Labor costs in Africa are lower than most Asian countries, especially China, and the continent has a large labor pool. These factors can be great assets if labor productivity can also become comparable. Energy costs are another criterion of competitiveness, particularly in textiles. In Benin, for example, electricity costs are offered to industrial parks at $0.08 per KWh – a globally competitive rate. The region is also competitive in terms of other inputs, such as water.
When investing in any industry, it is important to use the latest technology to be both energy efficient and productive. This can give West Africa a competitive edge, as more established players need a transition period to phase out their existing machinery and production methods to address sustainability concerns.
In what ways do textile parks support the development of the industry and how can governments facilitate their expansion?
SCHINDLER: Textile parks provide the main ingredients needed to attract investment in the industry. They provide a high-quality, reliable and cost-effective infrastructure – and in many cases a clean source of energy. They also have administrative assistance facilities, and operators benefit from attractive investment incentives in terms of taxes and levies. These factors encourage a wide variety of actors to establish operations, which in turn creates a cluster effect that supports value chain development.
Education is the most important area of state intervention. Workforce development with the explicit intent of meeting industry needs is key to ensuring steady growth. It is also imperative that job opportunities that arise at all levels are taken up by locals rather than foreigners.
How fast can West Africa develop its textile industry?
SCHINDLER: There is confusion around the speed, scale and scope of the offshoring trend. China is still responsible for more than 50% of global textile production and about 35% of clothing production. In this context, even a 5% market share is a significant volume that no country can take overnight.
The trend towards outsourcing has been gradual since the beginning of the industrial revolution. Before the Second World War, 50% of the world’s spinning production was done in Europe, mainly in the United Kingdom. Today there are hardly any left in the UK and half of the world’s capacity is in China, showing how big the change can be and how long it can take.
There is more room for West Africa to develop in spinning or clothing. The remaining parts of the value chain will take time to develop. The textile industry is capital-intensive, while clothing is labor-intensive. Development usually starts in either spinning or apparel, as these are relatively easy to set up in terms of technical know-how and capital required. The bottleneck in the value chain is in weaving, finishing and dyeing. For example, Vietnam started and is growing fast in spinning and clothing, but everything in the middle of the chain is not growing so fast. Bangladesh is still a big importer of Chinese fabric.
It is possible to develop cotton-based industries with political and regulatory will and public and private sector collaboration. Uzbekistan is a perfect example. In 2015, the country exported almost all of its cotton. He had tried to develop a local industry but was blacklisted in Western markets due to forced labor and child labor practices. However, a new president reversed the situation. All the cotton produced is now processed locally and the finished products are exported to Western markets, thanks to advances made in collaboration with the International Labor Organization. With concerted efforts, West African countries could be even more successful.