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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

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

actif

ACTIF

End of MFA:- the ‘Catalyst’

Regional supply chain

Linkages, industry strategies

Public/Private sector partnerships

Unified voice

actif is formed on the following principles
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
actif program areas
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

actif5
“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

actif7
“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

actif networking dialogue
ACTIF: Networking-Dialogue

International Cotton Advisory Committee

International Textile Manufacturers Federation

Supporting Regional Industry Strategies

world textile and apparel a history of protectionism
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

slide10

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

what africa is up against
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
however africa s cotton textile and apparel industry
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

word leaders specialized in mass
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
trend market for the big and small
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
what next
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
slide16

WORLD ORGANIC COTTON MARKET

Rapid growth seen in organic market

Source; Organic exchange

who s designing sustainable and organic textiles

WORLD ORGANIC COTTON MARKET

Who’s Designing Sustainable and Organic Textiles?
  • Katherine Hamnett
  • Rogan Gregory
  • Linda Laudermilk
  • Stella McCartney
  • Diane Von Furstenberg
  • And more….
brands increasing activity on organic
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
fairtrade clothing
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

finally
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 – ??
slide21
1

Brand Africa … Buy Africa … Market Africa

thank you for your attention
Thank You for your attention

Aggressive Strategy

Visionary