africa‘s t&a sector€¦ · africa’s global textile & clothing trade at us$ 43 bn shows...
TRANSCRIPT
Addis Ababa,14th February 2020
Investment &
Technology
Upgradation in
Africa‘s T&A Sector-
Opportunities &
Challenges
Key messages
• XX
Preferential market access is still a key driver for FDI in Africa
Large regional market(e.g.,ECOWAS 350 million)
Shifts in global textile chain present new opportunities…..and risks for
international buyers
Renewed interest of international buyers in sourcing from Africa….
and lessons from successful apparel exporting countries
1
2
3
4 Significant potential for investment for upgradation and expansion across
the African textile value chain as the enabling environment improves…. 5
Value Chain
Salient features
Raw materials
(Cotton)
Traditional textile
industry Import trade
Cotton-Textile-Apparel Value chain is highly fragmented
Apparel export
sector
1 2 3 4
• West African
Franc zone
represents 2/3rd
of Cotton pdn
• Increasing
production
• Potential to
improve
productivity
• Estb1960-90’s
• Stagnation (Y2K)
• Integrated mills
• Traditional fabrics
for local mkt
• Uncompetitive
• Potential for
revival
• Growing pentration
with 90% market
share
• Unorganised ,Grey
cross border trade
• 2nd hand clothing
• Emerging modern
retail
• Shift towards RMG
• Driven by
preferential market
access to EU/US
• FDI driven
• CMT
• Interest from int’l
buyers
• Global players enter
• Future integration
Textile investments
North America Western Europe
Africa
Total Asia & Oceania
(incl. Pakistan, India, China, Vietnam)
South America
China
Eastern Europe
India
World installed ring spinning capacity [mn spindles]: 2018
Turkey
5.6 5.6 5.7 5.8 3.5 4.1
10 11 12 13 14 15 16 17 18
3.4 3.5 1.4 1.4 1.2 0.9
10 11 12 13 14 15 16 17 18
3.9 3.7 3.7 3.7 1.2 1.0
10 11 12 13 14 15 16 17 18
110 120 100 114 105 104
10 11 12 13 14 15 16 17 18
3.7 4.6 6.1 7.4 7.2 7.8
10 11 12 13 14 15 16 17 18
Vietnam
46 48 45 52 54 52
10 11 12 13 14 15 16 17 18
6.5 6.5 7.6 10.0 8.1 8.4
10 11 12 13 14 15 16 17 18
5.2 5.5 5.4 5.2 3.5 3.5
10 11 12 13 14 15 16 17 18
198
208
225 219 220
10 11 12 13 14 15 16 17 18
9.4 9.4 9.2 7.4 7.2
10 11 12 13 14 15 16 17 18
10.5 11.8 13.2 13 13 14
10 11 12 13 14 15 16 17 18
Pakistan
Ring spinning : Decline and stagnation
Textile investments
World installed rotor spinning capacity [mn rotors]: 2018
Ring spinning : Decline and stagnation
169 471
515
4'486
1,409
274
600
Africa North America South America Asia & Oceania
Eastern Europe Western Europe Europe Others
Year 2012
Total: 7’9mn
Source: ITMF
(‘000’ rotors) 151 407
536
5'592
277 132
800
Year 2018
Total: 7'9mn
Textile investments
North America Western Europe
Africa
Total Asia & Oceania
(incl. Pakistan, India, China, Vietnam)
South America
China
Eastern Europe
India
Turkey
Vietnam
Pakistan
51 51 72 72 72 72
10 11 12 13 14 15 16 17 18
65 63 62 62 62 63 61 56 56
10 11 12 13 14 15 16 17 18
35 35 34 32 43 45 33 33 33
101112131415161718
110 109 109 109 109
109 110 110 110
10 11 12 13 14 15 16 17 18
14 14 13 13 16 17 16 19 19
10 11 12 13 14 15 16 17 18
40 40 42 45 47 49 51 53 53
10 11 12 13 14 15 16 17 18
27 28 28 28 33 35 31 39 39
101112131415161718
588 620 657 712 760 800 850 884 951
10 11 12 13 14 15 16 17 18
53 55 55 66 66 66 147 147 133
10 11 12 13 14 15 16 17 18
2 2 2 2 7 10 9 9 9
10 11 12 13 14 15 16 17 18
855 884 921 1'021 1'046 1'074 1'178 1'247 1'417
10 11 12 13 14 15 16 17 18
World installed shuttle-less weaving capacity ‘000 mc’s]: 2018
Shuttle-less weaving and circular knitting : show recovery (1/2)
Textile investments
North America Western Europe
Africa
Total Asia & Oceania
(incl. Pakistan, India, China, Vietnam)
South America
China
Eastern Europe
India
Turkey
Vietnam
Pakistan
6 5 4 4 3 4
10 11 12 13 14 15 16 17 18
7 8 8 8 9 8 8 7 7
10 11 12 13 14 15 16 17 18
6 5 4 4 4 4 4 4 5
10 11 12 13 14 15 16 17 18
3 3 3 3 4 4 4 5 6
10 11 12 13 14 15 16 17 18
9 10 10 10 10 11 11 10 11
10 11 12 13 14 15 16 17 18
1 1.2 1.2 1.1 1.1 1.1 1.4 1.8 2.3
10 11 12 13 14 15 16 17 18
143 162 188 212 212 204 196 189 201
10 11 12 13 14 15 16 17 18
9 10 11 12 13 16 19 23 25
10 11 12 13 14 15 16 17 18
2 2 2 2 3 4 5 7 9
10 11 12 13 14 15 16 17 18
188 208 235 262 267 263 261 262 284
10 11 12 13 14 15 16 17 18
World installed circular capacity [‘000 mc’s]: 2018
Shuttle-less weaving and circular knitting : show recovery (2/2)
Textile investments
80% companies
recognise
upgradation of
technology as a
priority
Key stimuli:
• Quality
• Resource
efficiency
• Sustainability
Key challenges:
• Lack of finance
• High cost of
borrowing (20% pa)
• Skills deficit
• Enabling
environment
Scope
• Spinning
• Weaving/Knitting
• Finishing
• Confection
1 2
4 3
Significant potential for upgradation of technology across the production
chain from spinning to processing and garment making (2/2)
Source: ITC
Textile investments
Significant potential for upgradation of technology across the production
chain from spinning to processing and garment making (2/2)
Age Africa % Asia %
Spinning < 10 Years 23 50
> 10 Years 76 50
Weaving < 10 Years 50 70
> 10 Years 50 30
Source: ITMF
Degree of technological obsolescence
NB:112 out of 190 existing industrial T&C companies in 5 East African countries surveyed
(Ethiopia,Kenya,Tanzania,Uganda,Rwanda)
Textile & Apparel trade
Africa’s global textile & clothing trade at US$ 43 bn shows a growing deficit
Africa: Textile & Clothing trade deficit: US$ Bn
Source: Comtrade
* All 54 countries in Africa Continent
HS Codes: 50 to 63
14.8 17.2 18.1
26.5
0
5
10
15
20
25
30
2010 2018
T&C Exports T&C Imports
CAGR: Textile= 4%
Clothing= 8%
CAGR: Textile= 1%
Clothing= 3%
New investment initiatives
Investment of € 1.25 bn
to modernize Egypt’s
T&A industry
announced at ITMA
Barcelona 2019
Projects worth $ 500 mn
announced at SICOT
2020, Koudougou,
Burkina Faso
• Ghana investment summit
to attract FDI in textile
industry
• Wuxi No. 1 inaugurates $ 200
mn spinning project in
Diredawa,Ethiopia. Phase 1
includes 100,000 spindles of
total 300,000 spindles
• Made in Africa Inc
acquires Vlisco Group with
a $ 190 mn Afriexim Bank
facility
Rivatex Kenya
upgraded with
capex of $ 29
mn
Opportunities and risks
+
-
Trend
• Preferential market access to US/EU
• Interest of international buyers to diversify sourcing
• Large regional/domestic market
• Abundant manpower and land
• Raw material supply(Cotton) availability
• Incentives
• Upcoming industrial zones
• Enabling environment
• Cost of doing business
• Infrastructure
• Logistics
• Skills & Productivity
• Socio-cultural issues
Opportunities in Africa are apparent however challenges must be understood
Thank you!
Consultants to the Industry since 1929 …………….present in Africa