african cotton & textile value chain a contemporary focus ...€¦ · madagascar mauritius...

WTO Cotton Day/Geneva, 30 July 2020

Photo will be addedin the final version of Report 1

Geneva

30 July 2020

DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM ON COTTON

33rd ROUND OF CONSULTATIONS ON COTTON DEVELOPMENT ASSISTANCE

for

African Cotton & Textile value chainA contemporary focus and emerging trends

Navdeep Singh SODHI

by


CONTENT

01Key messages

02African Cotton,T&A industry - Trends

03Opportunities,challenges and impact

04Gherzi in Africa

05Q&A


Restructuring of the global textile industry presents opportunities and

challenges for Africa

1

2

3

4

Key messages

5

Global T&C industry is undergoing an accelerated restructuring

International buyers are keen to diversify sourcing

African cotton-textile is highly fragmented

Eco-system to improve competitiveness and attract FDI

….leading to significant economic impact-

investment,trade,jobs→SDG’s

01


CONTENT

01Key messages



04Gherzi in Africa

05Q&A


African textile value chain is highly fragmented

Salient features

Raw materials(Cotton)

Traditional textile industry

Import trade

Cotton-Textile-Apparel Value chain

• West African Franc zone represents 2/3rd of Cotton pdn

• Increasing production

• Potential to improve productivity

• Established(1960-90’s)

• Decline and stagnation since Y2K

• Integrated mills

• Traditional fabrics for local consumption

• Artisanal sector

• Uncompetitive

• Potential for revival

• 90%+ market share

• Unorganised ,Grey cross border trade

• Second hand clothing

• Emerging modern retail

• Shift towards readymade garments

Apparel export sector

• Driven by preferential market access to EU/ US

• FDI driven

• CMT

• Growing interest from international buyers

• Potential for vertical integration

African Cotton,T&A industry - Trends

1 2 3 4

02



5 cotton producing basins in Africa with 2/3rd of cotton originating in West Africa

Cotton producing basins in Africa

West African basin

Egyptian basin

East African basin

Great Lakes basin

Southern African basin

Source : OCDE, ICAC, Club du Sahel

1

2

3

4

5

Cotton production & Consumption(‘000 MT)(2019/20)

Top priority countries (11)

Potential other countries (5)

1,336

197

454

12

140

199

0 200 400 600 800 1,000 1,200 1,400 1,600

F.Africa

N.Africa

S.Africa

Production Consumption

02


Source: ICAC; 2020-21 is a forecast

N. Africa cotton production, yield and consumption F. Africa cotton production, yield and consumption

S. Africa cotton production, yield and consumption Comments

• Francophone Africa dominates the cotton production

in the continent, with stable output

• Potential to increase yields in Anglophone/

Lusophone countries

• Potential for value addition in downstream industry

707

1,1031,213 1,171

1,336 1,344*

17 19 19 12 12 12

376 383 403 396 394 396

0

200

400

600

800

1000

1200

1400

1600

2011/12 2016/17 2017/18 2018/19 2019/20 2020/21

Production Consumption

225

78

148215 197 197

155 169 179 184140 138

678620

846

668699 700

0

100

200

300

400

500

600

700

800

900

2011/12 2016/17 2017/18 2018/19 2019/20 2020/21

Production Consumption Yield

590

341 346

436 454 463

144190 200 193 199 204237 257 249

294 299 304

0

100

200

300

400

500

600

700

2011/12 2016/17 2017/18 2018/19 2019/20 2020/21

Production Consumption Yield

African Cotton,T&A industry - Trends02

Figures of production and consumption in ‘000 MT; yield in kgs/ha (cotton lint)

Nort

h A

fric

a/F

rench W

est A

fric

a/S

outh

ern

Afr

ica



Sub Saharan Africa is a key player in supply of sustainable cottons*

Preferred cotton supply: sub Saharan Africa – Top 5 countries(2019)

Source : Textile Exchange

02

Burkina Faso185,044 t

Mali65,232 t

Cote d’Ivoire194,474 t

Cameroon132,990 t

Zambia24,279 t

5% 9% 16%

2012/13 2014/15 2016/17

1.37 mn t 2.30 mn t 3.78 mn t

22% 25%

2017/18 2018/19

5.96 mn t 5.96 mn t

Global supply of preferred cotton (% share)

*Includes BCI,CmiA,Fairtrade,Fairtrade Organic

1

2

3

4

5

50%

2024/25

TARGET


Spinning capacity in Africa has seen a modest recovery

World installed ring spinning capacity [mn spindles]: 2019

North America Western Europe

Africa

Total Asia & Oceania

(incl. Pakistan, India, China, Vietnam)

South America

China

Eastern Europe

India

Source: ITMF

Turkey

Vietnam

Pakistan

5.7 6.1 5.8 3.5 4.1 4.1

14 15 16 17 18 19

9.4 9.4 9.2 7.4 7.2 7.2

14 15 16 17 18 19

1.4 1.4 1.4 1.2 0.9 1.0

14 15 16 17 18 19

3.7 3.7 3.7

1.2 1.2 1.2

14 15 16 17 18 19

7.6 7.9 10.0 8.1 8.4 8.0

14 15 16 17 18 19

13 13 13 13 14 14

14 15 16 17 18 19

100103

114

105 104

96

14 15 16 17 18 19

45 52 54 52 54

14 15 16 17 18 19

200

208

225219 220

212

14 15 16 17 18 19

6 7 7 7 8 8

14 15 16 17 18 19

10 11 813 13 14

14 15 16 17 18 19

Bangladesh

5.4 5.5 5.23.5 4.1 4.3

14 15 16 17 18 19



Investments in forward integration are also picking up (1/2)

World installed shuttle-less weaving machines capacity [‘000 numbers]

North America Western Europe

Africa

Total Asia & Oceania

(incl. Pakistan, India, China, Vietnam)

South America

China

Eastern Europe

India

Source: ITMF

Turkey

Vietnam

Pakistan

72 72 72 72 72 72

14 15 16 17 18 19

62 63 61 56 56 57

14 15 16 17 18 19

43 45 33 33 33 33

14 15 16 17 18 19

109 109 110 110 110 110

14 15 16 17 18 19

47 49 51 53 53 51

14 15 16 17 18 19 14 15 16 17 18 19

760 800 850 884 951 971

14 15 16 17 18 19

66 66

147 147 133 141

14 15 16 17 18 19

7 10 9 9 9 9

14 15 16 17 18 19

1,046 1,074 1,178 1,247 1,417 1458

14 15 16 17 18 19

30 34 34 40 44 50

14 15 16 17 18 19

Bangladesh

16 17 16 17 17 19

14 15 16 17 18 19



Investments in forward integration are also picking up (2/2)

World cumulative shipment (<5-year-old) of circular knitting machines [‘000 numbers]

North AmericaWestern Europe

Africa

Total Asia & Oceania(incl. Pakistan, India, China, Vietnam)

South America

China

Eastern Europe

India

Source: ITMF

Turkey

Vietnam

Pakistan

4 4 4 3

4 3

14 15 16 17 18 19

9 8 8 7 7 7

14 15 16 17 18 19

4 4 4 4 5 5

14 15 16 17 18 19

1.0 1.1 1.2 1.3 1.5 1.5

14 15 16 17 18 19

4 4 4 5 6 6

14 15 16 17 18 19

10 11 11 10

11 11

14 15 16 17 18 19

1 1 1 2 2

3

14 15 16 17 18 19

212 204

196 189

201

182

14 15 16 17 18 19

13 16 19

23 25 26

14 15 16 17 18 19

3 4 5 7 9 10

14 15 16 17 18 19

267 263 261 262

284

265

14 15 16 17 18 19

11 11 12 12 13 12

14 15 16 17 18 19

Bangladesh



Africa’s global trade in T&A at US$ 46 bn shows a widening deficit

* All 54 countries in Africa Continent

HS Codes: 50 to 63

Africa: Textile & Apparel trade deficit: US$ Bn

Source: UN Comtrade & Intracen

17.415.9 15.8 16.1

14.3 13.515.4

17.2 16.3

19.4 19.020.3

25.624.2 23.7

25.226.5

29.7

-2.0 -3.0 -4.5

-9.6-9.9

-10.2 -9.8 -9.3

-13.3

2011 2012 2013 2014 2015 2016 2017 2018 2019

Export Import Deficit




Source: OTEXA

4 leading countries - Kenya, Lesotho, Madagascar & Ethiopia dominate 80% ofapparel exports to the US (under AGOA)

USA import of apparels from sub-Saharan Africa under AGOA [Mn US$]

HS Codes: 61 & 62

368

300

49

18

215

27

8

6

9

0

Kenya

Lesotho

Madagascar

Ethiopia

Mauritius

Tanzania

South Africa

Malawi

Ghana

Rwanda

2010 2017 2019

340

290

160

54

147

41

21

0

8

2

454

303

244

211

141

52

24

23

18

0

US$ 1’065 mn US$ 1’472 mnUS$ 789 mn

02

http://upload.wikimedia.org/wikipedia/commons/b/bc/Flag_of_Madagascar.svg

http://upload.wikimedia.org/wikipedia/commons/4/49/Flag_of_Kenya.svg

http://upload.wikimedia.org/wikipedia/commons/4/4a/Flag_of_Lesotho.svg

http://upload.wikimedia.org/wikipedia/commons/7/71/Flag_of_Ethiopia.svg

http://upload.wikimedia.org/wikipedia/commons/7/77/Flag_of_Mauritius.svg

http://upload.wikimedia.org/wikipedia/commons/3/38/Flag_of_Tanzania.svg


Maghreb countries- Tunisia and Morocco- account for 80% of Africa’s apparelexports to EU

EU Imports of apparels from Africa [Mn US$]

Source: EUROSTAT

* All 54 countries in African Continent

HS Codes: 61 & 62

US$ 5’911 mn

2010 2015 2019

US$ 6’324 mnUS$ 7’157 mn

2'779

3'090

556

252

438

5

14

1

5

2

Morocco

Tunisia

Egypt

Madagascar

Mauritius

Ethiopia

South Africa

Kenya

Cabo Verde

Lesotho

2'567

2'214

450

337

273

37

14

5

5

0

2'965

2'174

499

393

191

57

14

7

6

4


http://upload.wikimedia.org/wikipedia/commons/b/bc/Flag_of_Madagascar.svg

http://upload.wikimedia.org/wikipedia/commons/7/71/Flag_of_Ethiopia.svg


Cost

parameters

CN IN VN BD IDN KE ET MG NG EGY UG BF CI

Wages

Monthly

wages

USD

600 175 275 130 300 150 75 100 150 125 150 75 125

Electricity

Electricity

tariff (US$

per kWh)

13 10 7.5 10 9 15 3.5 12.00 12 6.5 12 15 12

Finance cost

Interest

% pa6 7* 8 10 12 12 10 10 7* 6 7* 11 10

African countries have competitive wages however many countries face costdisadvantage,especially power

Source: Gherzi database* Concessional interest rate for textile industry under special programme

02

Asian African



CONTENT

01Key messages



04Gherzi in Africa

05Q&A


Opportunities,challenges and impact

African countries face 5 key opportunities to develop the cotton-textile sector

Restructuring

Market access

Global Initiatives

Endowment

Sustainability

• Shift of industry from China to other developing and LDC’s

• Consolidation and upgradation

• Economic imperative

• Preferential market access to the EU and US

• RTA’s/AfCFTA

• Belt & Road Initiative

• Other international projects

• Availability of abundant raw material

• Africa’s labour pool

• Land,water

11

2

3

4

5

03



….and require policy actions in 5 key areas

Enabling environment

Market access

Raw material

FDI

Capacity building

• Creating a vision and roadmap for the T&C industry

• Transparent regulations

• Infrastructure support (e.g.,industrial parks,logistics)

• Cost of doing business

• Preferential market access to the EU and US,AfCFTA

• Developing the downstream sector

• Promote e-commerce

• Sustain small-holder cotton farming

• Supply of certified seeds

• Good agronomic practices for sustainability

• Attract FDI

• Make Africa attractive for international buyers to induce vendors

• Access to finance via regional institutions

• Institutional capacity building

• Skill building at industry and firm level

1

5

4

3

2

03


Transformation of the cotton-textile industry will have a significant economic

impact and realization of SDG’s; 5 key result areas:


Trade

• US$ 45-50 bn* from

exports by 2030

• ca 5% of the world

trade in T&A

Employment

• 5 million new jobs* created

along the integrated value

chain by 2030

• Women’s empowerment

Value addition

• Transformation of 3 mn

tons* of seed cotton into

intermediate (Yarn) and

finished products

• Diversification

Investment• US$ 25 bn* of

investment required to

transform 50% of African

cotton by 2030

Integration• African T&A industry gets

integrated into the global

value chain

1

2 3

4

5

03

*Source: Gherzi estimates


CONTENT

01Key messages


03Opportunities & challenges

04Gherzi in Africa

05Q&A


Gherzi has accumulated a very strong experience in Africa with over 125successful projects and regional presence through 2 offices

Egypt• Bank Misr• Spaltenstein Holding• Banque Mondiale• Agico• BAW• IFC• Gulf Denim• STIA• Santamora• SOFI• IMC• Shamsi Group• Nile Holdings

Algeria• SONITEX

Madagascar• Banque Mondiale• IFC• EDBM

Morocco• Gromatex• COTEF• BAW• ICOZ SA• Texnord• AMITH• Lamatem

Tunisia• Textiles en Biais• CETTEX• Ministère de l‘Industrie• Filtiss

Ghana• Akosombo Textiles• Banque Mondiale• Ministère de

l'Industrie• EAA/DFID

Mauritius• Vossen• Arvind Mills• UNIDO

Kenya• EADB• BAW• DEG• Bedi Textiles• EPZA

Cameroon• CICAM• Ministère de

l‘industrie• GIZ

South Africa• Atraco• Gulf Denim• SACU Secretariat• Standerton Mills

Sudan• Sharat• Ministère de

l'Industrie• Banque

Mondiale• SUR

Zimbabwe• BAW

Bostwana• CNUCED• BEDIA

Nigeria• Banque Mondiale• Chanrai Group• Bhojsons• Sunflag• CHA Group• UNIDO• ACTIS• VLISCO• NNDC• Bua Group

Ivory Coast• Banque Mondiale• IPS West Africa

Senegal• ONUDI• CDE / OPICT• SOTIBA• TBF

Uganda• IFC• Ministère de l‘industrie• Fine Spinners• Southern Range Nyanza

Zambia• Smith & Nephew• BMD• Tolaram• UNIDO

Ethiopia• KWA• Ministry of Industry• UNIDO• Raymond• Kanoria Group• Sutlej Group• CDC

Burkina Faso• Filsah• Alok Textiles• GIZ

04

Angola• AfDB

Rwanda• Utexrwa

Gherzi in Africa


Consultants to the Industry since 1929

[email protected]


CONTENT

01Key messages



04Gherzi in Africa

05Q&A

african cotton & textile value chain a contemporary focus ...€¦ · madagascar mauritius...

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