Are donated clothes harming Africa’s economy?

KAMPALA , Uganda – Ihwezo Mwessigye tosses a collared jersey onto his desk.

“Until recently, not even my mother believed we could make a shirt like this — I had to show her,” says Mwessigye, the production manger of Phenix Logistics Uganda, an apparel manufacturer on the outskirts of Uganda's dusty capital.

If African political and industry leaders have their way, Africans will no longer need convincing. The continent will be a globally competitive, value-added cotton and apparel hub.

That is no small order.

At present Africa exports 90 percent of its cotton in raw form. Right now the continent lacks economies of scale, skilled manpower, trade linkages and infrastructure to take the cotton and turn it into fabric or a finished garment.

But a collective push to transform the dormant sector is emerging, with the understanding that Africa ’s failure to add value to what it produces will dramatically impinge its development in the coming decades.

“The industrialization era is coming to Africa and if we want to survive it intact, we have to compete in the global market,” says Mwessigye.

Encouraging signs are emerging.

Some $200 million have recently been invested in Ethiopia, Tanzania and Ghana for textile mills and garment manufacturing. Kenya has attracted $20 million to open factories. Ethiopia’s textile exports have doubled from $7 million in 2005 to $14.6 million in 2008, according to the African Cotton and Textile Industries Federation (ACTIF).

Ethiopia has also benefited from banning second-hand clothing. The flood of used clothing from Europe and the United States is blamed for deterring local apparel production across much of the continent.

In December, Uganda set up a low-interest $5 million per annum devolving fund to support upgrading and new entrants. Two universities have introduced masters programs in textile training. To nurture skills development, Uganda plans next year to require that all school and military uniforms be produced in the country.

“We are building the building blocks,” says Richard Mubiru, corporate affairs director of the Picfare Group of Companies in Kampala , which has a stake in the cotton sector.

ACTIF was set up in 2005 to help nurture these building blocks and give Africa a single voice. With 19 countries participating, ACTIF is encouraging a regional policy for the textiles industry. Forging regional linkages, it is hoped, will boost trade and investment and in turn help nurture skills and expertise.

But key challenges remain. Cost is the main one. And much of it relates to infrastructure, says Rajeev Arora, executive director of ACTIF, including cost of electricity and water, poor logistics and productivity.

Even if infrastructure is improved, most African countries will continue to struggle with economies of scale. They also lack the large subsidies enjoyed by the world’s leading cotton producers, including the United States, China and India — meaning that to level the playing field African nations will need to start offering subsidies of their own or the big producers will need to end theirs.

“I don't think either of those [scenarios] is very likely,” says Matthew Schnurr, an assistant professor in the department of International Development Studies at Dalhousie University in Canada who is now studying ways to improve cotton production in Uganda. Indeed much of Africa remains donor dependent and is hardly in a position to subsidize.

Another major challenge to cost competitiveness is tax evasion on imported textiles through under-declared imports.

In Kampala’s Taxi Park, a chaotic downtown marketplace spilling with garments and cheap plastic products, Mubiru recently discovered new t-shirts selling for less than $1 from China.

“That’s less than the price of cotton lint here," he said. "And the only way it can happen is through a massive evasion of duties.”

No action has yet been taken but East African Community countries are discussing ways to ensure that all imports are weighed at the point of entry and charged on a per kilogram basis.

Also, many African governments have failed to stop low-quality and pirated goods, mostly from China, from entering their countries, thus diminishing demand for and deterring production of local goods.

Some countries are fighting back, attempting to carve out industry niches based on these challenges.

Kenya, for instance, has been extremely hard hit by imports of second-hand clothing so it is looking to produce clothes for the corporate sector, where there’s little to no demand for used clothing. It’s also calling on the private sector to assist with marketing efforts — a key to tapping the industry’s potential.

Uganda, in contrast, released a national textile policy last October that throws around words like “improve,” “support” and “strengthen” but mentions little in terms of potential niches. And when a reporter recently asked an official at the Cotton Development Authority what was being done to nurture the local industry, the official said all media inquiries had to be screened and authorized by the office of the president of Uganda.

ACTIF aims to help work out these inconsistencies and nurture synergies.

Mwessigye is at once skeptical but optimistic about Africa ’s grand plans for cotton.

“African nations have been great about setting up the frameworks. But then they don’t follow their own advice and implement properly,” he said.

He said, however, that countries are now more determined to develop their textile industries.

“We are waking up,” he added.