The implementation of the African Continental Free Trade Agreement (AfCFTA) on January 1, this year, the availability of cotton, the currently underway rewriting of logistics services, Ethiopia’s loss of AGOA status, and other advancements present an opportunity for West Africa to rise up in the global textile value chain, writes Rajesh Kumar Shah.
West Africa includes 17 countries: Benin, Burkina Faso, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo, as well as Saint Helena, Ascension, and Tristan da Cunha.
It is one of the nation’s biggest cotton producer countries, with Benin, Ivory Coast, and Burkina Faso ranking sixth, seventh, and eighth in terms of cotton production. Nevertheless, only 2% of the cotton grown here is turned into textiles, with the remainder exported to other nations, including over 90% going to Asian countries for further handling.
As a result, West African cotton-rich countries end up importing textiles at a cost that is estimated to be more than three times the value of the textiles they export.
This could change if governments in these countries develop plans to attract investment in the textile value chain and concentrate on improving transportation and distribution. This is particularly true given that the current surrounding world is favourable enough just to enhance local manufacturing in these regions.
To begin, the creation and implementation of AfCFTA has resulted in tariff reductions of up to 90% on merchandise trade inside this region. With a common Customs Union, production can be distributed all over nations, with each country pursuing its own specialized knowledge, supplementing rather than trying to compete for a larger share.
Second, Ethiopia, which has a larger textile industry in Africa, is losing its status as a beneficiary under the US African Growth and Opportunity Act (AGOA) trade programme as of January 1, 2022, due to its failure to end a nearly year-long war in the Tigray region, which has resulted in “gross violations” of human rights. As a result, retailers/brands that are currently sourcing from Ethiopia will look to other countries, beginning with African countries, for their value in order. Given the availability of cotton, West Africa can step in as a substitute and prevent orders (previously placed in Ethiopia) from leaving Africa.
Third, in the aftermath of COVID, brands and retailers are reorganising their supply chains. They are looking for new attractions instead of relying on a single country for their sourcing requirements. West African countries can present themselves as a resilient and profitable source of fashion and apparel for global corporations.
However, strengthening the textile-apparel supply chain would imply having facilities for spinning cotton into yarn, weaving it into fabric, dyeing, printing, and finally manufacturing finished garments. To that end, the Government of Togo and Arise Integrated Industrial Platforms recently opened a textile park through a public-private partnership. The park, which opened in June of this year, is expected to use 56,000 tonnes of cotton to produce $1.5 billion in apparel. Similarly, in neighbouring Benin, work is underway to establish a textile park in Glo-Djigbe, which will house up to 30 apparel factories. Once operational, this park is expected to consume approximately 100,000 tonnes of locally produced food.
A Nigerian company, Kobo360, has now expanded its presence to Burkina Faso, Ghana, Ivory Coast, Kenya, Togo, and Uganda in order to improve transportation system. The company collates edge haulage processes through its digital sites to assist cargo shareholders, truck owners, drivers, and cargo recipients in ensuring an efficient supply chain framework.
As a result, West Africa has already taken a step toward transitioning from a cotton provider to a clothing export industry. Greater government support and increased foreign investment are now required.
