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AFRICANMAG.COM---- CURRENT ISSUE | |
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| ISSUE:
July 2005 |
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Africa's Dwindling Textile Exports
By
Johnson A. Otitoyomi
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When then US President Bill Clinton signed the African Growth and Opportunity Act (AGOA) into law in May 2000, African countries that agreed to keep their economies open to American companies and build free markets were to benefit from duty free access to consumers in the United States.
Under AGOA, imported clothes made with American fabric could enter the US duty-free and quota-free, while clothes wholly assembled in Africa with fabric not presently produced in the US could also enter the US duty-free and quota-free, with an annual limit of 1.5% of total US apparel imports, increasing to 3.5% over an eight-year perid.
Since AGOA, U.S imports of clothing from sub-Saharan Africa did in fact rise in 2003 and 2004 to more than $1.5 billion a year, resulting in greater employment opportunities in the African textile industry. In the small African nation of Swaziland for instance, the United Nation Information Network reported that the clothing industry provided 45,000 jobs in 2001 and 2003. Asian investors opened up shop in Swaziland and other places in the continent to take advantage of the duty-free AGOA environment.
Five years later, the dividends of development promised by this Clinton-era trade initiative are fast evaporating.
On January 1, 2005, the World Trade Organization (WTO) agreement on textiles and clothing effectively ended all US textile quotas. This singular event resulted in chaos for the textile industry in the continent.
Reports from Lesotho indicated more than 7,000 clothing and textile workers lost their jobs, as factories closed doors after the New Year festivities. The numbers of lost jobs are equally as alarming in South Africa, Mauritius, Madagascar, and Kenya.
A US International Trade Commission report acknowledges that 15,000 jobs will be lost in Swazilands garment industry alone due to the new World Trade Organization policy.
The prospects of revitalizing the textile industry in Africa to effectively compete in the US market are dim. Asian investors are there to take advantage of the AGOA, and own many of the garment factories in Africa. Now that the quota initiative has been technically abandoned, the Asians are moving back home, where they enjoy both technological and large-scale production advantages. Business sources say that it costs less to manufacture textile in China than in most places in Africa, due to the cheaper cost of labor.
Robert Maxwell of the Swaziland Textile Exporters Association (STEA) said in a press interview that, The Chinese have a price advantage because of low wagesa Chinese gets about R427 (US $71) a month (while) Swazi workers earns twice as much. Cheap exports of textiles from China will make it impossible for African textile manufacturers to compete in the US market.
In the five years since AGOA, some African countries benefited immensely. The International Monetary Fund has credited the textile and clothing industry as the source of growth in Lesothos economy. Now that the benefits of AGOA no longer exist in the textile industry for African countries, an agreement that was once hailed as the dawn of a new era of opportunity for the continent looks very lop-sided in favor of American and Asian companies.
At the end of the day, African countries may be on the losing end of the stick. One crucial aspect of this relationship has not changed, however: American companies continue to get unfettered access into African markets.
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