eBusiness Weekly
Fradreck Gorwe
The local clothing and textile sector has wide growth opportunities and can potentially boost by ten times what the country earns in exporting cotton should value addition and sound import policing be made top priorities, chairman of the Zimbabwe Clothing Manufacturers Association (ZCMA), and executive director for Paramount Textiles, Jeremy Youmans, has said.
One of the major objectives of the ZCMA is to see the replacement of imports with locally produced products and attract investment in the sector, an objective in tandem with the Government’s emphasis on promoting local investments and industrial growth.
The Zimbabwean clothing sector has been succumbing to pressures from the proliferation of informal vendors and the dominance in the market of cheap and low quality imported garments.
These, as aforementioned, are results of the allegedly inefficient import policies compounded by the obtaining Bilateral Trade Agreement impasse between Zimbabwe and South Africa which, if resolved, can unlock great potential for the clothing sector.
“While the country earns a lot of foreign currency from cotton, if it is to value add into garments, the value addition is 940 percent and the country would earn ten times the amount of foreign currency.
“Then there is an economic environment the manufacturers are trying to survive in, lack of electricity, water, sufficient forex for imports and so on.
“Given all of these challenges, the cotton to clothing value-chain is quite simply not working.
“2019 was a very hard year for most manufacturers. The electricity and water shortages were extremely difficult for most to deal with. In terms of employment, remarkably, the sector stayed almost static.
“We are always positive and believe we can grow significantly given the necessary support. The industry could create 5 000 jobs in a short period of time. To do that we need better access to forex for raw materials and equipment, including generators; better policing of imports at the borders, and for the Government to deal with the outstanding issue of resolving the Zimbabwe-South Africa Bi-lateral Trade Agreement,” said Youmans.
The BTA impasse between Zimbabwe and South Africa erupted from differences in trade choices between the two.
Zimbabwean traders prefer the 1964 Bilateral Trade Agreement to the SADC FTA because of the former’s flexibility and simplicity in rules of origin. Rules simply require that the local content be met. On the contrary, South Africa subscribe to the SADC FTA with its complex and trade specific rules of origin for clothing that require both the fabric and the garment be produced in a SADC member state.
Owing to the differences, the Bilateral Trade Agreement was terminated on November 20, 2018. This affected certain imports from South Africa and exports from Zimbabwe to South Africa, and so Zimbabwe considers continual lobbying for simplification of SADC FTA rules of origin which hinders intra-regional trade.
Youmans bemoaned the proliferation of imported products which he blamed on a number of contributors including un-stringent import policies and “ongoing impasse between the ginners and the textilers’ over the supply of cotton lint”. The products are allegedly low-priced to the detriment of the local clothing industry which find it difficult to compete well. The situation has created for the industry an uneven playing field.
Said the ZCMA chairman: “The imported clothes coming in fall into various categories. Some are branded clothing not made in Zimbabwe but sourced from elsewhere. Then there are formal imports imported based on price. These are often inferior in quality compared to locally produced goods and are often imported without paying the correct duties. Some of this fraud is very simple to detect. Garments can include a label like “Made in China” but the consignment is declared under a SADC certificate as if they were made within SADC, and are therefore brought in duty free.
“There are also informal imports brought in via public or private transport. These are either falsely declared or not declared at all. From our understanding, very little of the imports coming are being correctly declared. All of this is done to reduce the price which makes it harder to compete with.”
The influx of cheap and sub-standard fabrics has continued despite a raft of measures taken to protect the local industry. The legislation had long banned the importation of second-hand clothing.
To ensure survival of the sector in the presence of such prevailing realities, Youman suggests the provision of significant subsidies to rescue the sector.
“Other countries offer significant subsidies to their clothing sectors, so were are not operating on a level playing field with imports,” he said.
The Government, however, has been making strides in trying to promote growth of the clothing manufacturing industry through the introduction and renewal of duty rebates for imported garments.
The Clothing Manufacturers Rebate was introduced in 2015 through statutory instrument 151 of 2015 and amended by SI 155 of 2017, 277 of 2018 and subsequently SI 39 of 2019.
SI 39 of 2019 allowed the importation of textile materials duty free but removed from the rebate raw materials like warp knit fabrics of synthetic fibres, unbleached or bleached, dyed, and of different colours.
Youmans further blamed the obsession with imported clothes on the quality of the local cotton produce which need to return to its actual position as the very best of the world produce.
“Unfortunately, the quality of our cotton is no longer of a high standard. Most of it is of low quality. In addition, farmers struggle to make a living out of cotton due the current pricing model. The size of the crop has also diminished significantly. The low quality cotton, leads to low quality cotton yarn, which leads to low quality cotton fabric which in turn leads to poor quality garments.
“There is also an ongoing impasse between the ginners and the textilers’ over the supply of cotton lint, such that some have been forced to import,” lamented the chairman.
Youmans indicated ZCMA is well determined, though to develop the whole clothing industry, taking cognizance of the significant contribution by the informal sector. He pointed to the need to incorporate the informal and create a formalised economy;
“The lines between the informal and the formal is becoming more blurred. It appears many people call the informal sector SMME’s now as well. Our constitution stipulates the requirements for membership and generally, this would exclude the true informal sector.
“However, we stand to develop the whole clothing industry and so include any clothing manufacturer within our distribution lists. It is vital that our economy become more formalized and we believe this must be the direction we all head towards. We are here to help those in the informal sector to become formal,” said Youmans.
