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South Africa:Economy likely to cringes on clothing & textile
exports post MFA era |
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2005-1-21
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It is a challenge like never before for Swaziland''s economy moves in the year 2005 facing Asian giants like China and India in the field of clothing and textile exports to the United States, post MFA era.
So far under the protectionist textile quotas, the kingdom’s garment industry prospered and brought in a sort of economic revolution. But, the picture today is fraught with competition mainly coming from Asian giants.
Relocation of businesses have started indicating the downtrends, as trade union leaders informed about closure of two textile factories, one owned by foreigner last December. Even order books are empty speaking about the sorry state of business.
The Kingdom like other countries from Africa, basically progressed with the help of US African Growth Opportunity Act (AGOA) that supported preferential tariffs for apparel and textile from the region. The President of the United States Of America recently ratified the act, which gave a reprieve for the countries of the region after much debate and controversy. Exports can attract lesser tariffs and would allow more clothing products from the continent to enter US markets without much of a problem.
AGOA was considered as an engine for growth of sub-Saharan African economies drawing Foreign Direct Investments in to the region.
A couple of reasons are proffered for the textile industry today, in dire state like the end of textile quota restrictions on Asian exporters to the US and strong South African Rand that directly affects the local currency - the Swazi Lilangeni further linked with the US dollar, depressing the local textile industry.
However, all agree that the existence and progress of the clothing and textile sector is vital for the kingdom’s economy.
With 24 textile companies today, up from three before the advent of AGOA, the sector employs about 30,000 people in a country with about 1 million people.
The recently issued press statement by the chief executive officer of the Swaziland Investment Promotion Authority (SIPA), Bhekie Dlamini, aptly sums up the situation: "Authoritative sources have indicated that the elimination of these quotas will allow the international markets in textiles and clothing to be dominated by China and India who, jointly, are expected to control approximately 70 percent market share".
"If this occurs, then there would be shutdowns by the highly marginal factories; retrenchments by the more successful factories in order to increase productivity levels and reduce costs, and a spiral effect on other related economic activities would occur," Dlamini informed. |
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