Magazine article International Trade Forum

Filling the Fabric Gap in Africa

Magazine article International Trade Forum

Filling the Fabric Gap in Africa

Article excerpt

African countries produce raw cotton and finished garments, but they rarely have domestic textiles industries that transform cotton into yarn and cloth on a scale that meets export needs. At present, producing clothing is a better fit for LDCs, being labour-intensive rather than capital-intensive. But filling the "fabric gap" in the chain could help them reduce costs and boost their competitiveness. Cotton growers, ginners, fabric manufacturers and clothing manufacturers in different parts of the continent should consider collaborating in a regional value chain, from cotton to clothing, to offer competitive products to major markets.

To overcome the disadvantage of size and to attract investment, companies could cooperate in regional vertical relationships.

If a country exports US$5 billion in garments annually, creating a local textile industry or attracting foreign textile investors is feasible. However, for countries where these exports are less than US$2 billion (the case for all LDCs except Bangladesh), building a local textile industry or persuading foreign textile mills to invest is difficult and costly. To benefit from economies of scale, a vertically integrated textile industry has to serve many clothing factories. Thus, even if they are located in different countries of the same region and are competitors on the final market, clothing factories need to cooperate closely to attract the necessary textile investment. …

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