IMPRESSIONS from a Cross-section

There is a definite paradigm shift in the cotton value chain of Africa and in the future it has the potential to enhance food security in the continent for the farmers as well as the value chain. According to one school of thought, massive opportunities exist due to untapped potential in cotton production, but lack of investment in the spinning and textile mills has led to a short supply of fabrics in the face of a growing apparel manufacturing industry.

According to International Cotton Advisory Council (ICAC) report 2012, the world’s cotton production in 2011/12 season was approximately 27 million MT.  Out of this, Africa’s share was estimated at 1.47 million MT, accounting for just about 5.4 percent. The same report stated that the total amount of cotton consumed by Africa in 2012 amounted to 0.32 million MT which means that close to 78 percent is exported in raw form, a statistic that indicates limited value addition across the region. 

Currently, a major portion (approx. 45 percent) of the cotton produced is from West African region, mainly in Burkina Faso, Mali, Cameroon, Benin and Ivory Coast. On the other hand, the Northern African region, mainly Egypt and Morocco, is the chief consumption belt (approx. 55 percent). The overall picture shows that Africa accounts for just about 1 percent of the total global consumption of cotton.

Similarly, the textile Industry in Africa also highlights great opportunities. According to a 2011 report published by the International Textile Manufacturers Federation (ITMF), Africa accounts for just about 2 percent of the global short staple spindles and 1 percent of the shuttle less looms. Egypt accounts for the largest share of investments and capacities in the spinning sector along with South Africa and Mauritius. This is well supported by the fact that Egypt takes a lead in consumption of cotton in Africa.

As far as African apparel sector in concerned, the total exports from Africa under the duty-free quota-free exports to the US (based on UN Comtrade statistics) were about US$ 2 billion in 2012, with Sub -Saharan Africa (SSA) benefiting greatly from duty-free access into the US market under AGOA (approx. US$ 1 billion amounting to 50 percent of the total exports), led by Lesotho, Kenya and Mauritius. Egypt alone accounts for almost 50 percent of the remaining share (US$ 1.08 billion) which confirms its dominance across the value chain.

The positive news is that there exists a huge potential in cotton production and value addition that can develop the overall cotton value chain in Africa. According to some estimates, Africa has the potential to produce up to 3 million MT of cotton and consume up to 0.8 million MT, which will be about 3 percent of the world’s total consumption. This is bolstered by the fact that most African Governments in SSA are coming up with policy incentives to attract more investors to the cotton value chain in Africa.

Investment opportunities lie in each sector of cotton value chain in Africa. At the production level, investors can open new cotton producing plants and partner with local cotton ginners to improve yields and quality. There are openings for investors to participate in spinning, weaving, knitting, dyeing and finishing process. Many SSA states can use 3^rd country fabrics to manufacture garments that they export to the US and the EU. Opportunities to locate apparel manufacturing plants are also present in selected SSA states.

In short, it is an opportune time for cotton, textile and apparel industry to develop in Africa.