Apparel sector to focus on regional markets

19 Jan '10

2 min read

Uganda, despite having the advantage of exporting duty-free clothing to the biggest global market; USA under the Africa Growth Opportunity Act (AGOA) has not been able to exploit the potential due to the fragile nature of its textile and apparel sector.

The global economic meltdown beginning from the last quarter of 2008, added more challenges to an already tottering sector, which also has to face competition from nimble-footed countries like Bangladesh, China and Vietnam.

The Ugandan textile and clothing sector has now decided to turn its focus on 19 countries compromising the Common Markets of Eastern & Southern Africa (COMESA) and the East African Community (EAC), made up of five African countries.

At an AGOA forum meeting held last year, member countries were advised to explore domestic and surrounding country markets in order to dissipate the effects of the slowdown in the US market, an effect of the economic meltdown.

The US administration in order to provide a boost to the economies of the poor African countries of the African continent opened up an $11 trillion-market, enabling duty-free access for more than 4,500 products from 48 sub-Saharan African countries five years ago.

In order to exploit the full potential of the AGOA act, Uganda is now offering incentives including a 10-year corporate tax holiday, a 5-year value added tax exemption on all inputs and a revolving cotton buffer stock fund of $3 million annually.

Other than the above the government is also offering a subsidy of US 5 cents per KWH for three years and a loan of $5 million to attract foreign manufacturing textile firms in to Uganda and also generate employment opportunities for the local populace.

Fibre2fashion News Desk - India