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New study examines cotton yarn spinning in 11 African countries
08
Jul '11
On the occasion of the Pan-African Cotton Meeting (PACM) organized by UNCTAD (United Nations Conference on Trade and Development, UNCTAD) in Cotonou (27-29 June 2011), UNIDO and Gherzi Textile Organization AG are officially releasing the publication of the study entitled “Feasibility study for a cotton yarn spinning mill in 11 sub-Saharan African countries”.

Cotton plays a significant role in the economy of sub-Saharan Africa. However, merely 15 per cent of the cotton grown in the sub-regions processed locally; the bulk of it is exported as a basic raw material.

The United Nations Industrial Development Organization (UNIDO) has embarked on various initiatives to support the African cotton industry. The study has been carried out with Gherzi Textile Organization AG, a leading consulting firm specialized in the textile industry based in Zürich, Switzerland, with the aim of building productive capacities in the cotton/textile/garment value chain.

The study includes a technological-economic feasibility study for setting up a cotton yarn spinning mill based on the factor costs prevailing in the 11 sub-Saharan African countries that were selected. A comparative analysis of economic returns has revealed that because energy is scarce and expensive, only a few African countries can meet the investment criteria. A strategic research finding was that Government support in the form of policies and incentives is essential for attracting foreign direct investment to the capital-intensive spinning industry, especially in Africa.

The study is to serve as a template based on a set of given premises and parameters. However, any decisions taken by a particular company should be sensitive to and take into account several factors, among them: cotton and yarn prices, exchange rates, interest rates, type of technology and equipment, product mix, location, market access and Government support measures.

In addition, the study provides an opportunity for policymakers in African countries to learn from the experiences gained by cotton and textile-producing Asian countries in strengthening the value chain.

United Nations Industrial Development Organization (UNIDO)


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