Global downturn turns around to be fortunate for local textile sector
Mr Sudesh Maheshwari, CEO, 21st Century Textiles Ltd
As international financial crisis of unprecedented scale continues to create havoc on national economies and recession sneaking in, a sense of insecurity due to production cutbacks and job losses is growing in the minds of the people.
High inflation rate and slow industrial growth has been undermining the actual potential of the textile sector. The devastation has not stopped here. Even the production of cotton across the globe is expected to decline in the current season. It is anticipated to decline by 6 percent in 2008-09 due to shrinkage in the area under cultivation.
The status is somewhat similar in Tanzania. The country has been exporting about 75- 80 percent of its cotton crop and since with the crash in prices due to the global meltdown, the export is affected drastically. Lot of forward purchased and contracts are in dilemma.
In an exclusive interaction with Fibre2fashion.com, Mr Sudesh Maheshwari, CEO, 21st Century Textiles Ltd (TCTL), under the flagship company Mohammed Enterprises Tanzania Ltd (METL), threw some light on the current global economic meltdown, and its effects on the Tanzanian garments and textile sector.
Mr Maheshwari stated, “It is too early to find an impact of global economic meltdown in the country like Tanzania on the textile market. The sector at present is catering to the local market and to some extent to the regional African countries. There are very few garment sectors in our country. Apparel units are importing fabrics from developing countries and exporting the finished garments to the European and American markets. Since the numbers are less and because of AGOA, I suppose there is a good scope at present.”
Talking about shrinking cotton demand across the globe, Mr Maheshwari reiterated, “Apart from the economic downturn, the projected decline in the income of developed economies in 2009, tightening credit availability for textile mills and uncertainty regarding the prevalence of the global financial crisis, are the factors that will lead to a cutback in global demand for cotton.”
TCTL an ailing firm was purchased by METL in 2003 as part of the Tanzania Government's parastatal privatisation process. Now it has become East Africa's single largest textile mill, following massive modernization investment by METL post-acquisition. It is one of the most modern mills in the East African region.
The Company has the capacity to produce 4,400 m ton of cotton and blended yarns and 16 million metre of grey and finished fabrics per year. It has already captured a large portion of the Tanzanian market with its range of kitenges, bed sheets, shirting and suiting materials and blended fabrics.
Export products such as, grey fabrics and cotton yarns (carded and combed) are also in high demand and are expected to grow dramatically as the company develops further export opportunities within the European Union and the USA (though the African Growth Opportunity Act 2000).