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Skewed policies thwart growth of African T&G sector
Mar '09
Most of the African countries had developed core competencies within the value chain of the textile and garment industry in the past. Some countries like Ghana and Ivory Coast developed competencies in growing cotton, while others like Nigeria put efforts in growing the textile industry.

But, all these efforts put in by the respective government and international developmental agencies came to naught in the late 70's. Government apathy and skewed policies brought this once thriving industry to its knees. Even the 'African Growth and Opportunity Act' (AGOA), the free trade pact with the US has not helped the sector.

AGOA was signed in to an act in May 2000. It provides preferential access to Sub-Saharan countries in to US markets till 2015 and also has special provisions for exports of textiles. This act was enacted to help these African countries open their economies and build free markets in the region.

But, none of the countries of the AGOA pact have been able to take real advantage of the treaty with the US. This act could have brought in the much needed investments in to the textile sector with the attraction of exporting goods to US with preferential tariffs and also created jobs in the process. But it was not to be so.

South Africa too along with other member countries of the Southern African Customs Union (SACU), like Botswana, Lesotho, Swaziland and Namibia had in the past, announced two major policy changes. One had to do with the hapless customized strategy, which really never took off, while the second was an export incentive.

The export incentive or subsidy or the Duty Credit Certificate Scheme (DCCS) as it was called, provided rebates on imports of raw materials meant for manufacturing goods for exports. However, these incentives were not within the policy frame work of the World Trade Organisation (WTO) agenda.

No one bothered to reframe the incentive structure as per the WTO guidelines and a very good policy which would have helped the textile industry to prosper was allowed to gather dust, with the result that companies from South Africa and SACU country signatories are leaving the sector in droves, giving rise to unemployment.

Most of the countries like India, China and Pakistan have announced stimulus packages for their respective textile and clothing industry. But the South African textile sector is not able to pressurize the government to announce a package on similar lines, though a revival package has been declared for the automobile components sector.

Fibre2fashion News Desk - India

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