T&C exports from major African economies may surge in 2022: TexPro

23 Apr '21

3 min read

Pic: Shutterstock

The combined exports of textiles and clothing from the major African economies such as Lesotho, Mauritius and Kenya are expected to surge in 2022 due to current efforts of the governments of these countries and other stakeholders of the industry. However, exports are likely to slightly decline this year due to the second wave of COVID-19 pandemic.

In 2019, total exports of textiles and clothing from Lesotho, Mauritius and Kenya were valued at $1,741.23 million with monthly average of $145.10 million. This figure dropped by 20.80 per cent to $1,379.02 million in 2020 due to the impact of COVID-19 pandemic. The monthly average exports is further expected to decrease by 14.44 per cent to $98.33 million during January-August 2021 from the monthly average exports of $114.92 million in 2020, according to Fibre2Fashion's market intelligence tool TexPro.

The African Continental Free Trade Area (AfCFTA), which came into effect from January 1, 2021, is expected to significantly stimulate the intra-African trade in the short term and global trade in long term. The AfCFTA agreement is based on the principle of reciprocity. Out of 55 member states of AU (African Union), 54 members, except Eritrea, have signed the agreement. Around 35 member states have even ratified the agreement.

However, the negotiation on the rules of origin under AfCFTA is still going on and is likely to be completed by the end of June 2021. The rules of origin have already been finalised for more than 81 per cent of the total commodity items, but negotiation is still pending on approximately 19 per cent of goods, including textiles and clothing. The rules of origin will help to expand the integration of markets at the regional and continental levels.

Meanwhile, the Parsons School of Design in New York and the African Development Bank (AfDB) are working together to develop and improve digital tools to support the African textile and fashion industry. This will help to create jobs, revamp regional integration, and increase intra-African trade and entrepreneurship.

The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA), which came into force on April 1, 2021, will also help in increasing textile and apparel trade between the two countries.

The US and the countries of EU (European Union) are the major markets for top African textiles and clothing exporters due to the preferential access under the African Growth and Opportunity Act (AGOA) and other free trade agreements.

In addition, many of the investors in the export zones of African countries such as Kenya are investors from Asia, as they get proximity and tax benefits while exporting to developed and lucrative markets including the US and the EU. Governments are also focusing on the attractiveness of the export zones through modifying tax incentives and services offered to investors. This will further increase the exports of the country and will create employment.

Recently, the US has planned to offer a $11.93 million fund to Kenya to improve compliance with international labour standards in key export sectors.

Fibre2Fashion News Desk (RKS & JL)

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