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Textile sector on crossroads

09
Oct '09
The Kenyan textile sector is raising its voice to what it calls a siege of the industry due to various factors like falling cotton production and reserves, the new value added tax and relaxation of rules with regards to import of second-hand clothing.

The sector has a whole is complaining about the erratic supply of raw materials and unfair competition in the domestic market, which is leading to closure of many textile enterprises or are pushing many companies out of the country.

A few years ago, the government made a move to set up the Cotton Development Authority (CDA) to regulate and revamp the whole cotton value chain in the hope of changing the industry's fortune.

But this has not helped, since, cotton production outlook for the near future is still bleak and the remaining companies that are relying on erratic imports from Uganda and Tanzania are barely surviving on the limited raw materials available, says an expert.

The sector is depending on the ongoing Economic Partnership Agreements, which is expected to open new avenues for exports along with which they are also concentrating on the domestic market. But local industry players say that, only government intervention will help clean up the whole chain and prepare the sector for the challenge ahead.

While the essence of the government economic liberalisation policy is to encourage all sector players, including the second hand clothe dealers to compete fairly in the local market,textile companies want the state to rethink strategy and rules.

They want policies which will tilt the investment environment in favour of local industries and also revamp local ginners and either ban completely or charge steep taxes on the imports of used clothes to save domestic textile enterprises. But the push, to ban or increase duties on second-hand clothing is unlikely to come as the duties were reduced in the first place to help the low income earners, affordable clothing and who are not able to afford textile products churned out by local industries.

When the import duty on second hand clothing was slashed from $0.3 per kg (or 45 per cent whichever is higher) to $0.20 per kg (or 35 per cent whichever is higher), finance minister Uhuru Kenyatta said the move was necessary to allow low income earners to afford clothes. The domestic textile sector on its part, is also trying to make clothing affordable, but trying to improve efficiencies across the whole value chain. But as an expert put it, the cost of cotton at the first stage of the chain needs to be controlled for benefits to accrue to the consumer.

Statistics indicate that from a production level of 20,000 bales of cotton in 2007, the country's production fell to only 8,000 bales last year due to drought and the post-election disturbances against a demand of 80,000 bales. Local factories are importing close to 80 per cent of their raw materials. Price volatility and erratic supply in the international cotton market has forced most manufacturers to turn to manufacturing fabrics and clothing from man-made fibres.

Fibre2fashion - News Desk, India


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