Interview: Christian Schindler
What factors underpin West Africa’s potential to be a regional leader in textiles?
CHRISTIAN SCHINDLER: West Africa has not traditionally been known as a destination for textiles or apparel manufacturing. Now that nearshoring is gaining traction, several factors work in favour of efforts to capture a share of China’s market share. The most evident of these is the abundance of cotton grown in the region. West Africa’s location is attractive relative to Asia, given its proximity to the North American and European markets. Moreover, it offers advantageous trade terms under schemes such as the EU’s Generalised Scheme of Preferences and Everything but Arms, and the US’ African Growth and Opportunity Act.
Labour costs in Africa are lower than in most Asian countries, especially China, and the continent has a large labour pool. These factors can be great assets if labour productivity can also become comparable. Energy costs are another criterion of competitiveness, especially in textiles. In Benin, for example, electricity costs are offered to industrial parks at $0.08 per KWh – a globally competitive rate. The region is also competitive in terms of other inputs, such as water.
When you invest in an industry, it is important to utilise the latest technologies to be both energy efficient and productive. This can give West Africa a competitive edge, as more established players need a transition period to phase out existing machinery and production methods in order to meet sustainability goals.
In what ways can textile parks and government policy support industry development?
SCHINDLER: Textile parks provide the main ingredients needed to attract investment. They offer high-quality, reliable and cost-efficient infrastructure – and in many cases a source of clean energy. They also feature administrative assistance facilities, and operators benefit from attractive investment incentives in terms of taxes and duties. Such factors encourage a wide variety of actors to establish operations, which in turn creates a cluster effect that supports value-chain development.
Education is the most important area for government intervention. Upskilling the workforce with the explicit intention of meeting the industry’s needs is critical to ensuring steady growth. It is also imperative for employment opportunities that arise at all levels to be taken up by locals, rather than foreigners.
How quickly can West Africa develop its textiles and apparel industry to capture global market share?
SCHINDLER: China is responsible for more than 50% of global textiles and around 35% of apparel production. In this context, even a 5% market share is a significant volume that no country can take up overnight. The relocation trend has been happening gradually since the beginning of the Industrial Revolution.
There is room for West Africa to grow in terms of spinning and apparel, but the remaining parts of the value chain will take time to develop. The textiles industry is capital intensive, while apparel is labour intensive. Development typically starts either in spinning or apparel because these are relatively easy to set up in terms of the technical know-how and capital needed. The bottleneck of the value chain is related to activities such as weaving, finishing and dyeing.
It is possible to expand cotton-based industries with the right political and regulatory will, along with public and private sector collaboration. A prime example of this is Uzbekistan. In 2015 the country was exporting almost all of its cotton. It had been trying to develop a local industry but was blacklisted in the Western markets due to forced and child labour practices. However, a new president turned this situation around. All the cotton produced is now transformed locally and end products are exported to Western markets, owing to strides made in collaboration with the International Labour Organisation. With concerted efforts, West African countries could be even more successful.