With a track record of employment creation outside the capital and strong export figures, textile manufacturing has long been a significant part of the national economy. A combination of competitive labour costs, well-trained human resources and proximity to European markets has made Tunisia a preferred destination for clothing manufacturers. Taking advantage of the offshoring regime established in the 1970s, textile and clothing manufacturers from Europe channelled production capacity into the country. However, instability at home and tougher competition abroad have eroded Tunisia’s solid position as a regional textile manufacturing centre in recent years.

Industry Stats

A network of subcontractors and globally recognised brands make up a segment that has brought in an average of €2.2bn in export earnings in recent years and employs around 160,000 people. Of the 1596 companies operating in textiles in early 2018, 1326 were exporting firms, according to the Agency for the Promotion of Industry and Innovation (Agence de Promotion de L’Industrie et l’Innovation, APII).

Tunisia’s textile industries have attracted a host of international investors, the majority of which have come from Europe in search of competitive production costs and logistical proximity that allows them to respond to rapidly changing market trends. As of December 2017 there were 256 textile firms with French investment, 175 with Italian investment and 75 with Belgian capital, according to data from the APII.

Rising Competition

As in many parts of North Africa, the Middle East and sub-Saharan Africa, Tunisian textile producers have had to face more difficult market conditions after the 2005 dismantling of the Multi-Fibre Arrangement, an international trade agreement on textiles that ran from 1974 until 2004. Furthermore, the industry suffered from the instability that impacted many areas of the economy after the 2011 revolution.

Still, textiles and clothing exports rose by 8.3% in 2016 to TD5.4bn (€2.1) and by 16.4% in 2017 to TD6.28bn (€2.4bn). However, the industry has lost ground to some international competitors. Although the EU accounted for over 90% of textile exports in 2017, according to international media, its standing in such a critical market has suffered since 2011. According to a report in Jeune Afrique magazine, Tunisia has fallen from being the fifth textile supplier to the EU in 2010 to ninth in 2017. Turkey and Morocco, specifically, have gained ground in European markets as credible and affordable manufacturing centres in the Mediterranean region. In 2016, for instance, Morocco exported €2.7bn worth of textiles to the EU, representing over 20% of its total exports to the bloc that year.

Egypt is also working to bolster its clothing exports, as stated at a major trade conference organised by the government, export councils and the UN International Labour Organisation in 2017, which aimed to promote Africa as the new frontier for garment and textile manufacturing. With China having become too expensive, Egypt is emerging as a major manufacturer for brands like Zara, Calvin Klein, Decathlon and Tommy Hilfiger.

While the tighter competition seems to represent another challenge for Tunisian textiles, opportunities to build stronger supply chains and increase trade within the African continent and abroad now look more likely. The March 2018 launch of the African Continental Free Trade Area, developed by the African Union, enables the free movement of goods and services, and should substantially contribute to the emergence of those supply chains. The newly configured trade area could work similarly to the pan-Euro-Mediterranean cumulation zone, an area that allows for the free trade of originating materials between different countries in the European Economic Area, and between the EU and Algeria, Morocco and Tunisia.

Game Plan

Aiming to regain trade with EU members, a delegation of Tunisian textile companies went to Poland in March 2018. The visit, held in collaboration with the Tunisian embassy in Warsaw, connected manufactures with Polish buyers in business-to-business (B2B) meetings. The ready-made clothing market is growing in Poland, and 16 leading Polish brands participated in the meetings to develop a better understanding of what Tunisian companies can offer.

One month prior Tunisia played a role in Texworld Paris, a global textile fair where materials and final products are exhibited and B2B dealings are promoted. Tunisia – along with Morocco, Portugal and Turkey – is among the countries where the majority of clothing is produced for European brands, thus representatives came to source fabrics at the show. The event saw a noticeable return of buyers from the US, which signals that the country could be another market worth looking into for Tunisian textile manufacturers.

According to a report by the European Commission in May 2017, textile and clothing products remain among Tunisia’s main exports to the EU, at 24% of the total. A strategy of participation in global conventions and the integration of supply chains, together with focused meetings with European markets that are increasing their expenditure on clothing, could help grow this figure in the short to medium term.

The Path Ahead

Industry authorities and private investors are also aiming to help the sector regain its broader international standing. In May 2017 private stakeholders established a new industry association, the Tunisian Federation for Textiles and Clothing. The new body was created in part because of the disagreement textile manufacturers felt regarding salary increases negotiated by the Union for Industry, Commerce and Handicrafts (Union Tunisienne de L’Industrie, du Commerce et de l’Artisanat, UTICA), the country’s main assembly organisation for the private sector. According to the textile business owners, the increases proposed by the UTICA would be too high for Tunisian producers to remain competitive globally.

Part of the turnaround will likely depend on how well Tunisian manufacturers can move up the production value chain. International manufacturers were first attracted to Tunisia because of its low-cost labour structure and technical capacity, and now several textile producers are leveraging the experience they have gained. Improving product development of specialised textiles for the automotive and aeronautic industries is one avenue that has been noted to enhance offerings and differentiate from the competition.

US Market

More advantageous access to the US market will also be important for future growth. Tunisian stakeholders have been attempting to lobby recent US administrations to reduce import duties for their textiles. This would put Tunisia on equal footing with Morocco, Egypt and Jordan, which already have preferential treatment for their products to the US. According to the Tunisian-American Chamber of Commerce, a reduction or complete elimination of import duties on Tunisian textiles would add over 30,000 jobs in Tunisia in just two years to serve the new customer base.