Southern Africa's Cotton, Textile and Apparel Sector: A Value Chain Analysis

This report provides an overview of the cotton to apparel value chain of the member states of the Southern African Development Community (SADC). The report does not represent primary research but is the result of desk research drawing on a wide range of sources as well as the observations and experience of the authors.

The purpose of the report is to provide a current review of the cotton to apparel supply chain in southern Africa. This will be used to inform Southern Africa Trade Hub (SATH) decision making, as a resource for the United States (US) Agency for International Development (USAID) and for SATH partners and to suggest interventions that may, directly or indirectly, be supported by SATH. Major recommendations are highlighted in the text. A snapshot statistical profile of SADC's entire cotton, textile and apparel pipeline is presented in Annex 1.

Though often discussed together because of the potential for beneficiation of the cotton into textiles and then garments, the growing and ginning of cotton and the the manufacture of cotton into yarns, textiles and garments in southern Africa actually comprises two value chains: 1) Agricultural  Cotton: the production of seed cotton through to the production of cotton lint via ginning. Some cotton lint is processed in southern Africa, but most is exported. Cotton is grown because it is a cash crop with a ready market, is not perishable, and is often pre-financed by the buyers (ginners). It is not grown because there is a spinning industry in southern Africa.

2) Industrial - Yarn to Apparel: the spinning of cotton lint and other fibers into yarns, through to the production of textile fabrics (wovens, knits and non-wovens) and then the make-up of these fabrics into garments and home textiles. Note that all yarns, fabrics and apparel produced in southern Africa do not necessarily contain cotton. Furthermore, some or all of the cotton used may not originate from southern Africa.

While both value chains have played an important part in the agricultural and industrial development of many SADC states, they have had very distinct growth trajectories.

The cotton production value chain remains important in those SADC countries with the agro-climatic potential to grow the crop. In 2009, it was estimated that about 863,000 smallholder households in SADC were involved in the growing of seed cotton. With a typical household size of 5.5 persons, this would mean that up to 4.7 million people are directly dependent on cotton for a substantial part of their livelihoods. Almost invariably, cotton is grown in rotation with food security crops by smallholder farmers. Cotton provides these households with essential cash income to purchase food not produced by the household and other household necessities.

By contrast, the industrial value chain has come under increasing competitive pressure and has contracted in the region on an overall basis. This pressure has been caused by a number of factors, including the lowering of tariff barriers, smuggling, aggressive targeting of the African market by Asian producers, the dumping of both new and worn clothing, significant technological developments in manufacturing machinery, and the loss of the quota system following the demise of the Multi-Fiber Arrangement (MFA).

Despite the overall trend, some SADC states (Lesotho, Mauritius, Madagascar and Swaziland) have seen a general growth in their textile and apparel manufacturing industries. On the other hand, Botswana, Malawi, Mozambique, Namibia, South Africa, Tanzania, Zambia and Zimbabwe have contracted - some quite significantly. According to SATH estimates, in 2010 about 314,000 people were directly employedin SADC's formal sector textile and apparel manufacturing value chain – and more than 80% of these are women. Most of SADC's textile and apparel manufacturing enterprises are located in urban and peri-urban areas and are staffed by low-skilled workers who have often lost most contact with rural farming areas. The incomes earned by these city dwellers play an important role in poverty alleviation and provides food security to people who generally have no access to land.