Mathabo Le Roux

July 1, 2006

Business Day, South Africa

IF THE example of Lesotho is anything to go by, China might not be solely responsible for the woeful state of the South African clothing and textile industry after all.

 

The traditional argument is premised on China increasing its share of the global export market for clothing and textiles from 9% to 24% between 1990 and 2004, growing its export base by a whopping 540%, to R61,85bn.

 

What often goes unmentioned is that a number of other developing countries have managed to maintain or grow their export bases during this period, which means they are competing successfully.

 

Mexico, for instance, upped its exports by 1126% in the same period, those of India grew 162%, and Turkey's increased 236%. Sub-Saharan countries, on the other hand, have fared dismally since the Chinese invasion, with, surprisingly, only Lesotho bucking that trend.

 

Mike Morris, professor of economics at the universities of Cape Town and KwaZulu-Natal, pointed this out at a recent workshop organised by the Institute of Global Dialogue on the expiry of the multifibre agreement.

 

The agreement had imposed quantitative restrictions on the textile and clothing exports of developing countries to developed regions such as the European Union and US, and its expiry saw Chinese imports flooding these markets.

 

Morris says that a memorandum of understanding signed between China and SA to restrict the former's exports to SA may be of little consequence to the industry. The proposed restraint of exports is a voluntary one and it is an open question whether China would be able to enforce it successfully.

 

The fundamental problem with the local industry is not cheap imports, but its lack of competitiveness, says Morris. Little capital investment, poor management, an inflexible labour force and poor relations between industry, labour and government are to blame.

Over the past 10 years SA's industry has become increasingly informal, which has led to rapid deskilling and substantial compromise in the quality of goods produced.

 

Between 1995 and 2004 the sector lost 75000 jobs, a loss that independent consultant Christi van der Westhuizen ascribes to ill-informed policy direction.

 

While clothing and textile industries in the southern African region have all suffered after the expiry of the multifibre agreement in 2004, Lesotho is the lone, shining exception.

 

At first Lesotho's industry suffered a decline with eight factories closing down. But since the beginning of this year, the country has seen a massive resurgence in the industry.

 

"We've been astounded at what has happened in Lesotho in the past three months," says Leanne Sedowski of the University of KwaZulu-Natal, who has extensively researched clothing and textile industries in the region.

 

New factories have opened and jobs, which had dropped from 53000 to 40000 after the end of the agreement, have climbed back to 44000. The figure is expected to reach 48000 by the end of July, according to the ComMark Trust, a nongovernmental organisation that supports and monitors the industry.

 

Sedowski says government intervention has made a marked difference.

 

The Lesotho government has undertaken several initiatives to create a favourable business climate, and meets regularly with industry players. While most manufacturers in southern Africa had never met the minister overseeing their industry, those in Lesotho know Trade Minister Mpho 'Melie Mali personally and have his cellphone number, she says.

 

"If a container gets delayed at the border post, they phone him."

 

Morris says the Lesotho case shows industrial policy matters enormously.

 

In SA, government is considering a plan to bale out the clothing and textiles industry. Curbing Chinese imports is only one of the measures in a comprehensive strategy to raise the industry's ability to compete internationally.

 

Morris says trade unions and the industry need to up the stakes and work together to create a more synergised value chain if SA is to compete globally.

 

Sedowski says that despite the massive challenges still facing SA, the region looks to the country for leadership, and that very few in SA seem to realise this.