TEXTILE INDUSTRY MASTER PLAN

THE textile industry is under immense pressure for its own survival and sustainability. Global, regional and domestic conditions are staked against the sector. While, we have a government that seems to be nonchalant about the fate of the industry, its beneficiaries and the benefits to the economy as a whole. We have become accustomed to reading about lay offs or closure of firms within the industry. This is a vital sector for the economy, holds so much potential for growth. South Africa’s textile master plan will kill the sector if our government does not assist the sector, through coordinated efforts, in a document akin to a master plan. We seem to be shifting priorities to new areas without putting in place mechanisms that ensure that we are able to reap and sustain the gains we have made in other industries.

Shifting focus

Industry shifting or strategic focus is an inevitable reality of commerce. The question we should be asking is what then needs to happen to the industries that are becoming obsolete. I often make reference to the Taiwan story and how they managed shifting needs in industry and ensuring that existing industries are assisted to adapt. Following the economic miracle of Taiwan, pivotal to their success strategy was the ability to handle the metamorphosis within industry.

In Taiwan, the planning ensured that when new industries come to light, old industries are assisted to remain profitable, training and re-training programmes were always aligned with the needs of industry and the skills level in the country. Furthermore, support to industries was provided by the government to ensure that they survive. I make the same point, that our industrialisation strategy does not have to be forward looking only, it is also incumbent on us as a country to ensure that within the same strategy we are able to consider existing industries and how they should be supported.

Safeguarding the sector

I call on the Government of the Kingdom of Eswatini to do more towards assisting the sector to survive and thrive. The sector creates and skills its own labour force, this imposes an additional cost to the firm. Government can come in through the Ministry of Education and Training to support the training endeavor. Resulting in improved productivity and ultimately margins for the industry, providing much wiggle room for the sector. Also, trainings can also be extended to service personnel so that the machinery used in the sector can also be serviced domestically.
There are multiple ripple effects to this move. Firstly, a critical mass of skilled personnel would be spread across the country, making it relatively easy to decentralise the industry as the costs of entry would be relatively lowered. Secondly, emaSwati with the skills will be put in a better position to start and run cottage factories, living bigger firms to sourcing orders and maintaining quality control. This is a very low hanging fruit as all that is required is some capital injection which can be sourced from the RDF and other existing government loan schemes.

This level of decentralisation has the  potential to open up new markets and new uses for what ideally would be referred to as waste within the textile industrial complex, improving on the environmental impacts and the general wellbeing of emaSwati. Lastly, a master plan which has these components will also create a service value chain and that is an entire industry we have not exploited as a country, all these services are imported.

Cost support

A comprehensive strategy also requires government to provide a cost subsidy in the form of reduced taxes and lowered rentals to mention a few. At the onset, this might seem to be a loss of revenues for government. However, I argue that most likely, this would be made up in the VAT collections as more people are employed in the sector and their propensity to spend is skewed for the domestic market. Also, decentralisation may also lead to a rise in local industries in the rural areas, increasing on the vat collected and the corporate taxes collected. I see an entire textile and apparel industry dominated by locally produced commodities.

The multiplier effect from these cost concessions will likely be greater than the revenue that government is currently collecting. Another implicit cost to consider is making the tax system relatively easy for the smaller firms so that they can benefit from AGOA and other regional and international trade dynamics. Make it easy for the people to access such markets.

Rationale

I imagine you are asking yourselves why should we go through all this trouble. Well, the sector is the 3rd biggest employer of labour or the biggest employer if you account for seasonality in other sectors. Employment in the sector is 80 per cent women and 20 per cent men. The sector contributes on average 11 per cent to manufacturing output and on average 2.9 per cent to GDP in nominal terms and accounts for over 50 per cent of the manufacturing sector’s labour complement. A textile industry value chain can do for the country in terms of job creation, poverty alleviation, youth and women empowerment.

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