TRALAC - Trade Law Centre

Botswana: Textile factory to shed part of workforce next month

Friday, 27 April 2012

Source: Mmegi Online (Botswana)

Carapparel Botswana, a textile firm employing 1,500 workers, says it will have to shed a third of its workforce next month owing to a cocktail of adverse trading conditions that are affecting the industry at large.

Carapparel Botswana is currently the sole exporter of textile products to the US, utilising the AGOA market access arrangement.

The textile industry went from 6,000 jobs to 2,000 at the height of the recession in 2009, forcing government to initiate a two-year P38 million rescue package, primarily designed to preserve citizen jobs and boost the cash flows of participating firms.

By the end of January 2012, about 5,591 citizen employee jobs had been saved under the programme, while the sector's profitability returned to performances last seen before the recession. This week, it emerged that the expiry of the rescue package last December, combined with the forthcoming end of a key US market access provision had brought the industry to its knees again. Expiring in September, AGOA's Third Country Fabric Provision allowed textile and garment firms to use foreign fabrics in the manufacture of products exported to the US.

For the industry, the twin factors have added to the stress of losing a crucial duty rebate in 2009, which left the textile industry exposed to full import duties. The textile sector imports its raw materials from outside Africa, where qualities and quantities are better.

"Conditions have become more difficult and we have to retrench," Carapparel Botswana director, Sam Lin told Business Week. "Government has been helping with workers' salaries but that stopped last December. We have spoken to the Ministry of Trade and Industry, industrial affairs department and BEDIA. We have been told they are still negotiating on that."

Trade ministry officials said they were aware of tremors in the industry caused by the termination of the rescue package.

"The programme has come to an end and already there are indications that businesses that had been revived are closing down," Trade deputy permanent secretary, Boniface Mphetlhe told a national AGOA forum on Tuesday.

"We need to investigate whether in Botswana this industry can survive without government support." An advisor to the Botswana Exporters and Manufacturers Association (BEMA), Gideon Phiri said rather than the extension of the bailout, the textile sector was looking for a win-win arrangement with government.

"We should both put something in," he said. "For instance, government can bring in the money and industry can bring in the skills. We have already made a proposal for a course in a school to focus on skills in the textile industry and there are companies ready to move some of their equipment to such a school. We have to think through a strategic partnership on how to sustain a sector that has made a massive contribution to the economy."

Phiri said the textile sector was "critical" to be allowed to collapse, noting that it was not only a high employer in the economy, but was also fast in skills transfer.

"You can bring a woman from Shoshong to work in a factory and in six months' time, she can go home, start a business and employ others. This is a versatile sector," he said.

"This is a bird that is already flying; why shoot it down? Business is not asking for handouts, but is saying let's both contribute something." Textile sector imports rose to P1.8 billion last year, up 63 percent from 2010 levels.





“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Botswana's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.