ACTIF Presentation

Rajeev AroraExecutive Director

African Cotton & Textile Industries Federation

www.actifafrica.com / www.cottonafrica.com

INTRODUCING ACTIFINTRODUCING ACTIF

The Vision:

An integrated cotton, textile and apparel industry that effectively competes on the world market

Mission:

To develop and successfully deliver services that enhance our membership’s competitiveness in the world market

A regional trade body formed by the cotton, textile and apparel value chain stakeholders in Eastern and Southern

Africa in June 2005

COTTON TRADEWORLD VS AFRICA

2011/12Million tons

2012/13Million tons

2013/14Million tons (projected)

World Production 28.042 26.684 25.63

Africa’s Share 5.6% 5.4% 6.0%

World Consumption 22.789 23.291 23.48

Africa’s Share 1.3% 1.5% 1.6%

World Imports 9.759 9.867 8.81

Africa’s Share 1.4% 1.7% 2.4%

World Exports 9.870 10.078 8.81

Africa’s Share 11.0% 12.6% 15.4%

Source ICAC June 2014

African Cotton Production

Production

Share of World Production

Million tons

Source: ICAC June 2014

Supply & Use of CottonStatus in africa

Region 2013/14

Prod Imports Cons Exports

North Africa 119 154 184 87

Francophone Africa

902 n/a 17 892

Southern Africa 506 59 164 404

World 25,628 8,811 23,461 8,811

Source: ICAC June 2014

000 Metric Tons

AGOA OPPORTUNITY

Total imports of textile & apparel products by USA stood at US$ 101Bn (Source: OTEXA, 2012)

SSA enjoys Duty free Quota free access into US for Garment exports under AGOA

Total U.S. Apparel imports from Africa under AGOA US$ 864

Million (0.8%) (Source: ACT, 2012)

U.S. Textile & Apparel Imports from Sub Sahara

Africa (SSA)

SSA

World

EXPORTS UNDER AGOA2013 DATA

Country MSME % Share $ Million % Share

Kenya 92.716 36.3% 308.77 32.4%

Lesotho 71.4 27.9% 321.27 33.7%

Mauritius 28.6 11.2% 191.4 20.1%

Swaziland 13.1 5.2% 49.97 5.2%

South Africa 12.7 5.0% 20.60 2.2%

Madagascar 11.6 4.5% 20.7 2.2%

Tanzania 10.5 4.1% 10.40 1.1%

Ethiopia 7.35 2.9% 10.5 1.1%

Malawi 2.9 1.2% 8.4 0.9%

Botswana 1.5 0.6% 5.8 0.6%

TOTALS 252.7 98.9% 948.0 99.4%

Source: ACT Report 2014

EU OPPORTUNITY

Africa enjoys duty free Quota free access into EU for Textile products through the Economic Partnership Agreement (EPA)

Total imports of textile & apparel products by EU stood at US$ 234Bn. (2012)

Total EU textile and apparel imports from Africa stood at US$ 9.3 Bn (4%)

EU Textile & Apparel Imports from Africa

Africa

World

Source: ITC calculations based on UN Comtrade

ROLE OF ACTIF

Foreign Direct Investments(FDI): ACTIF explores investment in the cotton textile & apparel value chain in Africa, including developing due diligence and match making for JV’s

B2B Linkages: ACTIF facilitates Business to Business linkages with member countries

Access to Information: ACTIF provides information access including reports and special studies for national policies and strategies

Market access: ACTIF actively develops linkages with member countries and regional economic communities (RECs) like EAC, COMESA, SADC

ROLE OF ACTIF

Policy & Advocacy: ACTIF is very active in advocacy activities in partnership with its members and partners to improve the policy environment across the region

COMESA CtC Strategy: ACTIF has been recognized as the private sector representative for the implementation of the COMESA Cotton to Clothing strategy. With support of our funding partners, ACTIF has developed an priority implementation plan from the strategy and is currently monitoring the implementation activities;

Highlights of key achievements

Extension of AGOA’s third country fabric provision to 2015

In 2011 & 2012, ACTIF was instrumental in engaging with key stakeholders including in US trade representatives, Members of US congress and Senate, Diplomatic corps and civil society. ACTIF Chairman was also invited to speak at a congressional hearing on AGOA. The end result was extension of AGOA’s third country fabric provision to 2015, saving over 300,000 jobs that were at stake!

Highlights of key achievements

Favorable Rules of Origin for the CTA sector adopted under EAC-COMESA-SADC tripartite

ACTIF has been actively involved in representing the private sector views in the EAC-COMESA-SADC tripartite discussions. This has led to favorable provisions for the Cotton, textile and apparel sector being adopted into the final draft of the tripartite document. The document is currently going through the political process before the FTA can be launched.

Highlights of key achievements

Investment Development – PVH Investment Delegation to East Africa: At least twenty Textile & Apparel companies from 5 countries in Asia made a strategic visit to Ethiopia, Kenya and Uganda in April 2014 to explore investment opportunities. The mission was organized by Philippe Van Heusen (PVH) and Vanity Fair (VF) in partnership with African Cotton & Textile Industries Federation (ACTIF) working with its member associations in the 3 countries visited along with export and investment promotion agencies.

Investment Visit to Kenya Investment Visit to Uganda

OTHER ACHIEVEMENTS

Trade Events

ACTIF has developed and also successfully partnered in developing trade events for the cotton textile & apparel sectors in Africa under Origin Africa (2011-2014) and Source Africa (2013 & 2014);

Information Dissemination

ACTIF has successfully developed a number of valuable reports

Capacity Building Seminars

ACTIF successfully organized Capacity building seminars for the CTA Industry in Africa under Source Africa events in 2013 and 2014 in Cape Town, South Africa

Projects Priority Areas linked to COMESA CtC Strategy

1 Capacity building of national federations Develop the industry's technical and human resource capacity

2 Cotton by-products markets prospectsAddress emerging industry standards and target appropriate channels/products (apparel)

3 Promoting investments in East African region Strengthen Regional and International Market Linkages

4Textile & Apparel industry optimization to build competitiveness

Develop Quality Standards, Standardization and Systems across the value chain

5CTA value chain development through value addition

Address emerging industry standards and target appropriate channels/products

6 Establishment of center of excellence Develop the industry's technical and human resource capacity

7 Evaluation of cotton support centersPromote good agricultural practices and train farmers/ginners to improve productivity

8Supply side analysis for 10 Countries: Mauritius, Zimbabwe, Zambia, Madagascar, Burundi, DRC Congo, Malawi, Egypt, Ethiopia & Eritrea

To capture country information and supply side data to enhance regional MIS and to promote trade across the regional cotton to clothing value chain

PROPSOED STRATEGIC INTERVENTIONS UNDER THE COMESA COTTON TO CLOTHING STRATEGY

Supply & Use of CottonStatus in africa

Region 2018/19

Prod Imports Cons Exports

North Africa 120 200 280 40

Francophone Africa

1,200 n/a 25 1,175

Southern Africa 680 70 260 500

World 28,000 9,000 28,000 9,000

Source: Forecasts by Terry Townsend, ACTIF Consultant

000 Metric Tons

WHY AFRICA?

Overview of global clothing industry

Clothing export industry has grown from US$40 billion in 1980 to $422 billion in 2012, averaging 29% growth annually

No major changes in main importing countries

19 World Clothing Import 1982

Source: WTOSource: WTO

20 World Clothing Import 2012

Source: WTO

Overview of global clothing industry

21

The major exporting countries have been playing musical chairs:

from quota countries to non-quota countries

after expiration of MFA in 2005; to cheapest countries

to countries with Free Trade Agreements (FTAs) or Generalised System of Preferences (GSPs)

22 World Clothing Export 1980

Source: WTOSource: WTO

World Clothing Export 201223

Source: WTO

Overview of global clothing industry

Wage Trends in

Major Clothing

Exporting Countries

Note:

GDP/capita gives an indication of

the standard of living

Source: CIA Factbook / Wikipedia

25

Where will be the next Apparel production Frontier?

Countries where they have:

•Geographical advantage: Nearness to raw materials and markets

•Trading advantage: Bi-lateral or multi-lateral Free Trade Agreement

•Demographic advantage: Abundance of unemployed labour

Why Africa?26

Africa has:•Geographical advantage:

• Cotton production Mali, Burkina, Cote D’lvoire, Mozambique

• Close to EU & US

•Trading advantage: • Duty Free to EU• AGOA

•Demographic advantage: • Abundance of unemployed labour

WHY AFRICA?27

Healthy Growth Momentum

Robust growth over the past 10+ years

Economic Growth:

4.2% (2012), projected to accelerate to 4.5% (2013), 5.2% (2014)

5 out of the top 10 fastest growing economies in 2013 are African countries, 4 out of 10 in 2012 (IMF)

Business Insider predicted 9 out of the 20 fastest growing economy in the next 40 years will be African countries.

WHY AFRICA?28

Healthy Growth Momentum (Cont’d)

Even resource-poor countries (Mozambique, Ethiopia) have grown, backed by mineral resource discoveries and buoyant commodity prices

Africa’s trade with emerging countries has gained in importance, e.g BRICS (Brazil, Russia, India, China, South Africa)

The US economy

Its gradual recovery is good news for garment exporters in Africa with increasing support from American buyers

WHY AFRICA? 29

• Africa becoming a major consumer market- Total population of 1 Billion

- More than 10 countries have GDP per capita exceeding $5,000

- More than 10 countries have millionaire growing at between 20% to 108% over the last 5 years

- Clothing export to Africa grown from $3.5 Bn in 2003 to 10.1 Bn in 2012

• The Obama Administration and AGOA:- Anticipates a seamless renewal of AGOA beyond 2015- AGOA enjoys strong bi-partisan support

LONG TERM FUNDAMENTALS – OPPORTUNITY FOR AFRICA

Increasing capita fiber consumption in emerging economies

Source: PCI-Fibres, The Fiber Year, ITMF

Asia is destined to put more focus on its domestic market in the coming years. Africa is therefore set to establish itself as the next sourcing destination

Year World West Europe Turkey North

America China India

2007 11.7 23.7 18.0 37.8 16.0 4.6

2009 11.0 21.9 14.6 30.2 17.2 4.8

2011 12.2 23.6 16.6 34.5 19.9 5.1

2013 13.0 24.0 16.9 36.2 21.1 5.5

Other reports show even higher trends for India

VALUE ADDITION OPPORTUNITIES

1) Increasing demand for high qulaity fabrics targeting AGOA & EU markets is a huge opportunity to invest in the Textile Industry;

2) Huge potential in the Cotton By Products Industry to enhance income to cotton farmers;

3) Increasing demand for African Fashion & Designs;

4) Increasing demand for hometextile & home decor from Africa;

CAPTURING VALUE ADDITION

Value Addition x 10 times which can create 9 million jobs if 100% value is added to current African lint

Fibre

1 Kg

1.6 US$

0.5 person

Yarn

0.75 Kg

3.40 US$

0.75 person

Fabric

3.35Mtr

8.5 US$

2.0 persons

Garment

2 Trousers

15.50 US$

4.0 persons

Retail

2 Trousers

38.80 US$

AFRICA’S POTENTIAL

Africa’s Land Mass depicting the

continent’s potential

10th – 12th November 2014HOTEL INTERCONTINENTAL

Nairobi, Kenya

Africa’s Cotton, Textile & Machinery

Trade Fair 

fiber fabric clothing fashion accessories home décor

machinery

  

www.originafrica.org

Origin Africa 2014 event

Changing Perceptions, Building Synergies & Doing Business

•The event will highlight the creativity and innovation of the African cotton, textile and clothing industries•Special focus on business, trade and investment – regional and international – capturing the spirit, style and innovation of modern Africa.

Components:

•Trade Expo; Seminars; B2B Meetings; Designer Fashion Showcase

Target Participants:

•Cotton, Fibre, Yarn & Textiles, Apparel & Fashion, Home Textiles & Décor, and Accessories sectors; Support Agencies; Investment Agencies; Export Agencies; Textile Machinery/Technology Suppliers; National Delegations; and Country Pavilions Investment Promotion;

Special features

Cotton Fibre Component

•B2B activities will be organized between Ginners and Spinners to promote cotton Trade and value addition in Africa;

Home Textile & Home Décor Component:

•A special Home Textile Component has been included to showcase key regional suppliers;

Factory Visits

•Factory visits to be organized for investment delegations and sourcing agents;

Students Category

•A Students Category has been included in the Trade Expo to showcase up coming talent;

B2B Meetings

37

• This will be pre-arranged meetings to match African

manufacturers with international and regional retailers, brands,

wholesalers and agents.

• An opportunity for African manufacturers to showcase African

made textiles, apparel, footwear and services to European,

American and African buyers.

conclusion

Value Addition Opportunities exist across the entire value chain

Thank you