New prospects for Sourcing & Value addition in African ...destination-africa.org/pdf/speaker/Navdeep S.Sodhi.pdf · Bangladesh’s apparel exports rose from $ 11 Mn in 1982 to $ 29

ITMF Presentation Page 1

Cairo

19th November 2018

- 3rd Destination Africa Conference 2018 -

For

New prospects for Sourcing & Value addition in African Textile & Apparel Industry


01 Key messages

02 African textile & apparel industry - Trends

03 Opportunities & challenges

CONTENT

04 Gherzi in Africa

05 Q&A


5 positive trends for African textile & apparel industry

Preferential market access is still a key driver for FDI in Africa

Besides sourcing, Africa is also a large domestic market(e.g.,ECOWAS

350 million

Shifts in global textile chain present new opportunities…..and risks for

international buyers

Renewed interest of international buyers in sourcing from Africa….

and lessons from emerging countries

1

2

3

4

Key messages

There is a significant potential for investment across the African

textile value chain as the enabling environment improves…. 5

01


L1 L2 L3 L4

WORLD POPULATION (billion) by four income levels

Low Income

(Extreme poverty)

High Income

Middle Income

Key messages

Source:Factfulness by Hans Rosling

01

$2 $8 $32


Key messages

Source:WTO/Gherzi analysis

0 5 10 15 20 25 30 35

Bangladesh

Srilanka

Cambodia

Vietnam

Myanmar

Morocco

Egypt

Tunisia

2017 2010 2000 1990

Evolution of apparel exports(1990-2017)

7

8

5

The journey between the first $1 Bn to $5 Bn in apparel exports takes between 5 to 10 years

01


Bangladesh’s apparel exports rose from $ 11 Mn in 1982 to $ 29 Bn in 2017

Key messages 01

1978

1980

2018

• N.Qader Khan, owner of Desh Garments sends 130 trainees to Daewoo Korea

• Sets up 6 lines with 600 workers

• $ 11 Mn

• Youngone sets up garment factory in Bangladesh

• Youngone exports $ 1.9 Bn of which 65% comes from Bangladesh

• 65,000 employees

1982

1992

• $ 1 Bn

• $ 29 Bn

2000

• $ 5 Bn


01 Key messages



CONTENT

04 Gherzi in Africa

05 Q&A


African textile value chain is highly fragmented

Value chain 02

Raw materials (Cotton)

Traditional textile industry

Import trade Apparel export sector

1 2 3 4


x

5 cotton producing basins in Africa with 2/3rd of cotton originating in West Africa

Cotton producing basins in Africa

West African basin

Egyptian basin

East African basin

Great Lakes basin

Southern African basin

Source : OCDE, ICAC, Club du Sahel

1

2

3

4

5

Cotton production & Consumption(‘000 MT) (2017/18)

Top priority countries (11)

Potential other countries (5)

150

1245

455 186

19

191

0

200

400

600

800

1000

1200

1400

N.Africa F.Africa S.Africa

Production Consumption

Value chain 02


African ring spinning capacity has faced decline and stagnation during 2010-2017

Textile machinery investments

North America

Western Europe

Africa

Total Asia & Oceania (incl. Pakistan, India, China, Vietnam)

South America

China

Eastern Europe

India

World installed ring spinning capacity [mn spindles]: 2017

Source: ITMF

5.6

3.5

10 11 12 13 14 15 16 17

9.4 7.4

10 11 12 13 14 15 16 17

3.4 1.2

10 11 12 13 14 15 16 17

3.9 1.2

10 11 12 13 14 15 16 17

5.2

3.5

10 11 12 13 14 15 16 17

110 105

10 11 12 13 14 15 16 17

46 54

10 11 12 13 14 15 16 17

198

219

10 11 12 13 14 15 16 17

Turkey

6.5 8

10 11 12 13 14 15 16 17

02


Africa’s shuttle-less weaving and circular knitting capacity has shown some recovery (1/2)

North America

Africa


South America

India

Western Europe Eastern Europe

China

Source: ITMF

World installed shuttle-less weaving machines capacity [‘000 numbers]

Vietnam

Turkey

51 72

11 12 13 14 15 16 17

63

56

11 12 13 14 15 16 17

35 33

11 12 13 14 15 16 17

109 110

11 12 13 14 15 16 17

14 19

11 12 13 14 15 16 17

40 53

11 12 13 14 15 16 17

620

884

11 12 13 14 15 16 17 55 55 66 66 66

147 147

11 12 13 14 15 16 17

2 9

11 12 13 14 15 16 17

884 1,247

11 12 13 14 15 16 17

Textile machinery investments 02


Africa’s shuttle-less weaving and circular knitting capacity has shown some recovery (2/2)

North America

Africa


South America

Turkey Pakistan

India

Vietnam Western Europe Eastern Europe

China

Source: ITMF

World cumulative shipment (<10 year old) of circular knitting machines [‘000 numbers]

5 4 3

11 12 13 14 15 16 17

8 7

11 12 13 14 15 16 17

5 4

11 12 13 14 15 16 17

1.0 1.3

11 12 13 14 15 16 17

3

5

11 12 13 14 15 16 17

10 10

11 12 13 14 15 16 17

1.2 1.8

11 12 13 14 15 16 17

162 189

11 12 13 14 15 16 17 10

23

11 12 13 14 15 16 17

2

7

11 12 13 14 15 16 17

208 262

11 12 13 14 15 16 17

Textile machinery investments 02


Africa’s global textile & clothing trade at US$35 bn shows a growing deficit

Africa’s T&C Trade

14.8 13.54

18.1

21.56

0

5

10

15

20

25

2010 2016

T&C Exports T&C Imports

Africa: Textile & Clothing trade deficit: US$ Bn

Source: Comtrade * All 54 countries in Africa Continent

HS Codes: 50 to 63

02


Africa’s textile & clothing export trade witnessed a slowdown in 2016.

Source: Comtrade

Africa* export of textile & clothing [Bn US$]

5.53

6.57 6.46 6.09 6.36

5.50 4.79

9.27

10.79

9.47 9.69 9.69

8.79 8.75

2010 2011 2012 2013 2014 2015 2016

Textile Clothing

CAGR Textile= -2% Clothing= -1%

* All 54 countries in African Continent

HS Codes: 50 to 63

Africa’s T&C Trade 02


Top 5 countries represent 71% share of textile exports

Source: Comtrade

Major exporters of textile from Africa* [Bn US$]

Share in 2016%


HS Codes: 50 to 60 & 63

Africa’s T&C Trade

1.6

0.7

0.4

0.2

0.5

1.7

0.8

0.4 0.4 0.5

1.7

0.8

0.3

0.5

0.4

1.4

0.7

0.5 0.4

0.4

Egypt South Africa Morocco Burkina Faso Tunisia

2010 2011 2012 2013 2014 2015 2016

29% 10% 15% 9% 8%

02


3 North African countries account for 70% of total apparel exports from Africa

Source: Comtrade

Major exporters of clothing from Africa* [Bn US$]

Share in 2016%


HS Codes: 61 & 62

Africa’s T&C trade

3.0 3.1

1.3

0.6

0.4

3.2

2.7

1.3

0.8

0.5

3.2

2.7

1.3

0.8

0.6

3.0

2.1

1.1

0.7 0.6

Morocco Tunisia Egypt Mauritius Madagascar

2010 2011 2012 2013 2014 2015 2016

34% 13% 24% 8% 5%

02


Africa’s market share in the US imports has been stagnant around 2.5% with further potential to grow to leverage preferential market access

Source: Comtrade

USA import of clothing from World and Africa’s* Share [Bn US$]

71.4

77.7 76.8

79.8

81.8

85.2

80.7

2.5%

2.5%

2.5%

2.4%

2.5%

2.4%

2.4%

2%

2%

2%

2%

2%

3%

3%

3%

60

65

70

75

80

85

90

2010 2011 2012 2013 2014 2015 2016

World Africa Share%


HS Codes: 61 & 62

Africa’s T&C trade 02


EU imports of clothing from Africa have been stagnant around 7% with further potential to grow

Source:EUROSTAT

EU import of clothing from World and Africa’s* Share [Bn US$]

84.7

97.2

86.9

89.2

97.4

90.2 90.0

8.4% 8.1%

7.8% 7.7% 7.3% 6.6%

6.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

75.0

80.0

85.0

90.0

95.0

100.0

2010 2011 2012 2013 2014 2015 2016

World Africa's Share


HS Codes: 61 & 62

Africa’s T&C trade 02


Cost

parameters

China

India

Vn

B’desh

IDN

Kenya

ET Mada Nig EGY UG BF CI

Wages

Monthly

wages

USD

600 175 275 130 300 150 75 100 150 125 100 75 125

Electricity

Electricity

tariff (US$

per kWh)

13 10 7.5 10 9 15 3.5 12.00 12 6.5 12 23 12

Finance cost

Interest

% pa 6 7* 8 10 12 12 10 10 7* 6 7* 11 10

African countries have competitive wages however many countries face cost disadvantage,especially power

Source: Gherzi database

Competitiveness

* Concessional interest rate for textile industry under special programme

02

Asian African


Several success stories and new entrants in Africa


African Textile Industry > 4G 02


01 Key messages



CONTENT

04 Gherzi in Africa

05 Q&A


Four regulatory issues need to be understood about African textile & apparel industry

Myanmar: Sourcing opportunities & challenges

Regional market

Incentives

Market access

Forex controls

Regulatory environment

•Tax holiday up to 10 years

•Export incentives

•Concessional financing

•Capacity building

•100% FDI

•Miscellaneous

•COMESA

•EAC

•ECOWAS

•Common External Tariff

•EU GSP

•Euromed-EU/Tunisia FTA

•US AGOA

•US QIZ

1

2

3

4

03


Infrastructure 03

Investment in new infrastructure will reduce the cost of doing business


New industrial zones provided dedicated infrastructure to textile & parks in Africa (1/2)

Infrastructure 02

Hawassa Industrial Park, Ethiopia

Athi River EPZ, Nairobi, Kenya


New industrial zones provided dedicated infrastructure to textile & parks in Africa (2/2)

Infrastructure 02

32

5 A

CR

E T

EX

TIL

ES

& R

ES

IDE

NT

IAL

AR

EA

COTTON

GODOWN

COTTON

GODOWN

FINISHED

FABRIC

GODOWN

09

FINISHED

FABRIC

GODOWN

08

SKILL DEVPT.

CENTRE

28 25HELIPAD

FINISHED

FABRIC

GODOWN

FINISHED

FABRIC

GODOWN

29

FINISHED

FABRIC

GODOWN

FINISHED

FABRIC

GODOWN

19 STAFF

CANTEEN

20

SPINNING UNIT

10

02

16

CRP PLANT & TANK AREA

PUMP

06

16

07

ROOM

DENIM FABRIC

PROCESSING HOUSE - 2

DENIM FABRIC WEAVING UNIT - 2

YARN DYEING UNIT - 1

11

YARN DYEING - 2

12

DENIM FABRIC


11

27 26

09

TRADING

CENTRER & D

CENTRE

GREY

YARN

GODOWN

04

WEAVING UNIT - 1

24 SUB STN.

HT & LT PANEL

ROOM

GEN. STORE &

W ORK SHOP

COMP.

HOUSE

COTTON

GODOWN

18

17

COTTON

GODOWN

COTTON

GODOWN

01

COTTON

GODOWN

01 01

01

COTTON

GODOWN

0101

01

COTTON

GODOWN

01

9 Mts. wide road

WORKER

CANTEEN

FINISHED

FABRIC

GODOWN

FINISHED

YARN

GODOWN

03

GREY

YARN

GODOWN

ROOMPUMP

GREY

YARN

GODOWN

FINISHED

FABRIC

GODOWN

15

12

PROCESSING HOUSE- 1

03

MAIN

ENTRY

EXIT

03

10

FINISHED

YARN

GODOWN

GREEN AREAAREA FOR ETP

14

GR

EE

N A

RE

A

GREEN AREAGREEN AREA

FIRE STATION

21

W EIGH BRIDGE

GATE

HOUSE

23

GREY

FABRIC

GODOWN

GREY

FABRIC

GODOWN

05

GREY

FABRIC

GODOWN

GREY

FABRIC

GODOWN

05

08

GREY

YARN

GODOWN

05

08

05

22

08

08

08

08

08

08

GREEN AREA

08

08

08

WEAVING UNIT - 2

06

CRP PLANT & TANK AREA

04

07


FINISHED

FABRIC

GODOWN

FINISHED

FABRIC

GODOWN

OVER

HEAD

TANK

GR

EE

N A

RE

A

03

E X IT

E N T R Y

CA

R P

AR

KIN

G

E N T R Y

FU

TU

TR

EX

PA

NS

ION 34

SCHOOL

RESIDENTIAL37WORKER

GREEN AREA

37

PLAY GROUND

RESIDENTIAL

GREEN AREA

CLU

B H

OU

SE

36

CAR PARKING

38

CAR PARKING

STAFF

RESIDENTIAL

CAR PARKING

35

36

RESIDENTIAL

STAFF

35

STAFF

STAFF

RESIDENTIAL

31

RESIDENTIAL

STAFF

RESIDENTIAL

STAFF

25M

RETAIL STORE

32

BANK

MAIN

ENTRY

EXIT

CA

R P

AR

KIN

GHOSPITAL

33

EN

TR

Y

EX

IT 30

35

GREY

YARN

GODOWN

03

GREY

YARN

GODOWN

03

ADMIN.

BLDG.

RESIDENTIAL

WORKER

WORKERRESIDENTIALWORKER

FINISHED

GARMENT

GODOWN

FINISHED

GARMENT

GODOWN

41FINISHED

KNIT

FABRIC

GODOWN

41 42FINISHED

KNIT

FABRIC

GODOWN

GREEN AREA

GREEN AREA

GREEN AREA

GREEN AREA

GREEN AREAGREEN AREA

GR

EE

N A

RE

A

FINISHED

FABRIC

GODOWN

GARMENTING

UNIT - 1 & 2

KNIT & KNIT

PROCESSING

39

DENIM FABRIC WEAVING UNIT - 1

35

3737

RESIDENTIAL

42

GR

EE

N A

RE

A

FINISHED

FABRIC

GODOWN

GREEN AREA

39

GREEN AREA

GARMENTING

UNIT - 3 & 4

40

Proposed 325 Acre Textile & Apparel Park in Egypt Source: Gherzi database


Large Chinese conglomerates are planning investments in industrial zones across Africa

Silk Route


02


International brands and retailers are showing an renewed interest in sourcing from Africa

International Brands

Source: Company logos

02


Opportunities in Africa are apparent however challenges must be understood

Opportunities & risks

+

-

Trend

• Preferential market access to US/EU

• Interest of international buyers to diversify sourcing

• Large regional/domestic market

• Abundant manpower and land

• Raw material supply(Cotton)

• Incentives

• Upcoming industrial zones

• Belt & Road Initiative

• Enabling environment

• Cost of doing business

• Infrastructure

• Logistics

• Skills & Productivity

• Socio-cultural issues

03


01 Key messages



CONTENT

04 Gherzi in Africa

05 Q&A


Gherzi has accumulated a very strong experience in Africa with over 100 successful projects with presence through 2 offices

Egypt • Bank Misr • Spaltenstein Holding • Banque Mondiale • Agico • BAW • IFC • Gulf Denim • STIA • Santamora • SOFI • IMC • Shamsi Group • Nile Holdings

Algeria • SONITEX

Madagascar • Banque Mondiale • IFC • EDBM

Morocco • Gromatex • COTEF • BAW • ICOZ SA • Texnord • AMITH • Lamatem

Tunisia • Textiles en Biais • CETTEX • Ministère de l‘Industrie • Filtiss

Ghana • Akosombo Textiles • Banque Mondiale • Ministère de

l'Industrie

Mauritius • Vossen • Arvind Mills • UNIDO

Kenya • EADB • BAW • DEG • Bedi Textiles • EPZA

Cameroon • CICAM • Ministère de

l‘industrie

South Africa • Atraco • Gulf Denim • SACU Secretariat • Standerton Mills

Sudan • Sharat • Ministère de

l'Industrie • Banque

Mondiale • SUR

Zimbabwe • BAW

Bostwana • CNUCED • BEDIA

Nigeria • Banque Mondiale • Chanrai Group • Bhojsons • Sunflag • CHA Group • UNIDO • VLISCO • NNDC • Bua Group

Ivory Coast • Banque Mondiale • IPS West Africa

Senegal • ONUDI • CDE / OPICT • SOTIBA

Uganda • IFC • Ministère de

l‘industrie • Fine Spinners

Zambia • Smith & Nephew • BMD • Tolaram • UNIDO

Ethiopia • KWA • Ministry of Industry • UNIDO • Raymond • Kanoria Group • Sutlej Group

Burkina Faso • Filsah • Alok Textiles

Gherzi in Africa 04


Egypt Textile City Master Plan

Gherzi in Africa 04

Source: Gherzi projects database


Gherzi in Africa 04



Morocco site under construction


Gherzi in Africa 04


x

Gherzi in Africa 04


01 Key messages



CONTENT

04 Gherzi in Africa

05 Q&A


Consultants to the Industry since 1929

[email protected]

[email protected]

www.gherzi.com

mailto:[email protected]

mailto:[email protected]

Documents

New prospects for Sourcing & Value addition in African ...destination-africa.org/pdf/speaker/Navdeep S.Sodhi.pdf · Bangladesh’s apparel exports rose from $ 11 Mn in 1982 to $ 29