Govt bets big on revival of textiles sector

Wednesday August 14 2019

Serious investment. President Museveni inspects

Serious investment. President Museveni inspects a new production line at Nytil in Jinja recently. The cotton, textiles and apparels sector needs serious investment to increase production and value. FILE PHOTO  

By Michael Wakabi

Government is betting on the cotton, textiles and apparels sector to create about 50,000 jobs and $650m annually in export revenues in a new strategic plan.
The plan, which was validated by stakeholders last week, envisages investment into five new vertically integrated textile mills set up over a period of eight years to raise the proportion of value addition to the cotton crop.
About 300,000 Ugandans grow cotton, producing about 30,000 tonnes of lint.
However, only 10 per cent of this is processed into yarn and fabric while 90 per cent is exported as lint.
Last year, Uganda imported $252m worth of cotton, apparels and textiles products, which indicates that the country has a significant domestic market. Cotton exports earned the country $22m in the same period.
The cotton, textiles and apparels sector has suffered years of neglect as it had entirely been left to a weak private sector with no resources or less willingness to invest in it.

Organised value chain
According to Ms Jolly Sabune, the Cotton Development Organisation executive director, current production stands at 180,000 bales annually but it is envisaged that this can increase through an organised value chain that has a fair reward system for the different players.
For instance, Ms Sabune notes, there have been efforts to organise farmers into groups that can engage in good production methods away from the push for hybrid varieties and biotech.
The local cotton varieties, she says, keep farmers independent of breeders with a fabric yield of 40 thread counts the average of 60-75 thread count from hybrid varieties.
During a stakeholders meeting in Kampala last week, it was noted that, the strategy, if well executed, will result in increased fibre cotton production, scaled up domestic value addition and thousands of new jobs.
The strategy proposes a two-pronged approach that would simultaneously revive the cotton production value chain and investment in export oriented apparels and garment production factories that would initially rely on imported fabric.
This approach is informed by the fact that cotton makes up only 20 per cent of fabrics used by the global garments industry with the other 80 per cent coming from synthetic sources.
According to Mr Michael Werikhe, the state minister for Trade, the strategy addresses the lower and upper aspects of the value chain, which creates quick wins, especially in the employment creation agenda.
“We have a good plan and all we need to do is to make sure that we implement it,” he said during a stakeholders meeting.
The strategy seeks to stimulate large scale commercial cotton production while improving infrastructure and the business climate.
It also seeks to attract targeted FDI into the sector while supporting existing industrial players to develop into integrated value chains.
Under the strategy, the proportion of processed lint would be progressively raised from the current 30,000 tonnes to 75 per cent of production or 20,000 tonnes annually.
According to National Planning Authority and Msingi East Africa which jointly developed the strategy, Uganda’s poor export performance in the apparels sector is attributed to inefficiencies at factory, product quality levels and non-compliance with international standards.

The reactivation of Uganda’s cotton, textiles and apparels sector is seen a pathway the country’s industrialisation agenda and boosting national income.

Ms Aggie Konde, the Msingi East Africa executive director, said during the stakeholders meeting that whereas Uganda “face critical choices” there was need to need to prioritise resources, noting that: If we choose the right industries, we can convert our young labour force into an asset.”

Industrialisation, employment and boosting national income
Under the strategy, the proportion of processed lint would be progressively raised from the current 30,000 tonnes to 75 per cent of production or 20,000 tonnes annually.
According to National Planning Authority and Msingi East Africa which jointly developed the strategy, Uganda’s poor export performance in the apparels sector is attributed to inefficiencies at factory, product quality levels and non-compliance with international standards.
The reactivation of Uganda’s cotton, textiles and apparels sector is seen a pathway to the country’s industrialisation, employment agenda and boosting national income.
Ms Aggie Konde, the Msingi East Africa executive director, said during the stakeholders meeting that whereas Uganda “faces critical choices” there was need to need to prioritise resources, noting that: “If we choose the right industries, we can convert our young labour force into an asset.”
Picking lessons
Recently, a delegation from the Ministry of Trade was India and Sri Lanka to pick lessons on how the two countries have established successful cotton, textiles and apparels sectors that are now playing on the global stage.
Led by Mr Werikhe, the delegation visited Shahi Factories in India, which operates 65 garments factories and employs more than 100,000 workers throughout its integrated operations where 80 per cent of raw material requirements are met by its own integrated plants.
The delegation observed that government support through macro-economic policy and development of key infrastructure such as Export Processing Zones, efficient logistics systems, skills development and marketing were critical for the successful revival of the cotton, textiles and apparels sector.
It was also observed that unlocking affordable finance was critical given the capital intensive nature of the business.
Mr Richard Mubiru, the Picfare Group director for corporate affairs, which operates Nytil Southern Range, said raising the level of value addition would roughly attract hundreds of millions in new investment.
“You would need an additional 125,000 new spindles and the rule of thumb is that you need $1m to set up a single spindle and its associated equipment,” he said, noting that such kind of money will only come into the sector after policy alignment at regional level.
This, he said, will ensure adequate protections through an enhanced common external tariff structure to protect local producers from imported synthetic fabrics.

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