The Sunday News
Roberta Katunga Economic Focus
LIKE the rest of the country’s manufacturing industry, the textiles and clothing sector is struggling. According to the Zimbabwe Clothing Manufacturers Association (ZMCA), at its peak the clothing industry employed 35 000 people, a figure which has since declined to a measly 6 800 workers.The effect of this downturn is felt more so in the city that is now known as a ghost of its former self. Bulawayo, which is the heartbeat of Zimbabwe’s textile industry, is singing the blues after most firms collapsed under pressure from cheap imports, lack of investment as well as high operating costs.
Security Mills, Archer Clothing, Karina Textiles, Merlin among other former giants are all in intensive care or under judicial management while companies like David Whitehead have folded.
The picture painted by Finance Minister Patrick Chinamasa on the manufacturing sector in general is largely gloomy. Minister Chinamasa said the Government would treat the empowerment policy compelling foreign companies to sell controlling stakes to locals on a case-by-case basis through line ministries and that the 51/49 mix will remain an aspiration but not cast in stone after company closures left over 55 000 employees jobless since 2011.
The numbers are staggering. Chinamasa said in 2011; 2 130 companies closed and 19 191 workers lost jobs. In 2012; 1 464 companies shut down, leaving 20 825 employees jobless.
In 2013; 878 companies closed shop, rendering 14 499 jobless and so far this year, 134 firms have shut down, throwing 9 280 people onto the streets.
With such figures one is left wondering what the future holds. However, back to the textile industry there are slight flickers of light with reports of Paramount Garments takeover of Archer Clothing increasing production by 40 percent and creating at least 100 jobs. The terrible state of affairs in the sector is seen through the massive job losses. All the companies have one thing in common that they have to address — looking for external investors but there seems to be something inherently unattractive about the sector — there was never any retooling in line with changing technological trends.
What does this mean, one might ask. It means that a company cannot compete in the 21st century using 20th century technology. Any investor looking to invest in the sector will no doubt be put off by the huge capital requirements needed to retool the textile factories. It will actually be easier to come in with new equipment than try to upgrade the archaic machines.
The reason why this is an important factor to look at is due to the recent policy interventions announced by Minister Chinamasa for the clothing sector. The fiscal policy measures are of a tariff nature. However, the approach is not holistic. It is one thing to put up tariff barriers in a bid to protect the local industry but it is quite another to ensure the local industry can compete effectively. There is a need to deal with structural issues; the antiquated equipment.
Another major challenge is the fact that these companies are capital thirsty, they have severely limited access to capital and in cases where funds are available there is high cost. How then does a company compete with a borrowing interest of 15-20 percent against people from single digit interest rate regimes?
To add to the prevailing woes is the issue of power. Frequent power shortages disrupt production and push up costs as there are less production hours while costs such as wages remain constant.
What then needs to be done to address these challenges? As a country we need labour laws that allow for productivity linked wages. Our competitors like South Africa and China have flexible labour laws and countries like Lesotho have become a hub for major international manufacturers due to the lax labour laws.
There is a need for targeted concessionary funding like the Dimaf which would help ease pressure off funding for the firms.
The question that remains in relation to the textile and clothing industry is, do we accept the fact that some of the industries will not come back, a fact that was alluded to by Industry Minister Mike Bimha. Is it still worth fighting for a Zimbabwean textile industry or we just grow cotton and export it to countries such as China? Do we have the requisite resources to support a full-fledged textile industry? We need to introspect as a country and see how best we can help salvage what is left and attract foreign direct investment, which is cheaper, to help keep ourselves afloat or risk going under.
