Cotton, textiles and apparel in Africa: Transforming the sectors to drive industrialization
Cotton, textiles, and apparel as case studies of regional value chains in Africa's industrial development
The African Continental Free Trade Area (AfCFTA), an African Union (AU) Agenda 2063 flagship project, is expected to promote regional value chains and foster transformative industrialization.
In 2023, the Council of African Trade Ministers requested the AfCFTA’s Trade and Industrial Development Advisory Council to conduct an in-depth review of the cotton, textile and apparel sector in Africa, identifying its constraints and policies for creating a dynamic and competitive sector.
The objective is to design a five-year strategic plan to be implemented within the AfCFTA Agreement, including by promoting regional value chains.
Part of the Advisory Council’s role is to provide strategic advice on various issues, including areas where negotiations have reached a deadlock, such as the Rules of Origin for textile and apparel products.
The AfCFTA has prioritized cotton, textiles and apparel regional value chains as one of the drivers of Africa’s industrialization agenda. This sector makes a substantial contribution to Africa's economic development, cultural identity, and worldwide influence.
UNESCO indicates that Africa has the potential to become the next global fashion leader. It is a significant producer of raw materials, with cotton being produced in 37 out of 54 countries. Africa exports textile products worth $15.5 billion annually and imports textiles, apparel, and footwear worth $23.1 billion annually.
Since the launch of the AfCFTA negotiations, African countries have completed negotiations in multiple protocols, paving the way for free trade across Africa. A critical challenge in the AfCFTA negotiations has been reaching an agreement on the Rules of Origin (RoO) for the cotton, textiles, and apparel sectors.
Rules of Origin are typically employed as a trade mechanism to ensure that value addition takes place within the free trade area and to inhibit the transshipment of commodities from a third country into a preferential trading zone.
The Advisory Council led a continent-wide consultation with private sector actors representing the different sections of the cotton, textiles, and apparel value chain and different countries and sub-regions in Africa. The Council put great emphasis on the views and perspectives of the private sector and their aspirations and vision for the sector.
In close cooperation with the AfCFTA secretariat and the Nelson Mandela School of Public Governance, the Council established three private sector led working groups, which revealed the need to formulate a five-year strategy that focuses on creating a competitive fibre-to-garment regional value chain.
This proposal was approved by the Council of African Trade Ministers in January 2023.
Subsequently, the working groups, closely consulting with the AfCFTA Secretariat, conducted several multi-stakeholder consultative workshops, organized into three thematic areas that address the challenges the private sector faces.
The first working group was tasked with formulating a regional value chain vision for textiles and apparel, aligned with domestic and global value development objectives, and attracting foreign direct investment.
The second working group was set to evaluate and enhance manufacturing capabilities and export competitiveness, focusing on investment, sustainability, technology and innovation.
The third working group concentrated on non-tariff barriers and Rules of Origin-related issues.
The working groups affirmed the potential for regional value chain development, supported by RoO that advance industrialization and Africa's economic development agenda. The working groups also emphasized the importance of designing RoO that effectively draws investments into vertically integrated value chains, while also being easy to implement and enforce, and ensuring equity and fairness for all parties involved.
The strategy will enhance policy space for implementing localization measures and regulating secondhand imports. Attention will also be given to the important role of Regional Economic Communities (RECs), including in the context of the implementation of the AfCFTA agreement, and the expansion of production platforms across a wider array of nations.
The strategy will also tackle environmental challenges stemming from poor waste management, inadequate treatment and recycling systems, insufficient investment in logistics infrastructure, technology, and productivity measures, as well as a deficiency in expertise and technical skills.
Additionally, the strategy will include standards and practices to mitigate false competitiveness while addressing logistics and foreign exchange shortages. It will also address the significant role of Industrial Parks as solutions to industrial infrastructure-related challenges facing potential investors.
Finally, the strategy will address national trade regulations to safeguard public health, security, and the environment, while being mindful of market access as well as mechanisms to address non-tariff measures in the African Continental Free Trade Area. The strategy will also consider that limited customs management capacity and fraud do not undermine the effective operation of the negotiated Rules of Origin.
Establishing a regional value chain in the cotton, textiles and apparel sector across the African continent will be a historic achievement for the continent and the implementation of the AfCFTA. It will inspire other potential regional value chains, in particular in agro-processing, pharmaceuticals and in critical minerals and electric batteries of the automotive industry.
