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Nathan Associates Inc

Strategies for Mozambique's textile and apparel sector

Submitted by Nathan Associates Inc. (www.nathaninc.com) to USAID/Mozambique

Prepared by Peter Minor

March 2005

SARPN acknowledges the Development Experience Clearinghouse website as the source of this report: www.dec.org
[Download complete version - 246Kb ~ 1 min (20 pages)]     [ Share with a friend  ]

Strategy Overview

The textile and apparel industries encompass a diverse range of products and interdependant processes. The production chain includes fibers, yarns and filaments, and knit, woven, and non-woven fabrics. Making-up products—the final step in preparing textiles for consumption—involves cutting, sewing, and integrating accessories and trims for ready-made garments. Final goods include clothing and textiles for the home and industry. Because the apparel sector requires 3-5 times more labor than other activities, such as spinning, weaving, knitting, or dying, it generates the most jobs in unskilled manufacturing in the world. Development of the sector often marks the first step in industrial development. Like other light and medium manufacturing industries, the sector not only lifts large segments of the population from subsistence wages in the informal economy but also employs some of the most disadvantaged workers, such as young uneducated women with few other employment options.

In Mozambique, only 8 percent of the country’s 17 million people are employed in the formal economy. Though statistics are scarce, it is well known that apparel industry workers are often the sole earners in their households, in effect forming the essential component of the safety net that keeps many from sliding into deep poverty. It is therefore important to Mozambique’s long-term development that it tap the potential of its apparel sector. The sector is not only labor-intensive, but the value added by garment workers, even to imported fabrics and accessories, could have a greater impact on employment and the country’s trade balance than other activities in the textiles sector. Value added in the capital-intensive textile industry arises largely from the use of expensive, imported, machinery, spare parts, dyes, and chemicals as well as skilled foreign workers.

Mozambique’s textile and textile product industries have gone through enormous change in the past two decades. After emerging from a war-torn, centrally planned economy, most firms faced a shortage of working capital and spare parts—all of which had to be imported—as well as local markets of fewer than 18 million consumers, most with incomes well below the poverty line. Moreover, restrictive labor laws and poor local management resulted in productivity and quality levels “well below international standards” (Werner International, 1980). Substantial imports of used clothing underscored the limited means of most Mozambican consumers. Thus, local demand for new clothing and the productivity and size of the apparel industry could not sustain the capital investments that a competitive spinning, weaving, and finishing industry required simply to survive. Saddled with debt, rising labor costs attributable to new regulations and laws, and a centralized industrial strategy that put wealthy consumers in export markets beyond their reach, Mozambique’s textiles and apparel industries dwindled to a few small suppliers of local niche markets. Most firms were not able to meet the global economy’s high standards for quality, cost, and delivery or to meet the demands of free markets. Meanwhile, globalization was unabated. The recent elimination of textile and apparel quotas may have turned the industry into one of the world’s most globalized.

Globalization, though controversial, offers opportunities to produce and consume a wide variety of high-quality goods and services at the lowest possible cost. In the textile and apparel industries, large producers and retailers manage complex, efficient, and responsive production chains to meet consumer requirements for price, quality, and value. For example, production is increasingly carried out in different locations. Fibers are produced where climates, natural resources, and yields help producers meet expectations for quality and price. Fiber processing is determined by the needs of yarn-consuming industries, which needs vary by product, quality, and price requirements. Fabrics, in turn, are sold locally and globally. Apparel manufacturing is located where costs and trade preferences are desirable, and where buyer requirements for delivery, quality, and services can be met. A one-size-fits-all model does not exist.

To succeed, Mozambique’s industrial strategy for the buyer-driven textile and apparel sector s must capitalize on the sector’s natural advantages and globally competitive strengths, while aiming to meet the requirements of global markets, rather than the desires of the government, suppliers, or the public. The strategy must match Mozambique’s development objectives with market requirements to ensure practical, sustainable results. In addition, the national industrial strategy needs to encourage linkages to the textile value chain—from the cotton fields to ginning, yarn spinning, knitting, weaving, dying, and making-up products. In the near and medium-term, this means that the quality and yields of cotton crops must be improved so that high-yield, high-quality cotton can boost the competitiveness of the spinning industry for local, regional, and export markets. Improving cotton production not only complements strategies for agricultural and rural development but also can raise incomes and enable and encourage long-term integration of the textile and textile product value chains in a manner consistent with high-quality, sustainable investment, technological modernization, and a competitive cotton-to-garment industry. Exhibit 1 summarizes the strengths, weaknesses, opportunities, and threats facing Mozambique’s apparel and textile industries. Remaining sections of this paper present strategies for apparel and textile sector development.

Exhibit 1: Strengths, Weakness, Opportunities, and Threats (SWOT) Analysis - 106Kb ~ 1 min (1 pages)



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