ACTIF Report On Competitive Supply Side Analysis of CTA Sectors in - Kenya, Sudan, Tanzania and Uganda - Varun Vaid - 2011

COMPETITIVE
SUPPLY SIDE ANALYSIS OF COTTON, TEXTILE & APPAREL

SECTORS IN EAST AFRICAKENYA, SUDAN, TANZANIA AND UGANDA
DatePrepared:March2011
Preparedby:
Mr.VarunVaid
WazirAdvisors
Email:varun.vaid@wazir.in
WithSupportfrom:
Table of Contents
Acknowledgement........................................................................................................................................5
Abbreviations................................................................................................................................................6
ExecutiveSummary.......................................................................................................................................8
1.
ProjectBackgroundandObjective......................................................................................................17
2.
ProjectMethodologyandTimeline....................................................................................................19
2.1.
Methodology.........................................................................................................................19
2.1.1.
IndustryMapping..........................................................................................................19
2.1.2.
InterpretationandAnalysis...........................................................................................21
2.1.3.
StrategyFormulation....................................................................................................22
2.1.4.
FinalReport...................................................................................................................22
2.2ProjectTimeline..........................................................................................................................22
3.
CountryLevelAnalysis........................................................................................................................23
3.1.
Kenya.....................................................................................................................................23
3.1.1.
CountryOverview.........................................................................................................23
3.1.2.
Cotton,TextileandApparelSectorOverview...............................................................23
3.1.3.
ValueChainAnalysis.....................................................................................................25
3.1.4.
SectorCompetitiveness................................................................................................35
3.1.5.
ForeignTrade................................................................................................................38
3.1.6.
SWOTAnalysis...............................................................................................................41
3.1.7.
Recommendations........................................................................................................43
3.2.
Sudan....................................................................................................................................45
3.2.1.
3.2.2.
3.2.3.
3.2.4.
3.2.5.
ForeignTrade................................................................................................................55
3.2.6.
SWOTAnalysis...............................................................................................................58
3.2.7.
3.3.
Tanzania................................................................................................................................61
3.3.1.
3.3.2.
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3.3.3.
3.3.4.
3.3.5.
ForeignTrade................................................................................................................75
3.3.6.
SWOTAnalysis...............................................................................................................78
3.3.7.
3.4.
4.
5.
6.
Uganda..................................................................................................................................83
3.4.1.
3.4.2.
3.4.3.
3.4.4.
3.4.5.
ForeignTrade................................................................................................................95
3.4.6.
SWOTAnalysis...............................................................................................................99
3.4.7.
Recommendations......................................................................................................101
RegionalLevelAnalysis.....................................................................................................................103
4.1.
Snapshot.............................................................................................................................103
4.2.
ValueChainAnalysis:Summary*........................................................................................105
4.3.
CostComparison.................................................................................................................105
4.4.
SWOTAnalysis.....................................................................................................................106
4.5.
KeyIssuesandRecommendations......................................................................................109
BenchmarkingandRecommendations.............................................................................................113
5.1.
CottonProductivity.............................................................................................................113
5.2.
FiberContamination...........................................................................................................122
5.3.
ValueAddition.....................................................................................................................125
5.4.
TechnologyLevel.................................................................................................................129
5.5.
Logistics...............................................................................................................................131
5.6.
PowerScenario...................................................................................................................132
5.7.
BusinessFinancing..............................................................................................................134
5.8.
SupplyChainLinkages.........................................................................................................136
5.9.
TrainingandEducation.......................................................................................................139
5.10.
MarketDevelopment......................................................................................................142
5.11.
InvestmentPromotion....................................................................................................144
5.12.
GovernmentSupport......................................................................................................148
ProposedInterventions....................................................................................................................150
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6.1.
ClusterDevelopment..........................................................................................................150
6.1.1.
Objective.........................................................................................................................150
6.1.2.
Broadcontoursoftheintervention................................................................................150
6.1.3.
Implementationframework............................................................................................150
6.1.4.
Impact.............................................................................................................................150
6.1.5.
CostEstimate..................................................................................................................150
6.2.
TrainingProgram.................................................................................................................151
6.2.1.
Objective.........................................................................................................................151
6.2.2.
6.2.3.
Impact.............................................................................................................................151
6.2.4.
CostEstimate..................................................................................................................151
6.3.
UpgradationofEducationInstitutes...................................................................................152
6.3.1.
Objective.........................................................................................................................152
6.3.2.
6.3.3.
6.3.4.
Impact.............................................................................................................................152
6.3.5.
CostEstimate..................................................................................................................152
6.4.
CreatingvariousNetworkingPlatforms..............................................................................153
6.4.1.
Objective.........................................................................................................................153
6.4.2.
6.4.3.
6.4.4.
Impact.............................................................................................................................153
6.4.5.
CostEstimate..................................................................................................................153
6.5.
InvestmentSupportScheme...............................................................................................154
6.5.1.
Objective.........................................................................................................................154
6.5.2.
6.5.3.
6.5.4.
Impact.............................................................................................................................154
6.5.5.
CostEstimate..................................................................................................................154
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Acknowledgement
This report has been prepared collectively by Intertek (Mauritius) and Wazir Advisors (India),
coordinatedbytheofficeofAfricanCottonandTextileIndustriesFederation(ACTIF)andfundedby
CentrefortheDevelopmentofEnterprise(CDE).Thisreportistheoutcomeofprimaryandsecondary
researchcarriedoutinKenya,Sudan,UgandaandTanzaniaduringApriltoJuly2011.
The team is grateful to CDE for sponsoring the study and giving the opportunity to work on the
initiative. We thank Mr. Rooben Mooteeveeren (Operations Officer, CDE) and Mr. Jaswinder Bedi
(Chairman,ACTIF&KAM)forparticipatingintheinterimreportpresentationsandmakingvaluable
recommendations.WearealsothankfultoACTIFforprovidingcontinuoussupportthroughoutthe
project.
Important contributions were received from the external consultants appointed by ACTIF member
associationsineachofthetargetcountries,viz.ACTIFinKenya,TanzaniaCottonBoardinTanzania,
SudanCottonCompanyLtd.inSudanandUgandaTextilesandGarmentManufacturersAssociation
in Uganda. The report also draws from a number of studies and reports conducted by various
government and nongovernment organizations and individuals regarding the Cotton, Textile and
Apparelsectorintargetcountries.
We would also like to acknowledge the inputs provided to us by about 100 industry stakeholders
during primary research work in target countries covering ginners, spinners, textile mills, garment
manufacturers, associations, support institutes, government bodies, etc. without which the report
wouldnothaveaccomplishedthestudyobjectives.
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Abbreviations
ACTIF
AGOA
ASAL
Bn
BPA
CAGR
CDE
CDO
CODA
CSR
CTA
CTDP
EAC
ECGA
ELS
EPA
EPZ
EPZA
EU
FOB
FOT
FBGs
GDP
GM
GOT
IARI
ICA
IMF
IRCC
KAMEA
KARI
KEBS
KEPHIS
LDC
LZARDI
MAAIF
Mn
MT
MTTI
MUB
MFPED
NAADS
Page6of154
AfricanCottonandTextileIndustriesFederation
AfricanGrowthOpportunityAct
AridandSemiAridLands
Billion
BukalasaPedigreeAlbar
CompoundedAnnualGrowthRate
CentrefortheDevelopmentEnterprise
CommonDevelopmentOrganization
CottonDevelopmentAuthority
CorporateSocialResponsibility
Cotton,TextileandApparel
CottonandTextileDevelopmentProgramme
EastAfricanCommunity
EasternCottonGrowingArea
ExtraLongStaple
EconomicPartnership
ExportProcessingZones
ExportProcessingZoneAuthority
EuropeanUnion
FreeonBoard
FreeonTruck
FarmerBusinessGroups
GrossDomesticProduct
GeneticallyModified
GinningOutTurn
IlongaAgriculturalResearchInstitute
InternationalCottonAssociation
InternationalMonetaryFund
IndustrialResearchandConsultancyCentre
KenyaApparelManufacturersandExportersAssociation
KenyaAgriculturalResearchInstitute
KenyaBureauofStandards
KenyaPlantHealthInspectorateService
LeastDevelopedCountry
TheLakeZoneAgriculturalResearchDevelopmentInstitute
MinistryofAgriculture,AnimalIndustryandFisheries
Million
MetricTones
MinistryofTourism,Trade,andIndustry
ManufacturingUnderBond
MinistryofFinance,Planning&EconomicDevelopment
NationalAgriculturalAdvisoryServices
NACRRI
NaSARRI
NARO
NCSF
NEMC
NGO
NPT
R&D
RLDC
RVP
SADC
SATU
SCCL
SCIA
SEZ
T&A
TBS
TCA
TCB
TEMAU
TOSCI
TPRI
UDC
US
USAID
USD
WCGA
NationalAgriculturalCropResourcesResearchInstitute
NationalSemiAridResourcesResearchInstitute
NationalAgricultureResearchorganization
NationalCottonStakeholdersForum
NationalEnvironmentManagementCouncil
NonGovernmentOrganization
NationalPerformanceTrial
ResearchandDevelopment
RuralLivelihoodsDevelopmentCompany
RiverValleyProject
SouthAfricanDevelopmentCommunity
SerereAlbarTypeUganda
SudanCottonCompanyLimited
SudaneseChambersofIndustriesAssociation
SpecialEconomicZones
TextileandApparel
TanzaniaBureauofStandards
TanzaniaCottonAssociation
TanzaniaCottonBoard
TextileManufacturerUganda
TanzaniaOfficialSeedcertificationinstitute
TropicalPesticidesResearchInstitute
UgandaDevelopmentCorporation
UnitedStates
UnitedStatesAgencyforInternationalDevelopment
UnitedStateDollar
WesternCottonGrowingArea
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ExecutiveSummary
African Cotton and Textile Industries Federation (ACTIF), which is a not for profit regional
industry/tradebody,withthesupportofCentrefortheDevelopmentofEnterprise(CDE),proposed
togetacomprehensivesupplysideanalysisdonefortheCotton,TextileandApparelsectorof4East
Africa countries Kenya, Sudan, Tanzania and Uganda. Intertek (Mauritius) and Wazir Advisors
(India) as a consortium were selected through a competitive bidding process as Consultants to
conductthisstudy.
Thepurposeofthestudyistoanalysetheexistingsupplychain,identifypotentialregionalstrengths
(productemphasis)andweaknesses,identifygapsintheinstitutionalstructuresandcommunication
channels and make recommendations for promoting the sector. Another major objective of the
study is to provide a source of information for buyer/seller matchmaking to grow exports and
encourageregionalintegration.
The project involved a combination of primary and secondary research, data analysis and
interpretation, which was followed by strategy formulation. Primary research was conducted in
targetcountriesofKenya,Uganda,TanzaniaandSudanwiththeassistanceoflocalconsultants.The
discussions with various stakeholders were held using the structured questionnaires and/or
discussionguides.
After completion of the primary and secondary research, the data was collated and analysed to
presentanoverallpictureatthecountryandregionallevel.Inadditiontoprovidingfactualindustry
trends and insights, we have also presented our own interpretation, recommendations & key
insightsaboutthesector.Onthebasisofcollectedfactsandfigures,wehaveanalysedandbrought
outtheunderlyingreasonsforissuesandrecommendedstrategiestoaddressthesame.
Findingsofeachofthecountrieshavebeensummarisedbelow:
1. Kenya
Cotton sector in Kenya is characterized by a large number of small holder farmers in the Eastern
zonecomprisingCoastal,EasternandNortheasternregionsandWesternzonecomprisingNyanza,
RiftValleyandotherwesternregions.Cottonexportsfromthecountryarealmostnegligible;rather
mostofthedomesticrequirementsaremetthroughimportofcottonfromneighbouringcountries
likeTanzaniaandUganda.
Domesticspinningandweavingcapacitieshavereduceddrasticallyfrom~52millsin1983toabout
6 mills currently. This is due to the failure of countrys cotton sub sector, large scale imports of
intermediate products as well as imports of second hand clothing, high production cost and poor
infrastructure.
ThegarmentsectorofKenyaisprincipallydrivenbyexportstotheUSundertheAfricanGrowthand
OpportunityAct(AGOA)initiative.Thereare~170largescalegarmentmanufacturingunitsoperating
inKenyatoday.In2010,garmentsectorremainsthedominatedsectorinEPZwhichconstituted29%
ofallEPZenterprises,78%oftotalEPZlocalemployment,56%ofEPZexports,52%oftotalEPZsales
and30%ofallEPZprivateinvestment.
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CountrystradedatashowsthatKenyahasbeenanetimporterinT&Asectorsince2005.Shareof
T&A exports incountrys totalexports havedeclined gradually from ~11% in2005 to ~6% in 2009
andshareofT&Aimportsincountrystotalimportshavedeclinedfrom~17%in2005to~7%in2006
and it is consistently at ~7% thereafter. Kenyas exports consist of Women's woven suits, jackets,
knitted jerseys, pullovers whereas imports constitute worn clothing and woven fabric of synthetic
filamentyarn.USAistheleadingmarketforKenyawhereasChinaistheleadingsupplier.
Major challenges faced by the industry include high costs of doing business related to power and
fuel.Theexistingcostsofborrowingarealsoveryhighat~1618%whichmakes itdifficultforthe
sectortobearhighcosts.Inaddition,theformalitiesforloanapprovals,requirementsforcollaterals
and other documentation are also intense. Current machineries / technology in use are very
outdatedinthetextilesector,whichfurtheraddstothecostsofmanufacturing.Sectoriscurrently
facing lack of new investments for upgrading technology. There are huge imports of second hand
clothesinthecountrywhichisposingabigthreattotheeconomy.
Thereisahugerequirementofenhancingtheskillsofpeopletoincreasetheirefficiencylevels.The
current infrastructure provides for few such institutions which have limited capacities. There is a
significant need to promote training institutions and support such programs with necessary
infrastructureandtrainalargenumberoftraineeseachyearinlinewiththesectordemand.
Thereisalotofscopeformakingvalueaddedproductsparticularlyfortheexportmarketssuchas
addingembroidery,sequins,otherstyle/designelements.Thiswillbringinincrementalrevenueto
thesectorandwillalsoleadtomoreemploymentcreationandskillenhancement.
2. Sudan
Cottonprovidesanimportantlivelihoodforanestimated200,000cottongrowersandtheirfamilies,
inadditiontoemployingseasonallabourduringharvesttime.CottonisgrowninSudanunderboth
irrigated and rainfed modes of production. The majority of Sudans extralong staple cotton is
grown in theGezira irrigation scheme.Whilethe scheme isgovernment managed,tenant farmers
decidewhichareasandvarietiestoplant.Inrecentyears,morethanhalfofSudanscottonexports
havebeenBarakat,whichrequiresalongergrowingseasonbutearnsmoreatexport.
CountrysoveralltradestatisticsshowthatSudanwasanetimportertill2006butin2007exports
surpassed imports andthesametrendwas seentill 2009.The CTA sector exportshavedecreased
since2005fromUS$0.08bntoUS$0.03bnin2009.ShareofCTAexportsincountrystotalexports
also declined from 1.5% in 2005 to 0.4% in 2009. On the other hand CTA imports have witnessed
increasefromUS$0.27bnin2005toUS$0.42bnin2009,thusregisteringacompoundedgrowthof
12%. Share of CTA imports in countrys total imports has increased from 4.4% in 2005 to 6.1% in
2009.
Cotton fiber accounts for almost 98% of Sudans CTA exports whereas imports constitute Mens
woven suits, jackets, womens knitted suits, dresses, etc. Egypt is the leading market for Sudan
whereasChinaistheleadingsupplier.
The major challenges faced by the industry are closure of large capacities, high cost of doing
business and low utilization of manufacturing capacity and unavailability of finance. Technology is
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anotherkeyareaofconcernwhichneedsupgradingtoenhancethecompetitivenessoftheoverall
textileindustry.Mostofthecottonproducedisexportedoutofthecountry.Farmershaveshifted
fromcottontoothercropsinlastfewyearsasaresultofexistinglowpricesandlessdemandatthat
time. This resulted in significant decrease in area under cotton cultivation and hence the cotton
production.
3. Tanzania
CottoninTanzaniaisgrownmainlyonsmallscalefarmsbywhoownbetween0.5to10acresand
grow mostly in the rain fed areas. Major production areas are the Western Cotton Growing Area
(WCGA) and the Eastern Cotton Growing Area (ECGA). WCGA accounts for over 98% percent of
production. Cotton production in Tanzania is largely meant for exports. Major importers of
Tanzanias cotton are China, Indonesia, Thailand, Kenya, Portugal, Bangladesh, Vietnam and
Pakistan.Initiativeshavebeentakentointroducecontractfarmingtopromotetheindustry.
The Tanzanian textilesectorconsistsoftwo standalonespinning mill and several integrated firms.
Theindustryspinsmostlycottonyarnsforbothknitandwovenfabric.Afewfabricmillsconcentrate
inmakingwovenprintedwomenkhangaandkitenge;aswellasyarndyedwovenkikoifabrics,bed
linenandhometextiles.MostofthesetraditionalfabricsaresoldinTanzania;afewexportedinthe
surroundingcountries;andlimitedamountsintosomeoftheislandstatesofftheeastAfricancoast.
Tanzaniaistheworlds2ndlargestsisalproducer.Tanzaniahas anumberofsisalprocessorswhich
spin/weavesisalandmakeproductssuchassacks,ropes,twines,mats,etc.
Countrys trade data shows that Tanzania is a net importer in CTA sector, with net imports
amountingtoUS$0.23bn.CTAexportshaveslightlyincreasedsince2005fromUS$0.16bntoUS$
0.17bn.However,shareofCTAexportsincountrystotalexportshavedeclinedgraduallyfrom11%
in2005to8%in2009.Tanzaniamainlyexportscottonfiberandhomefurnishingwhereasimports
constitute worn clothing and woven fabric of synthetic filament yarn. Kenya and India are the
leadingmarketforTanzaniawhereasChinaisamajorsuppliertothem.
Majorchallengesfacedbytheindustryaretoomanydisruptionsinthepowersupplywhichleadto
increased costs for the manufacturers. The borrowing costs for the sector are relatively high at
~15%. So, it becomes highly unaffordable for the manufacturers to borrow from the banks. The
technologycurrentlyinuseishighlyoutdatedinallareaslikeginning,spinningandweaving.Many
mills have lot of dysfunctional machineries which is just lying with them for many years. There is
huge requirement of modern technology and training people to operate these machineries, to
improve productivity in the sector. There are huge imports of second hand clothes in the country
whichisposingabigthreattotheeconomy.Thepresentlegalframeworkisnotstrongenoughto
preventthispractice.
The present workforce lacks the requisite skills and training to do the required job. There is
requirement of skilledworkers especially in areas likeefficient farm practices,weaving and textile
manufacturing. There is a huge requirement of enhancing the skills of people to increase their
efficiency levels. The current infrastructure provides for very few such institutions with limited
capacities and has few enrolments for the training facilities. There is a need for promoting these
institutions(newandold),supportthesewiththenecessaryinfrastructureandchurnoutlargeno.of
traineeseachyear.
Page10of154
Tanzaniahaslimitedvalueaddedservicesand80%ofthecottonproducedinthecountryisexported
withoutanyvalueaddition.Countryoffershugescopeforintroductionofvalueaddedservicesbut
requiresadditionalmanufacturingfacilityforthat.
4. Uganda
InUganda,cottonisgrowninnearlyeverypartofcountyandisentirelyrainfed.It isgrownona
regularbasisbyover10,000farmers.Over90%ofcottonisexportedrawoutof.UgandasCottonis
among the most commonly produced and traded cotton variety in the world and belongs to the
speciesGossypiumbirsidum,accountingfor75%ofworldtrade.
In Uganda, textile firms are mostly small or mediumsized. Mostly the capacities remain
underutilized. These mills produce both clothing and cloth for sale on the local market. Most
Ugandan textile mills do not produce large volume fabric orders, but rather concentrate on
producingsmallrunsofavarietyoffabrics.Ugandasapparelsectorlargelyconsistsofsmall,locally
ownedcompanies thatproduceapparel and uniforms fordomestic andregional markets.Mostof
theseapparelproducersusesdomesticallyproducedyarnorfabric,ortheyimportfromAsia.
CountrystradedatashowsthatUgandaisanetimporterinCTAsector,withnetimportsamounting
toUS$0.09bn.CTAexportshavedeclinedsince2005fromUS$0.06bntoUS$0.03bn.CTAimports
have witnessed increase from US$ 0.07 bn in 2005 to US$ 0.12 bn in 2009, thus registering a
compoundedgrowthof15%.ShareofCTAimportsincountrystotalimportshasconsistentlybeen
at 5%. Cotton fibre accounts for 81% of Ugandan CTA exports whereas it imports mainly worn
clothing and twines, cords. China is the biggest supplier to Uganda whereas the biggest export
marketisIndonesia.
Major challenges faced by the industry include high energy rates, while reliability of electricity
service is also an issue. Also since the region is land locked, firms have to incur high internal and
externaltransportcosts.Textilesectormanagestoborrowfundsataveryhighfinancerateranging
between1824%.Technologyandlackofskilledworkforceareotherareasofconcernwhichneeds
tobeaddressedtoenhancethecompetitivenessoftheoveralltextileindustry.
RegionalLevelAnalysis
Kenya,Sudan,TanzaniaandUgandatogetheraccountforsignificantquantitiesofcottonproduction.
Thisissufficienttonotonlymeetthedomesticrequirementsbutalsoexportsignificantquantities.
Thecottonindustryhasbeenoneofthekeyareasinthesecountriesandsignificantpopulationhas
beendependantonthesectorformorethanacentury.
These regions enjoy preferential market access and their products can enter most of the worlds
richereconomiesfreeofanycustomsdutiesandwithlimitedquotarestrictions.Someofthetrade
agreementsthesecountrieshavesignedupforpreferentialmarketaccessincludesAfricanGrowth
and Opportunity Act (AGOA), Economic Partnership Agreement (EPA) with EU, East African
Community(EAC)andothers.
However, the industry suffers due to the use of outdated technologies particularly in ginning and
textilemanufacturing.Thesectorisdominatedbysmallholderproducerswithlimitedknowledgeon
crop and farm management practices, price and market trends, input procurement and supply
trendswhichresultsinlowcottonyield.Thereareissueswithregardtothequalityofcottonasit
Page11of154
has high contamination. The cost of doing business including high power costs and/or inadequate
power supply and high costs of borrowing. Bankers are quite reluctant to lend loans to the CTA
sector. Large scale import of second hand clothing has crippled the development of domestic
market. Emergence of alternative cash crops, which are cheaper to grow but fetch higher returns
thancottoninthemajorcottongrowingareas,arealsoathreatforthesector.
Benchmarking
Thefourtargetcountriesarecomparedwiththeleadingcountriesandbenchmarkedonsomeofthe
key parameters relevant for the industry. The idea is to understand worldwide best practices or
some of the key initiatives undertaken by these countries to promote their respective industries.
Theseindicatorsinclude:
1. CottonProductivity
Kenya, Tanzania, Sudan and Uganda all have cotton productivity far less than the world average.
Mostofthelargecottonproducersgloballyhavebetterproductivitylevelsthanthese4countries.
Australiahasthehighestcottonyieldintheworld.About85%ofcottonareainAustraliaisirrigated,
whichpartlyexplainswhytheaveragecottonyieldishigh.Apartfromfertilesoilandafavourable
climate, the high yields are a result of the national cotton breeding program and better farm
managementpractices.
2. FiberContamination
ITMFscottoncontaminationsurvey2009showsthatamongthetargetcountries,contaminationisa
major issue with Sudanese cotton whereas Ugandan cotton is the better one. Degree of
contamination varies a lot with growing area and farm practices. In general, cotton from India,
Pakistan,SyriaandsomeAfricancountriesareknowntohavehighercontaminationlevelthanthe
world average, whereas cotton varieties of Australia, Brazil, China, Mexico and USA possess
minimumcontamination.
The major reasons for contamination are lack of awareness of the importance of reducing
contamination,absenceofQCprocedures,manualpicking,dirtystorageenvironment,useofpoly
propylene(PP)andjutebagsorwrappings,poorsupervision,improperginningprocess.
3. Valueaddition
MostofthecottonproducedinTanzania,SudanandUgandaisexportedoutofthecountryinraw
form. A major reason behind this is the absence of sufficient manufacturing capacities in the
countriestoconsumecotton.InKenya,thecottonexportsarenil,butthecottonproductionvolume
thereisalsolow.
Most of the large cotton producing countries have established capacities to consume maximum
cottonwithintheirowncountries.Valueadditionopportunityislostbyexportsofrawcotton,italso
losesoutoncreationofextrajobsacrossthevaluechainspinning,weavingorknitting,dyeing&
processingandgarmenting.Fore.g.,Chinascottonexportshavedwindledsincethelastdecadeand
itisnowtheworldslargestimporterofcotton.
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4. Technologylevel
Theprimarysurveyconductedforthisassignmentinallthefourcountriesrevealedagenerallackof
modern technology machinery for textile manufacturing. The reason behind nonupgradation of
machinesislackofmajornewinvestmentsinthesector.
Manyoflargemanufacturingnationsaddressthisissuebyreducingtheeffectivecostofinvestment
thus encouraging the entrepreneurs to invest in the sector. For example in India, the flagship
schemeofMinistryofTextiles,knownasTechnologicalUpgradationFundScheme(TUFS)providean
interestsubsidyof5percentagepointsonthebankcreditformodernizationofginning,textileand
apparel companies. It also provides a capital subsidy of 10% or 25% on selected machinery for
processingandtechnicaltextiles.
5. Logistics
Intodays priceandtimesensitivemarkets,logisticsholdsthekeytomakeorbreakanexporters
position in its target market. The intercity connectivity from port to manufacturing locations in
target countries is satisfactory with lot of highway development happening all across. The issue
sometimes is of paperwork and hassles at border post (from Uganda to Kenya) and delays for
clearancesattheportsitself.
6. Powerscenario
Therearetwoaspectsrelatedtopowerscenarioofacountrycostofpowerandqualityofpower.
Intermsofcostofpower,itisquitecompetitiveinTanzaniawhereascostsinKenyaarethehighest
amongstthetargetcountries.ThequalityofpowerwasreportedsatisfactoryonlyinKenya;whereas
inothercountriestheavailabilitywaserraticandfluctuationswerecommon.
Themodelfollowedbysomeofthecountriestopromotecaptivepowergenerationtoimprovethe
power scenario is allowing manufacturers to produce, say hydrobased power at one place in the
country, sell it to the maingrid andpurchase at its manufacturing location atsamecost. Similarly
some countries promote alternative power sources like windmills by providing appropriate
incentivese.g.subsidies,accelerateddepreciation,taxexemption,etc.
7. BusinessFinancing
Highcostcoupledwithlowavailabilityofbusinessfinancingisoneofthemajorissuesintheregion
thathasresultedinlowinvestmentinCTAsector.
The rate of interest charged by banks is more related to the macroeconomic environment of the
countryandpolicies.TheeffectiveratestoanysectormayhoweverbereducedbytheGovernment
byidentifyingitasaprioritysegmentandprovidinginterestsubsidiesonloansofferedbybanksto
businessesinthatsector.
8. Supplychainlinkages
Kenyahasastronggarmentmanufacturingcapacitybutnobackwardlinkageswithinthecountryto
supportit. Uganda andSudanproduces cotton,but lacks furtherdownstream processes.Tanzania
hassomecapacitiesfromcottontofabrics,butlacksvalueadditionintermsoffabrictypeaswellas
garmentconversion.
Page13of154
Forcountrieswhere substantialbenefits forexportsare available,itbecomes importanttohavea

complete supply chain as buyers prefer integrated supply bases. Importing yarn or fabric leads to
highercosts,higherleadtimeandlossofemploymentopportunity.
9. TrainingandEducation
Cotton,TextileandApparelsectorisoneofthelargestemploymentprovidersindevelopingnations.
Thesectorhaspotentialtoemploymanpowerinsignificantquantumspecificallyatthestartofvalue
chain(farmingandginning)andtowardstheend(apparelmanufacturing).
CountrieslikeIndiahavepaidspecialattentiontothisaspectandhavebuiltupastrongeducation
infrastructure,andalsohavelaunchedseveralcapacitybuildingprograms.Therearealsoahostof
schemeslaunchedbyvariousarmsofGovernmentfordevelopmentofskillsrequiredinthetextile
sector.
10. Marketdevelopment
The domestic market in all the target countries is dominated by imports of yarn, fabrics, finished
goodsandsecondhandclothing(exceptinSudan).
Fordevelopmentofexportsmarket,itisimportanttoshowcasetheproductrange,manufacturing
capacities, etc. to buyers who have not yet made inroads in the region. Such buyerseller meets /
programsarerunallovertheworldbytradeandgovernmentbodies.Forexample,inIndiathereare
10exportpromotioncouncilsinCTAsector,entrustedwithexportmarketdevelopmentofspecific
products.
11. InvestmentPromotion
Promotionofinvestmentsfromdomesticandforeigninvestorsisamustforeverycountry.Allthe
target countries have investment promotion cell/department but these are not specific to CTA
sector, such as Kenya Investment Authority (Kenya), Ministry of Investment (Sudan), Tanzania
InvestmentCenter(Tanzania)andUgandaInvestmentAuthority(Uganda).
The initiatives undertaken by leading textile and apparel manufacturing nations to promote the
sectorincludesorganisingInvestorSummitandinvitinglargescaleparticipation,allowing100%FDI
inthesectorthroughautomaticroute(withoutpreapproval),improvinginvestmentclimatethrough
administrativestreamlining,etc.
12. Governmentsupport
Government support in the target countries is very limited than what it should have been as the
sectorisofthestrategicimportancetothecountryaswellasregion.
SpecificsupporttotextilesectorisprovidedbygovernmentsinChina,India,BangladeshandTurkey
largely in the form of providing suitable infrastructure, incentives for investments in the sector,
incentives for promoting exports, marketing support, single window clearance system, trade
agreementswithmajorsuppliersandbuyers,supportingresearchanddevelopmentactivities,etc.
However, in order to implement any intervention successfully, the utmost importance is of
establishingstronginstitutionsinthecountrytopromote,planandmonitorthesectorgrowth.Inan
idealscenario,followingshouldbetheinstitutionalframeworkforimplementingvariousinitiatives:
Page14of154

Recommendations:
Listed below are some of the strategic issues which need to be addressed keeping in mind the
relativestrengthareasof eachcountryandtheCTAsector.Followingrecommendations aremade
forimproving/strengtheningtheCTAsectorperformance:
S.no. Objectives
Improvefarmpractices
Createawarenessamongfarmers
Increasingcotton
SupportR&Dcentersforintroducinghighyieldingseeds
qualityandyield
Promotecontractfarmingonalargerscale
Offermoreextensionprogrammes
Exercisestringentqualitycontrolsattheginninglevel
Regionhasabundantcottonsupplybutthedownstreamindustriesi.e.
Promotingvalue
textileandapparelmanufacturingarelimited.
additioninthe
Valueadditioninthesectorshouldbepromotedbyproviding:
sector
Supportschemes/fiscalincentivesonvalueaddition
Promotingclustersfordoingvalueaddition
Interestsubsidiesshallbeprovidedforupgradingmachineriesor
Supportfor
installingnewmachineries
modernizationand Textile&ApparelsectorshallbeclassifiedasPrioritysectorand
capacityexpansion
thus,increasedlendingtothesectorshouldbeaprimefocus
EstablishJVswithinternationalpartners
Introduceschemesfortrainingandskilldevelopmentandcreateafund
forimplementingtheschemewhichwillaid:
Improvingskillsof
peoplethrough
Establishingnewtrainingcenters
adequatetraining
Establishingnewtrainingprograms
Strengtheningexistingtrainingcenters
LinkingexistingcenterswiththeIndustry
Promoteeducation Establishnewcollegesfortextiles
inthefieldof
LinkexistingcenterswiththeIndustry
textiles
Updatecoursecurriculumregulatoryasperindustryrequirements
Page15of154
Recommendations
Tieupwithotherinternationalcollegesforstudent
exchange/knowledgeexchangeprograms
Adoptclusterbaseddevelopmentapproachwheresuitable
infrastructureisprovidedtotheunitsoperatingwithinthoseandat
reasonablecosts
Variousclustersshouldbeidentifiedbydoingadetailedstudyand
thenpromotedasTextile&Appareldistrictswithintheregion
Improveexisting
infrastructureand
rationalizecostsof
doingbusiness
Initiativesto
promotedomestic
market
development
Phaseoutsupplyofsecondhandclothingfromthemarketthrough
appropriatepolicyinterventions
Developamechanismtoregulateflowofcottontodomestic
market
Investment
promotion
activities
OrganizeMegaTradeshowintheregionshowcasingbusiness
opportunitiesincottonandtextilesectorandfacilitatingbuyer
sellermeets
Page16of154
1. ProjectBackgroundandObjective
Thecotton, textile andclothing exports from theEast African nations(Kenya,Uganda,Tanzania &
Sudan)intotheEUmarketarealmostnegligibledespitethepotentialoftheregionandtheexistence
oftradeagreementsbetweenEUandtheseEasternAfricancountries.
TopromotetradeinCotton,Textile&Apparel(CTA)sectorbetweenEastAfricanregionandtheEU,
the African Cotton and Textile Industries Federation (ACTIF), which is a not for profit regional
industry/tradebody,withthesupportofCentrefortheDevelopmentofEnterprise(CDE),proposed
to get a comprehensive supply side analysis done for the CTA sector of above mentioned four
countries.
Thestudyaimstoaccomplishfollowingobjectives:
a) Provide a source of information for buyer/seller matchmaking to grow exports and
encourageregionalintegration.
b) Monitorgrowth(exports/employmenttrends).
c) Identifypotentialregionalstrengths(productemphasis)andweaknesses.
d) Identifygapsininstitutionalstructuresandcommunicationchannels.
e) Provide a base for encouraging optimum use of existing R&D and Training facilities within
theregion.
f)
Explore the status and potential for each country to explore niche segments in the EU
marketthroughfairtrade&biocotton(organic)orequitablecottonproduction.
Asaresultofthisintervention,ACTIFwillbeempoweredtoprovidebetterservicestoitsmembers
andencouragetradelinkagesofAfricawiththeEUMarket.Thisincludes:
I.
AssistancetoACTIFtoupdatethesupplysideinformationfordevelopinglinkageswiththe
prospectivebuyersregionallyandinternationally.
II.
ACTIF will benefit by increasing its membership and developing linkages with potential
regionalandEUmarketbuyerswithaninteresttoimportfromitsmembers.
III.
A comprehensive sector analysis report will help ACTIF to advise government and other
agenciesontheneedstodevelopexports.
IV.
Assist ACTIF to generate a sustainable plan for the growth of fiber to fashion value chain
throughPrivatePublicPartnerships(PPP).
V.
ACTIFmembersstandtobenefitfromasectorsupplysideanalysiswhichwillestablishthe
shortcomingsoftheexistingsuppliersandidentifytheneedsforupgradationfortheplants
and machinery as well as capacity building to be able to access regional and international
markets.
Page17of154
VI.
ACTIF members with a potential of increasing their exports or developing exports would
benefitbyunderstandingthedemandandtheprocedurestoentertheEUmarket.
VII.
The Supply Side Analysis Report will identify the gaps in institutional structures,
communicationchannels&competitiveness.
VIII.
The report will also provide a base for encouraging optimum use of existing R&D and
Trainingfacilitieswithintheregion.
IX.
The report on Fair trade & bio cotton (organic) or equitable cotton production will enable
ACTIFtodrawuprecommendationstoitsmembersforexploitingthenichesegmentswithin
theEUmarket.
Intertek(Mauritius)andWazirAdvisors(India)asaconsortiumwereselectedthroughacompetitive
biddingprocessasConsultantstoconductthisstudy.TheConsultants,withtheassistanceofACTIF,
further appointed local consultants in each of the target countries to conduct deeper research in
theseregions.
Page18of154
2. ProjectMethodologyandTimeline
2.1. Methodology
Theprojectinvolvedacombinationofextensiveprimaryandsecondaryresearch,dataanalysisand
interpretationbasedonthefollowingworksteps:
Figure1:ProjectMethodology
2.1.1. IndustryMapping
A comprehensive mapping of the CTA sector in each of the four countries was done through
extensiveprimaryandsecondaryresearchwork.Thedetailsareasfollows:
PrimaryResearch
PrimaryresearchwasconductedintargetcountriesofKenya,Uganda,TanzaniaandSudanwiththe
assistance of local consultants. The discussions with various stakeholders were held using the
structuredquestionnairesand/ordiscussionguides(includedinannexure).
The primary objective of these onetoone meetings was to understand the current industry
scenario,identifykeyissuestheindustryisfacingfromdifferentperspectives(fore.g.ginner,textile
mill,association,etc.),andidentifysomeofthekeyinitiativestakenbytheindustry,amongstothers.
Page19of154
Followingwasthetimelineforconductingprimaryresearch:
Kenya
Tanzania
Uganda
Sudan
18May
17May
16May
15May
14May
13May
12May
11May
10May
9May
8May
7May
6May
5May
4May
3May
2May
Country
1May
30Apr
Table1:PrimaryResearchTimeline
Inadditiontotheabovetimeline,localconsultantswereintouchwiththeindustrystakeholderson
continuousbasisfortheentiredurationoftheproject.Stakeholderinteractionalsohappenedover
phoneandemails,primarilyforfollowups.
Thecoverageofprimaryresearchwasasfollows:
Kenya
Sudan
Tanzania
Page20of154
Uganda
Bureauofstandards
Agricultureresearchinstitute
Cottonmerchant
Governmentbodies/ministries
Tradeassociation
University/Fashionschools
Fashionhouse
Tradezones
Cottonboard
Investmentpromotionauthority
Tradeunion
Garmentcompanies
Processhouses
Knittingcompanies
Spinners
Ginningunits
Country
Weavingcompanies
Table2:PrimaryResearchCoverage
SecondaryResearch
Anexhaustivesecondaryresearchwascarriedoutforthetargetcountries,EUmarketandleading
global T&A exporters by studying a large number of documents and databases available online or
otherwise,asmentionedinthesectiononsourcesofinformation.Thereviewofexistingliterature
alsoincludedcountry/issuespecificreportsprovidedbyassociationsintargetcountries.Thelistof
sourcesofinformationisincludedasannexure.
2.1.2. InterpretationandAnalysis
FactBasedAnalysis
The information and data collected through primary and secondary research was collated and
analyzed to present an overall picture at the country and regional level. In addition to providing
factual industry trends and insights, we have also presented our own interpretation,
recommendations&keyinsightsaboutthesector.
Benchmarking
ComparisonofCTAsectorofeachofthetargetcountrieshasbeendonewithothermajorexporters
(likeChinaandIndia)toseethedifferenceintermsof:
Policysupport
Marketingapproach
Manufacturingcapability
Technologylevel
R&Dinput
Productoffering
Pricing
Services
Growthenablersandinhibitors
Thevariousgrowthenablersandinhibitorsineachcountryareanalyzedanddiscussedinlengthin
respectivesections,covering:
Growthindemandoftextileproducts
ingloballyandEU
Concentration of textile production
activityincertainclusters
Fluctuationinrawmaterialprice
Adoption / emergence of new

technology
Competitionfromothernations
Partnership Change in regulatory
environment
DirectoryListing
Directorylistingofallthesignificantstakeholdersacrossthevaluechainhasbeendonecomprising
of ginners, spinning & weaving, processing, garmenting, etc. In addition to these, all the National
associations or other important stakeholders, such as Government Ministries/departments and
training/researchfacilitieshasalsoincludedinthedirectorylisting.
Page21of154
2.1.3. StrategyFormulation
Onthebasisofcollectedfactsandfigures,wehaveanalyzedandbroughtouttheunderlyingreasons
forissuesandprovidedstrategiestoaddressthesameatthecountrylevelandregionallevel.
2.1.4. FinalReport
ThefinalreportcontainingalltheinformationasspecifiedinTermsofReferencefortheassignment
andourrecommendationshasbeencompiledinreportformforsubmission.
Thereportisdividedintwosections:
SectionACTASupplySideAnalysisofTargetCountries
SectionBDirectoryListing
2.2ProjectTimeline
The assignment has been completed on time following the timeline as mentioned in the original
proposal,whichwas:
Table3:ProjectTimeline
Activity
Projectplanning
Secondaryresearch
Primaryresearch
DataCollationandAnalysis
Strategyformulation
FinalPresentation
Finalreportsubmission
Page22of154
March
April
May
Jun
July
3. CountryLevelAnalysis
3.1. Kenya
3.1.1. CountryOverview
Kenya is the regional hub for trade and finance in East Africa. Kenya's economy ismarketbased,
withafewstateownedinfrastructureenterprises,andmaintainsaliberalizedexternaltradesystem.
Thecountry'seconomicprospectsarepositivewithexpectedGDPgrowthof45%,largelybecause
ofexpansionsintourism,telecommunications,transport,constructionandarecoveryinagriculture.
The current size of Kenyan economy is US$ 32 Bn (2010, nominal GDP). The per capita GDP is
estimatedat ~US$ 888 (2010,Nominal). Theservicesectoristhe largestcontributortoeconomic
activity,contributing~62%totheGDP;dominatedlargelybytradehotelsandrestaurants,transport
andcommunications.
Figure2:EconomicSnapshot,Kenya
1,000
800
30
600
20
400
10
200
GDPpercapita(US$)
GDPinUS$bn
40
0
2000
2001
2002
2003
GDP(nominal)
2004
2005
2006
2007
2008
2009
2010E
GDPpercapita(Nominal)
Source:WorldEconomicOutlookDatabase,IMF
3.1.2. Cotton,TextileandApparelSectorOverview
CottonwasintroducedinKenyaintheyear1902byBritishColonialadministration.Intheyear1953,
CottonLintandSeedMarketingBoardwereestablishedbythegovernmentwhosemajorrolewasto
undertake production, processing and marketing of the cotton sector. At the same time, the
CooperativeUnionswerealsoformedtohandleprimaryactivitieslikeinputsupplyandpaymentto
thefarmers.
Since Independence (1963), Kenyas cotton textile and apparel industry has gone through major
phases.Atthetimeofindependence,theindustrywasdominatedbytheprivateginners.Overthe
next ten years, Government provided a lot of support in the form of well organised marketing
Page23of154
systemandtimelypayments.Inadditiontothis,theGovernmentalsoinvestedinnumberoftextile
millswhichlargelysuppliedtothelargeprivateapparel(garment)manufacturers.
Kenya's cotton industry was largely controlled by Cotton Board of Kenya till 1991. However, the
governmentdecidedtoliberatethesectorin1991andallowedprivateinvestorstoparticipateinthe
cottonsector.Asaresultofthis,thegovernmentsupportstarteddeclining,andthissubsequently
resultedinthedeclineincottonproduction.
CottonismainlygrowninAridandSemiAridAreaswheretherearelimitedeconomicactivities.Itis
grown solely by smallscale farmers in Western, Nyanza, Central, Rift Valley, Eastern and Coast
provincesofKenya.Anestimated200,000farmersgrowmostofthecottononholdingsoflessthan
onehectare.
The sector faces certain challenges which include competition from the synthetic fabric, cheap
importsofsecondhandclothes,highproductioncost,etc.Cottonproductionhasshownadeclining
trend in the past two decades. However, it is slowly picking up after years of neglect and
disillusionmentamongfarmers.
Cotton is considered under the Country Vision 2030 and in the Government Medium Term Plan
20082012asoneofthemostimportantindustriestoimplementthelongtermAridandSemiArid
Lands(ASAL)developmentinitiativesandindustrializationstrategy.Thegovernmentisimplementing
revivalinitiativesofthesectorthatstartedin2005.
Page24of154
3.1.3. ValueChainAnalysis
3.1.3.1.
Overview
Figure3:Kenya'sCTAValueChainOverview
No.offarmers:
~2,00,000

AverageYield(Seed
cotton):
Average:572kg/ha
Potential:2,000kg/ha
AverageCottonHolding:
0.51ha
Page25of154
Noofginneries:
Cooperatives:4
Private:18
InstalledGinning
Capacity:
140,000bales/annum
GOTofcottonlint:
33%
InstalledSpinning
Capacity:
ShortStaple:1,00,000
LongStaple:4,000
OERotors:1,200
No.oftextileMills:
12
MainProducts:
WovenFabric
GarmentManufacturers:
LargeScale:170
MainProducts/Markets:
Domestic Market: Trousers,
Uniformsetc
Export
Market:
Jeans,
Trousers/Pants,Shorts,Shirts,
etc
3.1.3.2.
CottonFiber
The cotton sector in Kenya is characterized by a large number of small holder farmers. Eighty
percentofKenyaslandareaisAridandSemiAridLand(ASAL)withlimitedeconomicopportunities
forthecommunitiesintheseareas.CottonisamongthefewcashcropsthatflourishintheASAL
regions,andhenceamajorpotentialsourceofemployment,incomegenerationandfoodsecurity.
Fromtheyear2005todatetheGovernmentthroughtheMinistryofAgriculturehascontinuedto
supportthecottonsector.
Table4:CottonSectorProfile,Kenya
No.offarmers
~2,00,000
AverageProductivity
<300kg/acre
Seedcottonpricepaidtofarmers
PriceinCurrency
KES35/kgcottonseed
EuroEquivalent
0.27Euro/kg
AverageYield
Current
253kg/ha
Potential
2,000kg/ha
SeedPlantingRate
15kg/hectare
VarietyofCotton
Averagefarmsize
Gossypium Hirsutum (American upland

cotton)
0.51ha
LandAvailableforCottonProduction
43,000ha
ExchangeRateused:Euro=130KES
Source:PrimaryResearchFindings
ProductionStatistics
InKenya,cottoniscurrentlygrownmainlybysmallscalefarmersinWestern,Nyanza,Central,Rift
Valley, Eastern and Coast Provinces of Kenya. An estimated 200,000 farmers grow most of the
cottononholdingsoflessthanonehectare.
Majority of the production takes place in the Eastern zone comprising Coastal, Eastern and North
eastern regions. These regions contribute to ~85% of the production. While the Western zone,
comprising Nyanza, Rift Valley and other western regions, contribute to about 15% of the seed
cottonproduction.
Page26of154
Table5:RegionalCottonSeedProduction2010,Kenya
Zones
Region
Western
Eastern
Nyanza
Western
RiftValley
WesternTotal
Coast
Eastern
NorthEastern
EasternTotal
GrandTotal
Price of
Area Planted Area Harvested Seed
Cotton
Seed Cotton
(Ha)
(Ha)
Production(Tons)
(KES/Ton)
1,887
782
852
3,521
1,451
537
840
2,828
1,117
197
483
1,796
50,000
55,000
34,000
8,027
13,000
5
6,248
11,000
3
3,624
6400
2
37,000
37,000
37,000
31,020
21,032
10,026
34,541
23,860
11,822
Source:CottonDevelopmentAuthority,Kenya
CottonStatistics(19902011)
Productionwaslow,at<23kbalesupto2005duetolackofincentivestogrowersintermsofprices,
marketingsystem,creditandpoorcoordinationofthesector.Butduetogovernmentinterventionin
form of provision of seeds, chemicals, training, streamlined marketing system, etc., the cotton
productiongraduallystartedincreasingreachingto~55kbalesin2011.
Significant improvement in yield is visible and has resulted in higher production. This has also
loweredthedependenceofKenya'sCTAsectoronimportedcotton.
Thecottonimportshavereducedovertheyearsasthedemandhasremainedmoreorlessconstant
whereastheproductionhasimprovedconsiderably.TherearealmostnilcottonexportsfromKenya.
In2009 the mill demandswere lower thanprevious years, buttheproduction that year waseven
lower.Theequationultimatelyresultedinalmosthalvingthecountry'scottoninventory.
Page27of154
Table6:CottonBalanceSheet(19902010),Kenya
Valuesin000(480pound)bales
YearfromAug1toJul31
Harvested
Year
2010
Opening
Total
Mill
Ending
Stocks
Prod.
Import Supply
Use
Export Stocks
8
49
5
62
50
0
area
Yield
(000)
Pounds/
Acres
Acre
12
104
226
2009
17
23
48
40
99
112
2008
13
46
13
72
55
17
106
208
2007
17
38
63
50
13
89
205
2006
15
46
11
72
55
17
82
269
2005
10
20
40
70
50
15
74
130
2004
10
20
40
70
50
10
10
91
105
2003
15
20
40
75
55
10
10
124
77
2002
25
20
40
85
55
15
15
124
77
2001
35
20
30
85
50
10
25
74
130
2000
40
20
35
95
50
10
35
136
71
1999
30
30
40
100
60
40
136
106
1998
20
30
40
90
60
30
136
106
1997
10
30
40
80
60
20
136
106
1996
10
25
35
70
60
10
136
88
1995
10
20
40
70
60
10
148
65
1994
15
15
40
70
60
10
99
73
1993
15
20
40
75
60
15
138
70
1992
15
20
35
70
55
15
138
70
1991
16
24
35
75
60
15
148
78
1990
15
26
37
78
62
16
151
83
Source:NationalCottonCouncilofAmerica
PlantingSeasons
ThegrowingseasonsofcottoninKenyaisshowninthetablebelow
Table7:CottonPlantingSeasonsinKenya
EasternKenya
WesternKenya
Sowing
October
March
Bottomcrop
Jan/Feb
July
Aug/Sep
Bottomcrop1month
Maincrop2/3months
2/3months
Maincrop
Ginningperiod
Source:PrimaryResearchFinding
Page28of154
CottonCharacteristics
The cultivated cotton in Kenya is mainly of the American Upland type (Gossypium hirsutum).
CurrentlytherearetwovarietiesofcottongrowninKenyai.e.HART89MandKSA81M.
CottonGrades
ThemainQualityandGrademeasureforlocalcottonsisbyGradesA(AR)andB(BR);andVariety
(HART89MandKSA81M).GradeARisthehighergradeoftheRollerginnedcottonandBRisthe
lowergradeoftheRollerginnedcotton.Allthecottoninthecountryisrollerginned.
CottonTypes
CurrentlytherearetwodominantvarietiesofcottongrowninKenya:
Table8:KenyanCottonVarieties
Variety
Length
Fineness
Share
(Micronaire)
HART89M
2829
3.84.2
KSA81M
2829
3.84.2
Growingarea
Yieldrainfed
Kg/ha
Yieldirrigated
Kg/ha
60%
Eastofrift
2,500
4,000
40%
Westofrift
2,000
3,000
Source:CottonDevelopmentAuthority
Therearenowoverfivenewvarietiesofcottonthatareundergoingnationalperformancetrialswith
KenyaPlantHealthInspectorateService(KEPHIS).
KeyInitiatives
BtCotton
Bt(Bacillusthuringiensis) cottontrialshadbeencarriedoutinKenyaforlast56yearsin confined
fields by Kenya Agricultural Research Institute (KARI) with an aim to control African bollworm and
make cotton pest control more efficient thereby increasing farmers return while conserving the
environment.Btcottonproducesaninsecticidalproteinfromthenaturallyoccurringsoilbacterium
Btmakingitinsectresistant.Thisreducesthecostofproductionasnopesticideswouldberequired.
The commercialization initiative has been carried out by various stakeholders to revive the cotton
industry. Bt cotton technology would increase the productivity and hence would help boost the
revivalofthesector.Itisexpectedtocommercializeby2014.
OrganicCotton
Organic cotton trials are being carried out in Kenya for last five years in Lamu. Gin in Kiboka
processesorganiccottonfromTanzania.
CertifiedSeedCottonProduction
Inordertoimprovethecottonproductionandcreateemployment,theCODAinconsultationwith
thestakeholdersconvenedameetingtochartthewayforwardforcottonseedproductioninKenya.
Kenya Seed Company was identified as the most suitable seed merchant for certified seed cotton
Page29of154
production.TheplanforimplementationofCertifiedSeedcottonproductionforthenext3yearsis
givenbelow:
Table9:ImplementationPlanforCertifiedSeedCotton,Kenya
Area
under
certified
seed
2011
Western
Eastern
Plant60 Plant1acre
ofbreeders
acresof
seedin
breeders
Octoberin
seedin
Hola/Bura
Juneat
Ahero.
72,000
Expected
Yields
(kgs)
1,200
2012
Western
Eastern
Plant200
Plant300
acresof
acres
Standard
ofprebasic
seedin
seed
Marchin
inAhero/
Hola/Bura.
Perkerain
Plant100
March
hectaresof
breeders
seedin
Octoberat
Hola/Bura.
360,000
240,000
(standard
seeds)
120,000
(certified
seed)
2013
Western
Eastern
Plant300
Plant300
acresofpre
acres
ofbasicseed basicseed
at
inAhero/
Hola/Bura
Perkerain
inOctober.
October
360,000
360,000
Source:KenyaSeedCompanyLtd
FairtradeCotton
Fairtrade Cotton is a two year project which aims at improving the lives of smallscale cotton
farmersintwoofKenyaspoorestdistricts,KituiandMwingi.ThisprojectisfundedbyComicRelief.
It will enable small holder farmers in Kitui and Mwingi to increase their income from cotton by
helpingtheminimprovingtheirproductionandlinkingthemintoafairtradesupplychainthrougha
local ginnery. Guaranteed fair trade sales will mean farmers receive an increased and consistent
pricefortheircottonandareabletoimprovetheirfamiliesstandardofliving.Intotal,thelivesof
2,500farmersandtheirfamilies(12,500people)willbeimproved.
3.1.3.3.
Ginning
Thereare22ginneriesspreadoutinthecottongrowingprovincesinKenya.Outoftheseonly10are
operational. The operating ginneries are Meru Ginnery, Makueni Ginnery, Kitui Ginnery, Nyanza
Ginnery, Salawa Ginnery, Ndeere Ginnery, Luanda Farmers Cooperative Union Ginnery, Mwea
Ginnery,MalindiGinnery,VoiGinneryandMpeketoniGinnery.
However, these ginneries are underutilized due to the low supply of seed cotton, which currently
standsatabout25,000MT.
The cotton cooperative societies own four cotton ginneries in Nyanza and Western provinces
Ndere,Nambale,Malaba,/MalakisiandLuanda.Threehavebeenleasedtoprivateginneryoperators
while only Nambale ginnery is operated by the cooperative society. The leased ginneries are
Page30of154
operationalbutunderutilizedandtheunionsarereorganizingthemselvestorepossessthem.These
ginneries are in poor state of maintenance.There are high costs associated with ginning in the
countryduetooldmachineries/equipmentsandlowcapacityutilisation.
Table10:InstalledandOperationalGinsinKenya
Province
Numberoffirms
Operational
Factory
Central
1 Mwea
Coast
3 Voi,MpeketoniandMalindi
Eastern
3 Kitui,Makueni,Meru(1994)
RVP
1 Salawa(RiftValleyProducts)
Western
Nyanza
Total
22
0 Luandaonlease(Acollectionyard
forRVP)
2 NyanzaandNdeere(Operatingbut
inaverypoorstate)
10 1cooper(Ndeere)&9privatelyowned
Outoftheexistingprivateginneries,sixwereoriginallyownedbytheCottonBoardofKenya(Mwea,
Makueni, Kibos, Meru, Salawa and Hola) but were later sold to private entrepreneurs through
divestitureinthe1990s.
Table11:GinningSectorProfile,Kenya
No.ofGinneries
Cooperatives
PrivateInvestors
AnnualInstalledGinningCapacity
GinningEquipment
AverageGOT%forlint
CapacityUtilization
PriceforcottonseedFOB/FOTginnery
SeedCottonStoragecapacity
22
4
18
140,000bales
Roller mediumtomediumlongstaplecottons
33%
1731%
KES35/kgcottonseed
25,253MT
3.1.3.4.
Textiles
Duringtheyear1983,Kenyahad52textilemillsoperatingwithaninstalledcapacityof115million
square meters per annum. After market liberalization in the early 1990s, there was a decline in
textile and apparel industry. The reasons that contributed to the decline of the sector were an
enormous import of textile products and garments and an increase in import of second hand
clothing. Though the Kenyan Government reacted by imposing a duty on such imports, but the
Governmentseffortstolimittheimportofsecondhandgarmentsandfabricswasafailure.
Page31of154
Other factors that aggravated the problem include the failure of countrys cotton sub sector,
increased use of synthetic fibers and a worse operating environment in terms of high production
costandpoorinfrastructure.
Currently80%ofthedomesticlintrequirementismetthroughimportsbyyarnspinnersandfabric
manufacturers. Annual local fabric demand is over 225.0 million square meters and to meet this
demand,about200,000balesofcottonarerequiredannuallywhichisformorethantheavailable
cotton.Theaveragecapacityutilizationforthetextilefirmsislessthan50%capacityandislikelyto
remain low unless local supply of lint, yarn and fabric is improved. At present, there are only six
textilemillsthatspinandweaveinthecountry.
Majorproductsmanufacturedbythetextilesectorarelistedbelow:
Forlocalandregionalmarkets
Wovenfabricforblankets,acrylicyarn
Forexportmarkets
Organiccottonyarn,organiccottonknitfabric,yarn
andfabricofcotton/manmadefiberblends,thread
3.1.3.5.
Apparel
ThegarmentsectorofKenyaisprincipallydrivenbyexportstotheUSundertheAfricanGrowthand
Opportunity Act (AGOA) initiative. As of 2008, there are 35 large scale garment manufacturers
exporting to the US of which 15 are located in the Export Processing Zones (EPZ), 7 enjoy
ManufacturingunderBond(MUB)while5operateoutsidetheEPZandMUB.
It is estimated that there are 170 large scale and ~74,000 small and micro garment/apparel
manufacturersoperatinginKenyatoday.Therangeofapparelproductsforbothlocalanddomestic
marketincludesthefollowing:
Forlocalandregionalmarkets
Forexportmarkets
Trousers,uniforms,overalls,vests,innergarments
Jeans,trousers/pants,shorts,shirts,nightwear,
blousesanddresses
Thelocalproductionofgarmentaccessories(zippers,buttons,etc.)isverylimitedintermsofvariety
andquality.Currently,mostofthegarmentmanufacturersimporttheiraccessoriesforfinishingthe
product.
EPZApparelSector
There has been a lot of emphasis by Kenyas Export Processing Zone Authority to promote and
provide attractive investment opportunities for the exportoriented business ventures in the
country. It also aims at employment creation and generation of foreign exchange earnings,
technologicaltransferandcreationoflinkageswiththecustomsterritoryinvarioussectors.Oneof
thekeysectorssupportedbyEPZisGarmentandTextilesector.EPZtextileexportsonaveragemake
up 80% of total Kenyan textile exports. According to the Export Processing Zones Annual Program
report, 2010, garment sector remains the dominated sector which constituted 29% of all EPZ
Page32of154
enterprises,78%oftotalEPZlocalemployment,56%ofEPZexports,52%oftotalEPZsalesand30%
ofallEPZprivateinvestment.
Table12:GarmentSectorPerformance,Kenya(2010)
(ValuesinUS$mn)
GarmentandSupportServices
Others
ProportionofT&Asector
Firms
22
53
29%
LocalJobs Exports Sales Investments

24,137
179
186
78
6,889
140
170
181
78%
56%
52%
30%
Source:AnnualreportEPZA
Exportsofapparelarticleshaveincreasedby27%toUS$180Mnin2010fromUS$141Mnin2009.
Investment on other hand registered an increase of 27% on account of the enterprises expanding
operationsandacquisitionofnewplant,machineryandequipmenttomeetthemarketdemand.
Table13:GarmentSectorTrends,Kenya
Indicator
2005
2006
2007
2008
2009
2010
% growth
(200910)
16
16%
No.ofEnterprises
25
25
22
18
19
Employment(No.)
34,234
31,813
28,506
25,766
24,359
24,114
1%
Investment(US$Mn)
99.5
102.8
82.1
74.8
54.2
68.7
27%
Exports(USDmillion)
145.1
147.1
136.0
156.2
125.4
159.9
24%
50.0
46.3
59.6
67.9
58.1
70.3
21%
Quantity of exports
(millionpieces)
Exchangerateused:1US$=80KES
Source:AnnualReportEPZA
Page33of154
3.1.3.6.
SupportInstitutes
ThevariousinstitutesthatsupporttheCotton,TextileandApparelsectorarelistedbelow:
Table14:CTASectorSupportInstitutesinKenyaandtheirFunctions
Institutions
MainFunctions
Cotton Development Authority The Cotton Development Authority (CODA) is a regulatory state
(CODA)
corporationwasestablishedin2006.Theroleoftheauthorityisto
promote, coordinate, monitor, regulate and direct the cotton
industryinKenya.
National Cotton Stakeholders Anumbrellabodywhichprovidesaforumwhereallstakeholders
Forum(NCSF)
candiscussissuesaffectingthemandhasmembershipoffarmers,
ginners, spinners and weavers and textiles and garment
manufacturers. It was formed to spearhead the revival of the
cottonindustryinKenya.
Kenya
Cotton
Association
Growers An umbrella body of farmers with representation all over the

country and aimed at lobbying for the formulation and
implementationoffavorablepoliciesandlawsforthecottonsub
sector.
Kenya Association of Apparel Represents interests of all manufacturers in the cotton textiles
Manufacturers(KAMEA)
industry under the Textiles Manufacturers Association and
includesspinners,textilesandgarmentmanufacturers.
Kenya
Cotton
Ginners ConsistsofGinnersandits mainfunctionistoprovidesupportand
Association
lobbyingforginners.
Kenya
Association
Manufacturers(KAM)
of An umbrella body of manufacturers which provides an essential

link for cooperation, dialogue and understanding with the
Government by promoting trade and investment, upholding
standards and representing members views and concerns to the
relevantauthorities
Cotton Board of KenyaCotton Providesadvisoryservicestofarmersandginnersandasecretariat
Secretariat
totheCottonGinnersAssociation
Kenya Agricultural Research Providesresearchandextensionservicestofarmers
Institute(KARI)
Kenya Bureau of Standards Facilitatequalitycontrolandassurance
(KEBS)
Page34of154
3.1.4. SectorCompetitiveness
3.1.4.1.
Rawmaterial
Cottonproductioninthecountryaswellasthelandundercultivationhasdeclinedovertheyears.
MostofthecottonisimportedfromneighboringcountriesofTanzaniaandUganda.Fewinitiatives
havebeenundertakenforvalueaddedcottonsuchastrialsarebeingconductedfororganiccotton
aswellasBt.Cotton.
3.1.4.2.
Manpower
Thereisavailabilityofmanpowerbutthepresentworkforcelackstherequisiteskillsandtrainingto
dotherequiredjob.Thereishugerequirementofskilledworkersespeciallyinmanufacturingareas
ofspinning,weaving,processingandgarmenting.
3.1.4.3.
Power,Water&Fuel
PowersupplyisconsistentinKenya,however,thecostsofpowerisrelativelyhigherwhichleadsto
highcostsofbusiness.Likewise,waterandfuelcostsarealsohighaddingtothetotalmanufacturing
costs.
3.1.4.4.
Financialsupport
Majority of the industry players find it very difficult to borrow funds from the banks and other
financial institutions. Even if they manage to seek funds, it is possible only at very high rates of
interest(~1618%)andthus,makesitunaffordablefortheindustry.
3.1.4.5.
Marketaccess
Kenyamadetextileandapparelproductscanentermostoftheworldsrichereconomiesfreeofany
customsdutiesandwithlimited/noquotarestrictions.Someofthetradeagreementsthattheyhave
signedupforpreferentialmarketaccessincludes:
AfricanGrowthandOpportunityAct(AGOA)
EconomicPartnershipAgreement(EPA)withEU
CommonMarketforEasternandSouthernAfrica(COMESA)
EastAfricanCommunity(EAC)
3.1.4.6.
Technology
The technology currently in use is outdated particularly in the areas like ginning, spinning and
weaving. Certain mills have unutilized machineries owing to lack of functionality and efficiency.
Machineriesinthegarmentingsectorarerelativelynewandfullyfunctional.
3.1.4.7.
Industrialzones
The no. of gazette zones as at December 2010 stood at 42, of which 40 are privately owned and
operated,while2arepublicownedandoperated.About75enterprisesareoperatingwithinthese
Page35of154
zones andhavemade cumulative investmentsofUS$ 290million.The locationdetails of these 42

zonesarelistedbelow:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
AthiRiver/Mavoko/Mlolongo
Nairobi
Mombasa
Voi
Kilifi
KerioValley
Thika
Isinya,Kajiado
Ruiru
Malindi
Eldoret
3.1.4.8.
:
:
:
:
:
:
:
:
:
:
:
03
09
20
01
03
01
01
01
01
01
01
Research&productdevelopment
Researchinitiativescurrentlybeingundertakenarelimitedasthereareveryfewsuchinstitutes.One
suchinstituteisKenyaAgriculturalResearchInstitute(KARI)whichdoesresearchonfarmactivities
andexploringthepossibilitiesofvalueadditionandimprovementwithintheexistingfields.
3.1.4.9.
Valueaddition
Currently, most of the products made are very basic in designs at the textile level as well as
garments (finished product) level. There is very limited focus on value addition w.r.to designs,
specializedfinishes,embroidery,sequins,etc.
3.1.4.10.
CompliancesandCSRactivities
Majority ofthefirmscontributetocharities andmakedonations as partof CSRactivities and also

providebetterworkingconditionsattheworkplacetothelaborforce.Fewfirmslocatedatfarflung
areas/export processing zones have created provision for various facilities for employees like
crche,employeeschildreneducation,canteenfacilities,activityzones,etc.
3.1.4.11.
LogisticsandBusinessCosts
KenyahasitsownportatMombasawhilemostofthetextilemillsarelocatedinthecapitalcityof
Nairobi. The overall procedure for customs clearance, documentation and processing takes lot of
timecausingdelaysintheshipment.ThesailingtimefromNairobitoChinais~2530days.Thecosts
ofdoingbusinessinKenyaarerelativelyhighowingtohighcostsofpowerandinterestcosts.Details
oneachofthecostcomponentaregivenahead:
Page36of154
Table15:LogisticsandBusinessCosts,Kenya
PowerAvailability
Consistent
Powercost
UScents20/unit
Lendingrate
16%
Watercost
US$2/cu.m.
Wage/month
~US$100
OwnPort
Yes
Nearestport
Mombasa
SailingtimefromChina
17days
SailingtimetoUS
25days
Freightcost/container(20ft)
ExportUS$2100
ImportUS$2200
3.1.4.12.
GovernmentInitiatives
The Government is providing targeted support to the smallholder farmers in form of provision of
planting seeds as a food security measure, advisory service through extension service and cotton
research. The Government through the Cotton Development Authority (CODA) has initiated
measures like collaborative research, establishing input supply system etc., to improve
competitivenessintermsofyields,quality,costsandlogistics.
3.1.4.13.
Domesticmarket
The domestic market is characterized by all sorts of dresses Tshirts, jeans, office wear, skirts,
shorts,etc.Lotsofdomesticmanufacturersmakeworkweargarmentswhichincludesuniformsfor
corporate,schools,armypeople,etc.
Domesticmarketisaffectedbyhugeimportsofsecondhandclothingatverylowprices.Thishasled
todependenceonimportedclothinganddomesticproducersmakeproductsmainlyfortheexport
markets.
Page37of154
3.1.5. ForeignTrade
3.1.5.1.
Overview
KenyaisanetimporterinT&Asectorsince2005,withnetimports(T&A)amountingtoUS$0.43Bn
in 2009. T&A exports have declined since 2005 from US$ 0.34 Bn to US$ 0.25 Bn. Share of T&A
exportsincountrystotalexportshavedeclinedgraduallyfrom~11%in2005to~6%in2009.
T&A imports have witnessed increase from US$ 0.5 Bn in 2005 to US$ 0.7 Bn in 2009, thus
registering a compounded growth of 8%. Share of T&A imports in countrys total imports has
declinedfrom~17%in2005to~7%in2006anditisconsistentlyat~7%thereafter.Kenyasexports
consistofWomen'swovensuits,jackets,knittedjerseys,pulloverswhereasimportsconstituteworn
clothingandwovenfabricofsyntheticfilamentyarn.USAistheleadingmarketforKenyawhereas
Chinaistheleadingsuppliertothem.
Figure4:KenyasOverallTrade
Figure5:KenyasCTAsectorTrade
ValuesinUS$Bn
3.1 3.0
3.3
2005
9.6
8.7
7.2
ValuesinUS$Bn
9.4
0.52
0.50
3.6
4.9
4.1
2006
2007
2008
2009
TotalExports TotalImports
0.34
2005
0.33
0.32
0.62
0.32
0.71
0.68
0.25
2006
2007
2008
2009
T&AExports
T&AImports
Source:UNCommodityTradeStatisticsDatabase
Table16:KeyCTASectorExportandImportStatistics,Kenya(2009)
Top4exportedcommodities
65% Top4importedcommodities
39%
Women'swovensuits,jacketsetc.
27% Wornclothing
13%
Knittedjerseys,pullovers,etc.
15% Wovenfabricofsyntheticfilamentyarn
13%
Women'sknittedsuits,jacketsetc.
13%
Men'ssuits,jacketsetc.
11% Linen
Leading4markets
89% Leading4suppliers
65%
USA
81% China
38%
Uganda
4% India
11%
China
2% UAE
10%
Tanzania
2% HongKong
Woven fabric with more than 85%

cotton,lessthan200gsm
8%
5%
Page38of154
6%
3.1.5.2.
ExportstoEU
KenyaisaminorsupplieroftextileandapparelproducttoEU.KenyasT&AexportstoEU27during
theyear2010werevaluedatUS$8.5Mn.ThevalueofexportswithEU27hasbeendecliningduring
thelast5years.
Figure6:KenyasCTASectorExportstoEU
ValuesinUS$Mn
12.4
11.2
10.4
8.5
CAGR
9%
2006
2007
6.2
2008
2009
2010
Source:Eurostat
Table17:MajorCategoriesofEUimportsfromKenya
ValuesinUS$Mn
2006
2007
2008
2009
Other veg. fiber e.g. coconut, abaca,

sisal,ramie,&theirwaste
5.5
5.2
6.4
3.2
Sacks&bags
0.0
0.0
0.0
Linen
0.2
0.2
Cottonyarn,with>=85%cotton
3.8
Women's suits, jackets, dresses,

skirts,shorts,etc.
Subtotaltop5categories
Others
Total
2010
CAGR
2010share
3.2
14%
38%
0.0
1.4
330%
16%
0.1
0.1
0.9
77%
11%
2.3
1.2
1.4
0.6
34%
8%
0.0
0.1
0.1
0.2
0.5
71%
6%
9.6
2.8
12.4
7.8
3.4
11.2
7.8
2.6
10.4
5.0
1.2
6.2
6.7
1.8
8.5
5%
19%
9%
79%
21%
100%
Source:Eurostat
3.1.5.3.
Page39of154
ExportstoUSA
USAistheleadingmarketforKenyastextileandapparelexports,withexportsvaluedatUS$202.2
Mnin2010.ThevalueofT&AexportswiththeUSshowsadecliningtrendoverthelastfiveyears.
(Seethefigurebelow)
Figure7:KenyasCTASectorExportstoUS
263.8
ValuesinUS$Mn
249.1
246.9
CAGR
5%
2006
2007
2008
195.4
202.2
2009
2010
Source:Otexa
Table18:MajorCategoriesoftheUSimportsfromKenya
ValuesinUS$Mn
2006
2007
2008
2009
2010
CAGR
2010share
Womens, girls suits, jacket, dress,

skirt,etc.
Mensorboyssuits,jackets,trousers
etc.
Jerseys, pullovers, cardigans, etc.,
knitorcrochet
Womens,girlssuit,dress,skirt,etc.,
knitorcrochet
Tshirts,singletsandothervests
126.0
104.5
106.4
64.1
50.4
17%
25%
59.1
52.4
37.4
24.5
31.6
12%
16%
25.2
25.7
35.7
35.3
46.2
13%
23%
13.5
21.1
25.2
30.4
31.9
19%
16%
7.7
3.7
7.0
4.4
3.9
13%
2%
Men'sorboys'shirts
5.1
3.6
1.4
1.5
1.6
21%
1%
SubTotal
236.6
211.0
213.0
160.1
165.6
7%
82%
Others
27.2
38.1
33.9
35.2
36.6
6%
18%
Total
263.8
249.1
246.9
195.4
202.2
5%
100%
Source:Otexa
Page40of154
3.1.6. SWOTAnalysis
Strengths:
1. Increased focus on the sector: Government is laying focus on the sector and is committed to
revitalizethecottonsector.Thiswillprovideadditionalmomentumtothesectorandwillcreate
interestsofamongsttheexistingindustryplayersaswellasthepotentialinvestors.
2. Active stakeholders forum (National Cotton Stakeholders Forum): This forum tries to address
theissuesofvariousstakeholdersandpromotedevelopmentofthesector.
3. Export driven sector: The apparel sector is largely exports driven and currently contributes to
about56%oftheEPZexports.Thisoffersopportunitiestotheinternationaltextileplayerstoset
uptheirmanufacturingcapacitiesinKenya.
Weaknesses:
1. Inefficient farmpractices:Lowcottonyieldsduetopoorqualityplantingseeds,untimelyland
preparation,poorpestcontrolaswellasinadequateuseoffertilizersandmanure.
2. High production costs: All the business costs are quite high with respect to farm inputs
(spraying, weeding, harvesting, and use of pesticides) or manufacturing costs (power, fuel).
Thus, the domestic product loses its competitiveness and industry people prefer to import
intermediategoodsratherthanmanufacturingitlocally.
3. Outdatedtechnology:Currentmachineries/technologyinuseareveryoutdatedparticularlyfor
ginning and textile sector. This further adds to the costs of manufacturing. Sector is currently
facinglackofnewinvestmentsforupgradingtechnology.
4. High borrowing costs: The existing costs of borrowing are so high that it almost makes it
impossibleforthesectortorelyonthesefinancialinstitutions.Eveniftheymanagetobearthe
high costs, the formalities for loan approvals, requirements for collaterals and other
documentationareintense.
5. Lackofsupportinstitutionsfortrainingandskilldevelopment:Thereisahugerequirementfor
enhancing the skills of people to increase their efficiency levels. The current infrastructure
providesforveryfewsuchinstitutionswithlimitedcapacitiesandhasfewenrollmentsforthe
training facilities. There is a need for promoting these institutions (new and old), supporting
thesewiththenecessaryinfrastructureandchurnoutlargeno.oftraineeseachyear.
6. Lack of welldeveloped transport infrastructure: The current road, rail, port infrastructure
needsimprovementtoovercomedelaysintransitaswellasproceduralformalities.Thecurrent
Page41of154
procedure for customs clearance, documentation and processing takes lot of time causing
unforeseendelaysintheshipment.
7. Absenceofintegratedsupplychain:Thoughtheindustryhaspresenceacrossfarmtofinished
products,therearecertainweak linkswhich needs tobestrengthenedwithfocusedattention
andinvestments.Fore.g.,thereareseveralgarmentingunitswithforeigninvestmentswhichfail
to source fabric locally. They are highly dependent on other economies for fabric imports and
thenprocessittomakegarments.
8. Absenceofinstitutionalinfrastructure:Tofacilitatedialogueacrosstheentirefarmtofinished
productsupplychain.Thereisaneedtointegratevariousvalueaddingactivitiesandhelpcreate
demandforprimaryinputsaswellasenhancethecompetitivenessoffinishedgoods.
Opportunities:
1. Huge demand potential: Enduring demand for cotton fabrics and textiles due to rising
population,increasingincome,andchangingconsumerpatternsinpreferenceforcottontextiles
andapparel.
2. Increasedinvestmentsinthesector:Specificbudgetallocationbythegovernmentwillincrease
investmentsintextilesmanufacturingandenhanceskillsdevelopment,boostincomesandjobs,
andunderpinamoresustainabledomesticindustrialisationstrategy.
3. Scopeforvalueaddition:Thereisalotofscopeformakingvalueaddedproductsparticularlyfor
theexportmarketssuch as addingembroidery,sequins,andotherstyle/designelements. This
willbringinincrementalrevenuetothesectorandwillalsoleadtomoreemploymentcreation
andskillenhancement.
Threats:
1. Threatfromsecondhandarticles:Therearehugeimportsofsecondhandclothesinthecountry
whichisposingabigthreattotheeconomy.Thepresentlegalframeworkisnotstrongenough
topreventthispractice.
2. Competitionfromleadingglobaltextilemanufacturers:WiththeendofMultiFibreAgreement
in2005andestablishmentofCustomsUnionon1stJanuary2005,thedomesticsectorisfacing
toughcompetition fromChineseandAsiancompanieswhichhavehighproductivity levelsand
enjoyseconomiesofscale.
3. Huge dependencies of select markets for exports: Kenyas garment industry is principally
dependentonAGOAandtheU.S.market,makingtheentireindustryvulnerabletofluctuations
inthesemarketsandtheirpolicies.
Page42of154
3.1.7. Recommendations
After conducting a comprehensive analysis of CTA sector in Kenya, we did a SWOT analysis which
bringsoutthekeyissuesthatthesectoriscurrentlyfacing.Thesearestrategicissueswhichneedto
be addressed keeping in mind the relative strength areas of Kenya and its CTA sector. Following
recommendationsaremadeforimproving/strengtheningtheCTAsectorperformance:
S.no. Objectives
Increasingcottonqualityandyield
SupportR&Dcentersforintroducinghighyielding
seeds
Promotecontractfarming
Garmenting sector is relatively big in Kenya but the

focus has always been on basic products and
uniforms.Thereisanopportunitytodovalueaddition
Promoting value added products in
ingarmentingbyproviding:
garmenting
Support schemes/fiscal incentives on value
addition
Interestsubsidiesshallbeprovidedforupgrading
machineriesorinstallingnewmachineries
Support for modernization and T&A sector shall be classified as Priority sector
capacityexpansion
and thus, increased lending to the sector should
beaprimefocus
Introduceschemesfortrainingandskilldevelopment
andcreateafundforimplementingtheschemewhich
willaid:
Improving skills of people through
adequatetraining
Establish new colleges for textiles/fashion

Promote education in the field of
designing
textilesandfashiondesigning
Page43of154
Recommendations
Update course curriculum regulatory as per

industryrequirements
Tieup with other international colleges for
studentexchange/knowledgeexchangeprograms
Adopt cluster based development approach

where suitable infrastructure is provided to the
units operating within those and at reasonable
costs
Various clusters should be identified by doing a

detailed study and then promoted as T&A
districtswithintheregion
Improve existing infrastructure and

rationalizecostsofdoingbusiness
Phase out supply of secondhand clothing from

the market through appropriate policy
interventions
Organize regional level design competition and
fashion shows to create and promote domestic
fashionindustry
Initiatives to promote domestic

marketdevelopment
Promoteinvestmentsinthesector
Organize Mega Trade shows in the country to

promoteinvestmentsinthesector
An event shall be held in which all the buyers,
sellers, investors, industry associations and
support institutions should participate. There
should be an Investors summit showcasing
business opportunities in Kenyas textile sector.
ItwillalsoserveaplatformfororganizingBuyer
sellermeets.
AlltheserecommendationshavebeendealtindetailunderChapter5:BenchmarkingandProposed
Interventions,wherewehavecomparedthetargetcountrieswiththeleadingCTAmanufacturing
countriesoftheworldonthekeyparameters.
Page44of154
3.2. Sudan
SudanisthelargestandoneofthemostgeographicallydiversecountriesinAfrica.Itpossessesrich
mineral resources including petroleum, natural gas, gold, silver, chromite & asbestos. Until the
secondhalfof2008,Sudan'seconomyboomedonthebackofincreasesinoilproduction,highoil
prices, and large inflows of foreign direct investment. GDP growth registered more than 10% per
year in 2006 and 2007. From 1997 to date, Sudan has been working with the IMF to implement
macroeconomicreforms.
The current size of Sudans economy is ~ US$ 66 Bn (2010, nominal GDP). The per capita GDP is
estimatedat~US$1,705(2010,Nominal).Theservicesectoristhelargestcontributortoeconomic
activity, contributing ~39% to the GDP; dominated largely by wholesale, retail trade, transport &
communications.
70
1,800
60
1,600
1,400
50
1,200
40
1,000
30
800
600
20
400
10
200
GDPpercapita(US$)
GDPinUS$bn
Figure8:EconomicSnapshot,Sudan
0
2000
2001
2002
GDP(nominal)
2003
2004
2005
2006
2007
2008
2009
2010E
ThefirstmoderntextilefactorywasestablishedbytheprivatesectorinAnzara(EquatoriaState),in
1945.Itwasdesignedtoproduce4to5millionyardsperyear,usingrawcottongrownandginnedin
thesamelocalarea.However,thethoughtofbuildingtextileindustriesonalargescalebeganwith
thesetupofthefirstnationalgovernment,immediatelyafterindependencein1956.Thefirsttextile
plant,SudanTextileFactory,wasestablishedin1962,completelyfinancedbytheSudaneseprivate
sector.Aconsiderablenumberoffactoriesfollowedsoon.
The sector has been on a downtrend since last many years as it is facing several financial and
technical difficulties. Most of the mills have closed down; the ones which are working are largely
underutilized.Mostofthecottonproducedinthecountryisexportedinfiberform.Themarketis
largelydominatedbyimportedtextileandapparelgoods.
Page45of154
Since1990stheinflationhadbeenveryhigh,thisledtohighcostsofdoingbusinesswhichultimately
led to downfall of the sector. However, in recent years there has been a renewed interest on the
partofGovernmenttorevivethesector.TheMinistryofIndustryinitsplanfor2002concentratedto
upgradeoftextileandspinningindustry.
TheauthoritieshavetakentheCTAsectorastheprioritysectorandarepushingforthegrowthin
sector.SudaneseCottonCouncilisalsotakingvariousenablinginitiativeslikeprovidingcottonseeds,
funds and crop insurance to farmers. Some foreign companies have also expressed interest about
investinginaround250,000acresofcottoncultivation.
The Sudan Cotton Company Ltd. (SCCL), marketer of all cotton produced in Sudan, has signed
contracts of importing 10 advanced cotton ginneries. The ginning units will have stateoftheart
equipment from Turkish and Brazilian technology suppliers. As per a certain economic and social
plan, the rehabilitation and operation of the textile factories of Kosti, ElDuwaim, alHaj Abdullah
andShendiareplanned.
Page46of154
3.2.3.1.
Overview
Figure9:SudanCTAValueChainOverview
No.offarmers:
>200,000
Page47of154
Noofginneries:
12
GinningEquipment
inUse:
RollerandSawgin
2openendmills,
noringspinning
unit
Usedtohave16
Spinningplants
withacapacityof
63,000tons/year.
Someoftheseare
nowunder
rehabilitation
Usedtohave45
weavingand18knitting
factories,mostofwhich
havecloseddown.
2knittingunitsarestill
operational
Atpresent12weaving
and5knittingunitsare
underrehabilitation.
No.of Garment factory:

24workingoutof74
MainProducts:
Galabia and Tobe
(nationaldress),women
and mens innerwear,
suiting,shirts,blouses
5
factories
for
absorbent cotton also
exist

3.2.3.2.
CottonFiber
Sudan's cotton industry has assumed a key role since the mid 1920's in its national economic
developmentbothoneconomicandsocialgrounds.
Cottonusedtobetheprincipalforeignexchangeearnerforthecountrytillearly1990s.Lateron,the
share of cotton in Sudans foreign export earnings declined whereas share of products like oil,
sesameandlivestockhaveincreased.
Cotton provides an important livelihood for an estimated 200,000 growers and their families, in
addition to employing seasonal labor during harvest time. Cotton is grown in Sudan under both
irrigated and rainfed modes of production. The majority of Sudans extralong staple cotton is
grownintheGeziraIrrigationScheme.Whiletheschemeis governmentmanaged,tenantfarmers
decidewhichareasandvarietiestoplant.Inrecentyears,morethanhalfofSudanscottonexports
havebeenBarakat,whichrequiresalongergrowingseasonbutearnsmoreatexport.
Theareaundercottoncultivationhasbeenunderacontinuousdeclinefrom2005.Themainreason
for decline in harvested area under cotton is shift towards food crops. This has led to significant
loweringofcottonproduction.
MostofthecottonproducedinSudanisexported.MajorimportersofSudanscottonareEgyptin
Africa;Germany&ItalyinEurope;andChina,India,Thailand&BangladeshinAsia.Theexportshave
reduceddrasticallyinlast5yearsorso.Overtheyearsthemillusehasalsoslumped.
Page48of154
Table19:CottonBalanceSheet(19902010),Sudan
YearfromAug1toJul31
Year
Opening
Stocks
Production
Imports
Total
Supply
MillUse
Exports
Harvested
Area(000)
Acres
Ending
Stocks
Yield
Pounds/
Acre
2010
62
100
162
100
54
104
462
2009
160
50
210
140
62
67
358
2008
193
135
328
160
160
210
309
2007
293
105
398
197
193
128
394
2006
292
270
562
261
293
395
328
2005
310
330
640
340
292
420
377
2004
78
525
603
284
310
519
486
2003
194
310
504
14
412
78
442
337
2002
215
375
590
19
377
194
383
470
2001
191
330
521
17
289
215
371
427
2000
38
340
378
28
159
191
420
389
1999
23
240
263
40
185
38
408
282
1998
101
210
311
41
247
23
297
339
1997
97
400
497
52
344
101
445
431
1996
37
485
522
63
362
97
445
523
1995
30
490
520
58
425
37
544
432
1994
32
400
432
52
350
30
430
447
1993
75
216
291
59
200
32
272
381
1992
69
276
345
70
200
75
376
352
1991
143
386
529
60
400
69
474
391
1990
223
380
603
60
400
143
484
377
Source:NationalCottoncouncilofAmerica
PlantingSeasons
ThecottonplantingstartsinJulyandendsinAugust.PickingtakesplacefromDecembertoMarch
andginningstartsinDecemberandendsinJune.
The main three types of cultivated cotton, the long and the extralong staple (Gossypium
barbadense),themediumandshortstaplecotton(G.hirsutum)aregrownunderirrigationandrain
fed. A major cotton variety is Extra Long Staple, which has superior strength and fineness, and is
grownmainlyinGeziraState.
CottonGrades
The grades of Sudan Barakat Cotton GIB, XG2B and G2B are extralong staple variety. It has early
maturingandhighyielding.Thisvarietyissuperiorinfinenessandstrength.Barakatismostlygrown
in Gezira. The whole crop is handpicked and the ginning is carried out by roller. Acala is medium
staplecottonwhichisbothrollerandsawginned.
Page49of154
Table20:HistoricalPricesofSudaneseCotton
ValueinUSDcents/lb
Grade 200607
200708
200809
200910
201011
BarakatCotton
G1B
91.00
90.16
88.00
121.75
234.00
XG2B
89.00
88.34
86.00
119.75
232.00
G2B
87.00
86.52
84.00
117.75
230.00
AcalaCotton(R.G)
1G
59.00
70.95
AcalaCotton(S.G)
1SG
57.00
90.16
57.00
78.77
162.00
2SG
56.00
88.34
56.00
77.77
161.00
Source:SCCL(TheSudanCottonCo.ltd)
CottonTypes
Sudans Barakat cotton is 100% handpicked, which maintains fibre length, and gently ginned on
roller gins. The strength of this extralong staple (ELS) cotton allows the spinning of finer, longer
yarns, yielding a lighter, more supple and durable fabric with thread counts three to four times
higherthancommoditycotton.NourisanontraditionalhighcountAcalawhichishighlyresistantto
Jassidandbacterialblight.ItislongerandstrongercomparedtotraditionalAcala.Acalaismedium
staplecottonbothrollerandsawginned.Itishasagoodmicronairevalueandbrightcolour.
Table21:MainFibrePropertiesofMajorSudaneseCottonVarieties
Variety
BARAKAT
NOUR:
RollerGin
Length2.5%
SL(mm)
3336
2931
Fineness
Micronaire
3.5 4.2
4.44.7
Strength
(g/tex)
26 30
2123
SawGin
ACALA:
2830
4.44.6
2022
RollerGin
SawGin
2728
2528
3.84.3
3.74.4
Page50of154
HVI
3441
2934
2833
1922
2532
1822
2431
Sudanhasrecentlyreleasedninevarietiesofcottonwhicharelistedbelow.
Table22:MainFibrePropertiesofNewlyReleasedVarieties,Sudan
Varieties
Length:2.5%
SpanLength(mm)
Fineness
Micronaire
Strength
(g/tex)HVI
Hadi
Siddig
Kheiralla
Hamid
Knight
Abdin
Wager
Burhan
Khalifa
32.6
32.8
29.2
27.9
29.3
31.8
28.9
29.4
27.3
3.7
3.6
4.2
4.9
4.5
4.4
4.5
5.2
4.1
35.0
37.0
31.5
30.1
31.1
34.0
30.4
30.3
28.0
KeyInitiatives
ReleaseofExtrafinecountcotton
Sudan has recently released a top class, extrafine count cotton, a cultivar combining traditional
SakelwithhighyieldingLambertvarieties.Thistypeofcottonhasahighresistancetodisease,isthe
longestvarietyandhasthefinestfibre.OthersvarietiesintroducedincludeNubaandAcrain,bothof
whicharerainfed.
NationalAgriculturalSchemes
Under the framework of privatization policy adopted by the government, a lot of schemes were
transferredintoagriculturalcompanies.
GeziraScheme:
Itistheoldestagriculturalschemeadoptedbythegovernmentin1925asthebiggestirrigatedfarm
intheworldinanareaof2.1millionfeddans.TheschemeextendsthroughGeziraandSennarstates
and irrigated by flowing irrigation. The scheme contributes by 65% of the country's cotton
production. The Scheme provides great opportunities for investment in agricultural industries and
weavingandspinningindustry.
RahadAgriculturalScheme:
This Scheme was established in the 2nd half of the seventies and extends through Gadaref and
GeziraStates.TheareaoftheSchemeisestimatedat800,000feddans,and30,000feddansofthe
areawerecultivated.Otherpreparationsareunderwayfortheremainingarea.Thesystemadopted
intheSchemeistheintensiverotationsystemwherebyalltheareaoftheSchemearecultivatedin
quarterlyrotationtoproducecotton(mediumstaple),groundnuts,sorghumandwheat.
SukiAgriculturalScheme:
TheSchemeislocatedinSennarStateandisconsideredasthesmallestfederalschemeinanareaof
85,000feddans.ThecostoftheirrigationintheSchemeisthehighestwhencomparedwithother
irrigatedschemesbecauseofthepumpirrigationsystem.Thequarterlyrotationsystemisdesigned
togrowcotton(mediumstaple),groundnutssorghum,wheatandsunflower.
Page51of154
3.2.3.3.
GinningandOilPressing
Thereare18ginneriesinSudanwhicharedispersedindifferentpartsofthecountryandespecially
incottonproducingschemeswhicharescatteredallacrossthecountry.
3.2.3.4.
Textiles
ThetextileindustryoriginallystartedasatraditionalindustryinthesouthernprovinceofEquatoria
in1945andgraduallydevelopedin1960bytheestablishmentofSudanstextilefactoryinKhartoum
North which is considered as a biggest factory in Africa at that time. In 197075 all existing plans
were set up in both private as well as in public sector. Since 1990 the textile industry began to
collapsemainlyduetotheliberalizationpricespolicy,highcostofelectricity,outdatedtechnology,
etc.Problemsoflowcapacityutilizationpersistuntiltoday,buttheGovernmentkeepsthesectoron
theprioritylistoftheMinistryofIndustry.
Atpresent,thereare16spinningandtextilefactoriesinSudanoutofwhichonlyfourareworking
now. The efficiency and the production capacity of these factories is low as compared to their
designatedcapacity.
3.2.3.5.
Apparel
Thereare75garmentfactoriesinSudanoutofwhichonly13areinoperation.Themanufacturingof
apparel and clothing in Sudan is mainly for domestic consumption. The exports of apparel and
apparelmadeupsarealmostnegligible.
ThemostcommonsproductsmanufacturedareGalabiaandTobe(thenationaldress),innerwear,
suiting (trousers and shirts), shirts, blouses, grey loom state cloth ( pure cotton) count 16/1,
bleachedcountNe16/1,bedsheets,blankets,etc.
3.2.3.6.
SupportInstitutes
TheSudanCottoncompanyLtd
The Sudan Cotton company Ltd was established in 1990 to undertake the marketing of all cotton
producedinSudan.
IndustrialResearchandConsultancyCentre
TheIndustrialResearchandConsultancyCentre(IRCC)istheResearchInstituteinSudanthatfocuses
on Industrial Research and Consultancy to the Sudanese Industry. IRCC conducts several research,
technologicalandconsultancydirections,suchasIndustrialInformation,ProductDesign,Technology
and Production Line Design, Quality Assurance, Economic and Feasibility Studies and Industrial
Process Modeling. The Activitiesof IRCC addressalldirectionsof Sudanese Industry and cover the
entirespectrumofitsconsultancyneeds,contributingtosustainabledevelopment.
SudaneseBusinessmen&EmployersFederation
Sudanese Businessmen and Employers Federation encourage economic, scientific and practical
studies in different aspects and supports industrial, commercial and agricultural research. It also
holdsmarketingfairsinsideandoutsidetheSudantoshowandcirculatethenationalproducts.
Page52of154
SudaneseChambersofIndustriesAssociation
SudaneseChambersof IndustriesAssociation isarepresentativeof theSudaneseIndustrial Sector
insideandoutsideSudan.ItcontributesinsettingupoftherulesoftheIndustrialpolicy.SCIAalso
participatesinthetradeagreementsandtheworkerslegislations.
SudaneseStandards&MetrologyOrganization
SudaneseStandards&MetrologyOrganizationwasestablishedintheyear1992withtheobjective
of protection & awareness of consumers, strengthening national economy, improving quantity &
quality of national produce & services, adoption of philosophy of quality assurance and
enforcesimplementation, standardization of commodities and monitoring quality of imports &
exports.
FarmersCommercialBank
FarmersCommercialBankmajorrolesaretofinancetheagricultural,industrial,andcommercialas
well as export sectors, facilitate the availability of production input for agricultural sector, adopt
integrated rural development projects that help with the development of rural areas in Sudan,
provide healthy investment opportunities for farmers and also provide comprehensive banking
services.
3.2.4.1.
Rawmaterial
Sudan is one of the larger producers of cotton in the world; however the production has been
significantlylowerinrecentyearsonaccountoffarmersshiftingtoothermoreprofitablecrops.The
reasonsbehindthiswere lowdomesticdemand andlow prices ofcotton inexport marketswhich
prevailedfewyearsback.ThecottonproductivityinSudanisbetterthantheothertargetcountries,
evenIndiabutlowplantationofcrophasresultedindismalperformanceofthesector.
3.2.4.2.
Manpower
Most of the textile and apparel manufacturing units were forced out of business; those who are
operating are few and operate much below their actual capacities. As such the demand of
manpower has also shrunk. There are 2 universities in Sudan offering Diploma, Graduate and
MastersprograminTextiles,butthestudentstrengthhasnotbeentooencouragingrecentlyasthey
faceissuesofemploymentintheindustry.Therearesometrainingprogramsfortheoperatorlevel
workforce,whichisbeingruninassociationwithUNIDO.Severalcompaniesemployexpatsintheir
unitsasstaffandofficersatvariouslevels
3.2.4.3.
Power,Water&Fuel
The power cost is in the range of US$ cents 12 / unit which is quite high. Moreover the supply is
quiteerratic.Thereisnomajorissuerelatedtootherutilitiesasfarasthesupplyisconcerned.
Page53of154
3.2.4.4.
Financialsupport
Sudanesebanksdonotofferlongtermcredittobusinesses.Onlyshorttermfinanceisavailableat
an interest rate of 9 to 12%. Some finances are also available from Arab countries, but not too
significantcontributionhasbeenmadeinCTAsectortilldate
3.2.4.5.
Marketaccess
SudanesetextileandapparelproductscanenterEUandsomeothereconomiesfreeofanycustoms
dutiesandwithlimited/noquotarestrictions.Someofthetradeagreementsthattheyhavesigned
upforpreferentialmarketaccessincludes:
ArabTradeOrganization
3.2.4.6.
Technology
Most of the technology employed is outdated, but the rehabilitation program is being envisioned
withlatesttechnologye.g.10newginswhichareplannedhavelatestmachineryfromBrazil(5saw
gins)andTurkey(5rollergins)whichhaveveryhighproductivitylevel.Similarly,3weavingfactories
arebeingplannedwithrapierlooms.
3.2.4.7.
Industrialzones
Till date there are no CTA sector unit is operational in any industrial zones, but the government
envisagesestablishmentofseveralsuchzones,whichmaybenefitthebusinessinfuture.
3.2.4.8.
There is a severe lack of R&D activity at product level. However, at fiber level research work is
continuouslygoingonandrecently9highyieldingseedvarietieswerelaunched
3.2.4.9.
Valueaddition
There is absolute dearth of value addition in the Sudanese CTA sector. Most of the cotton is
exportedoutofthecountryinrawform.
3.2.4.10.
Nosignificantcontribution.Someofthegarmentfactoriesprovideforthebasicrequirementoftheir
staffmembers,whichismoreofemployeewelfarethanCSRactivity.
3.2.4.11.
SudanhasitsownportPortSudanfromwhereexportsandimportsaredone.Therearenomajor
issuesrelatedtodelaysetc.atport.ThesailingtimeformChinatoPortSudanis~20days,whereas
thesailingtimetoUSis~18days.
Page54of154
Table23:LogisticsandBusinessCosts,Sudan
PowerAvailability
Erratic
Powercost
US$12cents/unit
Lendingrate
Nolongtermfinancing
Watercost
Minimal
Wage/month
US$160300/month
OwnPort
Yes
Nearestport
PortSudan
20
SailingtimetoUS
18
Export US$2000
ImportUS$2100
3.2.4.12.
ThegovernmentofSudanhasmadeseveralinitiativestorevivetheindustryincludingrevivalof
severalfactories.However,thepowerscenarioandothermacrofactorsremainunfavorablewhich
hashamperedtheanticipateddevelopment.
3.2.4.13. Domesticmarket
ThedomesticmarketislargelydominatedbyimportsofclothingfromChina,India,Turkey,etc.most
ofthelocalmanufacturersareengagedinsuppliestoinstitutionalbuyerandlocaldresses.
3.2.5. ForeignTrade
3.2.5.1.
Overview
Sudan was net importer till 2006 but in 2007 exports surpassed imports and the same trend was
seentill2009.Theexportssawacompoundedgrowthrateof~11%whereasimportsincreasedwith
compoundedannualgrowthrateof3%from2005to2009.
T&A exports have decreased since 2005 from US$ 0.08 Bn to US$ 0.03 Bn in 2009. Share of T&A
exportsincountrystotalexportshavedeclinedgraduallyfrom1.5%in2005to0.4%in2009.
increasedfrom4.4%in2005to6.1%in2009.
Cottonfiber accounts for almost98% ofSudans exports whereas importsconstitute Mens woven
suits,jackets,womenknittedsuits,dresses,etc.
Page55of154
Figure10:SudansOverallTrade
Figure11:SudansCTASectorTrade
ValuesinUS$Bn
ValuesinUS$Bn
13.3
7.1
6.1
5.46.1
8.6
6.9
7.7
8.2
6.8
0.08
2005
2006
2007
TotalExports
0.43
0.39
0.43
0.42
0.27
2008
2005
2009
TotalImports
0.06
2006
0.06
0.05
2007
T&AExports
0.03
2008
2009
T&AImports
Table24:KeyCTASectorExportandImportStatistics,Sudan(2009)
99.7%
Top4importedcommodities
27%
Cottonfibre
97.7%
Menswovensuits,jacketetc.
9%
Shawl,scarvesetc.
1.6%
WomenKnittedsuits,dressesetc.
7%
Syntheticstaplefibre
0.2%
Menswovenshirts
6%
Wornclothing
0.2%
Wovenfabricofsyntheticfilamentyarn 5%
Leading4markets
93%
Leading4suppliers
81%
Egypt
70%
China
52%
China
11%
India
13%
Germany
7%
Egypt
10%
India
5%
Indonesia
6%
Page56of154
3.2.5.2.
ExportstoEU
Figure12:Sudan'sCTASectorExportstoEU
7.4
ValuesinUS$Mn.
6.9
5.2
CAGR:27%
2006
2007
2008
2.7
2.6
2009
2010
Source:Eurostat
Table25:MajorcategoriesofEUImportsfromSudan
(in000US$)
2006
Rawcotton
Knitted
garments
professional,sportinguses
for
Others
Total
2007
2008
2009
2010
CAGR
2010share
7,239
6887
5218
2682
2596
28%
99%
10
24
371%
1%
7,239
6887
5228
2685
2620
27%
100%
130
10
23%
0%
7,369
6889
5237
2696
2624
27%
100%
Source:Eurostat
Page57of154
3.2.6. SWOTAnalysis
Strengths
1. Goodqualitycotton:Sudanisoneoftheleadingproducersoflongstaplecottonvarieties,which
aresuitableforfinequalityproductsandcarryapremiumonprice.InSudan,thecottonpicking
isdonemanually.ThismakestheSudanesecottonfreeofanyblemishesorknots
Weaknesses:
1. Lowutilizationofmanufacturingcapacity:Currentutilizationlevelofmanufacturingisverylow,
with several units closed down. Technology is another key area of concern which needs
upgradingtoenhancethecompetitivenessoftheoveralltextileindustry.
2. Export of unprocessed cotton: More than 90% of the cotton produced in Uganda is exported
withoutanyvalueaddition.
3. Reductionofcottonoutput:Farmer'sshiftedfromcottontoothercropsinlastfewyearsasa
resultofexistinglowpricesandlessdemandatthattime.Thisresultedinsignificantdecreasein
areaundercottoncultivationandhencethecottonproduction.
Opportunities:
1. Governmentfocus:GovernmenthasstartedfocusingondevelopmentoftheCTAsectorinthe
country in a significant manner. Several steps have been planned to revive the sector in near
future
2. Hugedomestic/regional/internationalmarketdemand:Thecurrentsectoroutputisnotableto
meetthecountry'sdemand.Alotofuntappeddemandexists.
3. MarketAccess:Freetradeagreementexistswithkeymarketsoftextileandapparelproducts.
Threats:
1. Competitionfromleadingglobaltextilemanufacturers:WiththeendofMultiFiberAgreement
2. Focusonothercrops:Cottoniscontinuouslybeingdisplacedbymoreprofitablefoodcropsby
farmers.
After conducting a comprehensive analysis of CTA sector in Sudan, we did a SWOT analysis which
beaddressedkeepinginmindtherelativestrengthareasofSudananditscotton,textileandapparel
sector. Following recommendations are made for improving/strengthening the CTA sector
performance:
Page58of154
S.no. Objectives
Recommendations
Support R&D centers for introducing high yielding
Increasing cotton quality and
seeds
yield
Sudan has abundant cotton supply but the downstream

industriesi.e.textileandapparelmanufacturingarelimited.
Promoting value addition in Value addition in the sector should be promoted by
providing:
thesector
Supportformodernizationand
capacityexpansion
Improving skills of people

throughadequatetraining
Promoteeducationinthefield
oftextiles
Improveexistinginfrastructure
and rationalize costs of doing
business
Page59of154
Interest subsidies shall be provided for upgrading

Textile & Apparel sector shall be classified as Priority

sectorandthus,increasedlendingtothesectorshould
beaprimefocus
Introduce schemes for training and skill development and

createafundforimplementingtheschemewhichwillaid:
Establishnewcollegesfortextiles
Update course curriculum regulatory as per industry
requirements
Tieup with other international colleges for student
Adopt cluster based development approach where

suitable infrastructure is provided to the units
operatingwithinthoseandatreasonablecosts
Variousclustersshouldbeidentifiedbydoingadetailed
studyandthenpromotedasTextile&Appareldistricts
withintheregion
Initiatives
to
promote
domesticmarketdevelopment
Investment
activities
Phase out supply of secondhand clothing from the

marketthroughappropriatepolicyinterventions
Develop a mechanism to regulate flow of cotton to
domesticmarket
promotion
OrganizeAnnualInvestorSummitshowcasingbusiness
opportunitiesinSudanscottonandtextilesector
Page60of154
3.3. Tanzania
Tanzania witnessed a high GDP growth of ~9% between 2000 and 2010. The country's growth is
supportedbycontinueddonorassistanceandsupportingmacroeconomicpolicies.Thecurrentsize
ofTanzaniaseconomyisUS$22.4Bn(2010,nominalGDP)andpercapitaGDPisestimatedat~US$
543(2010,Nominal).
Theagriculturesectoristhelargestcontributortoeconomicactivity,contributing~42%totheGDP,
dominatedlargelybycoffee,sisal,teaandcottonproduction.Thesectoremploys~80%ofthework
force.Thecountryisrichinnaturalresourceslikegold,naturalgas,ironore,coal,diamonds,etc.The
country has several beautiful National parks and other places of tourist interests and tourism has
becomeavitalpartoftheeconomy.
Figure13:EconomicSnapshot,Tanzania
750
20
500
15
10
250
GDPpercapita(US$)
GDPinUS$bn
25
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E
GDP(nominal)
Cotton was introduced in Tanzania more than 120 years ago. Cotton is the second largest export
product in Tanzania with over 80% of cotton produced in Tanzania is exported. Cotton is a major
sourceofemploymentandlivelihoodtoabout40%ofthepopulation,i.e.about16million.Itisone
of the major cash crops grown in Tanzania. Over the last five year, among the traditional crops,
CottonhasgeneratedmaximumrevenueforthecountryamountingtoUS$92Mnperannum.
InTanzania,cottonisgrownmainlyonsmallscalefarmsby350,000to500,000 farmers whoown
between 0.5 to 10 acres and grow mostly in the rain fed areas. Major production areas are the
Western Cotton Growing Area (WCGA) and the Eastern Cotton Growing Area (ECGA). WCGA
accounts for over 98% percent of production comprising subregions like Shinyanga, Mwanza,
Tabora,Mara,Singida,KageraandKigoma.
Page61of154
TanzaniaisthefourthlargestproduceroforganiccottonintheworldafterIndia,TurkeyandSyria.
OrganiccottonfarmingispracticedincertainareasofWCGAespeciallyinMeatuDistrictandfetches
relativelyhigherprice.
Though,thecottonsectorwasliberalisedinthe1990sbutthecottonsubsectorisstillregulatedby
theTanzaniaCottonBoardwhodeterminesthefloorpriceoftheseedcottonandissuespermitto
theseedcottonbuyersandtraders.
ThetextileindustryofTanzaniagrewrapidlybetween1966and1985withsupportivegovernment
policytoindustrializethecountry.Thepolicyaimedatproducingconsumergoodslocallyandadding
valuetoprimaryproducts,includingcotton.
Cottonspinners,weaversandtextilemillerscompriseof~25millsbotholdandnew.Allthesemills
areprivatelyowned,andproduceexclusivefabricskanga,kitenge,dyeddrill,linenandbedsheets.
Thesemillsutilizeonlyabout20%ofdomesticlint;restisimportedduetounfavourablepricesand
unacceptable quality levels of local fibres. These mills operate at 4050% of installed capacity and
employaround20,000workers.
Page62of154
3.3.3.1.
Overview
Figure14:TanzaniaCTAValueChainOverview
No.
of
farmers:
350,000500,000
Land Available for
Cotton Production:
300,000560,000ha
Average
Yield
Rate:750to800kg/ha
Average farm size:25
haplots
Page63of154
No.ofginneries:
WCGA: 62
ECGA: 8
Noofgins:
Rollergins:
1451
Sawgins:
89
GinningOutturn(%):
34
No.of firms:
2standalonefirms
Installedspinning
capacities(in
spindles)
ShortStaple:400,000
LongStaple:3,000
No.offirms:
16
MainProducts:
Printed women khanga
and kitenge as well as
yarn dyed woven kikoi
fabrics, bed linen and
hometextiles.
No.ofApparel
Manufactures:
5
MainProduct:
KnitGarments
3.3.3.2.
CottonFiber
Cottonisoneofthemostimportantcashcropsoftheeconomyandhascontributedsignificantlyto
theagriculturalgrowthandearningsofthecountry.Cottonisasourceofemploymentandlivelihood
toabout40%ofthepopulation,i.e.about16millionpeople.Overthelastfiveyearsfrom20052009,
among the traditional cash crops, cotton has generated the highest foreign exchange earnings,
averagingUS$92.0Mnperannum,comparedwithUS$89.7Mn(tobacco)andUS$88.6Mn(coffee).
In Tanzania, cotton is grown in 42 districts and 13 regions out of 127 districts and 21 regions of
MainlandTanzania.Cottonisgrownmainlyonsmallscalefarms,inthe2cottongrowingareasthe
WesternCottonGrowingArea(WCGA)andtheEasternCottonGrowingArea(ECGA).
Table26:CottonSectorProfile,Tanzania
No.offarmers
350,000500,000
Seedcottonpricepaidtofarmers
PriceinCurrency
EuroEquivalent
AverageYield
Tanzania shillings (TZS)

500/kgcottonseed
0.22Euro/kg
Current
200kg/ha
Potential
2,500kg/ha
SeedPlantingRate
25kg/hectare
VarietyofCotton
LandAvailableforCottonProduction
Gossypium
Hirsutum
(Americanuplandcotton)
300,000 560,000ha
Averagefarmsize
25haplots
The regional cotton production trend during the period 200102 to 200809 shows that WCGA
accountedfor99percentoftotalcottonproductionperyearonanaverageandonly1percentwas
producedinECGA.
ThemaincottongrowingsubregionsinWCGAincludesShinyanga,Mwanza,Mara,Tabora,Singida,
Kagera and Kigoma. Shinyanga and Mwanza together account for ~80% of the cotton production.
ThesubregionsinECGAincludeMorogoro,Manyara,Coast,Tanga,Iringa,andKilimanjaro.
Page64of154
Table27:RegionalCottonProductionTrends,Tanzania
ValuesinMT
Zones
Regions
Western
200102
200203
200304
200405
200506
200607
200708
200809
Shinyanga
80,030
119,107
88,352
204,626
233,721
82,740
128,285
220,808
Mwanza
46,685
43,681
31,296
90,974
90,868
29,087
41,814
74,744
Mara
13,091
11,361
11,296
24,128
28,281
4,734
13,081
53,282
Kagera
3,117
1,613
3,476
7,091
4,639
1,992
4,257
2,559
Tabora
4,613
11,409
4,332
10,560
14,197
9,997
11,698
13,451
Kigoma
18
28
62
542
484
208
238
412
Singida
21
39
481
697
507
581
1,641
Total
Western
147,575
187,147
138,904
338,402
372,885
129,265
199,954
366,897
99.6
99.6
99.3
98.1
99.5
99
99.9
99.5
Eastern
Manyara
130
120
224
829
781
404
540
898
Morogoro
242
347
523
1,948
875
845
98
299
Mbeya
Kilimanjar
21
20
29
26
11
23
84
Pwani
86
83
190
45
19
48
83
Tanga
15
61
49
140
58
42
307
Iringa
150
102
17
54
23
Total
Eastern
567
736
929
3,187
1,772
1,325
710
1,694
0.4
0.4
0.7
1.9
0.5
0.1
0.5
Percentag
Percent
Grand
148,142 187,883 139,829 341,789 374,657 130,585 200,664 368,697

Total
Source:TanzaniaCottonBoard
CottonProductionandYieldsStatistics(19902011)
In the recent years, the production of cotton has declined as farmers have turned to other cash
crops such as tobacco. The various challenges in cotton cultivation include low productivity, poor
cottonqualityandalowlevelofmechanizationlevel.
CottonproductioninTanzaniaislargelymeantforexports.MajorimportersofTanzaniascottonare
China, Indonesia, Thailand, Kenya, Portugal, Bangladesh, Vietnam and Pakistan. There has been a
drastic dip in exports in the year 2006. However, since then the quantum of cotton exports has
increased.
Page65of154

Table28:CottonBalanceSheet(19902010),Tanzania
YearfromAug1toJul31
Year
Opening
Stocks
Production
Total
Supply
Imports
MillUse
Exports
Harvested
Area (000)
Acres
Ending
Stocks
Yield
Pounds/Acr
e
2010
435
275
710
150
225
335
741
178
2009
440
410
850
140
275
435
902
218
2008
285
570
855
165
250
440
998
274
2007
295
310
605
170
150
285
1,112
134
2006
302
200
502
110
97
295
741
130
2005
248
575
823
120
401
302
1,260
219
2004
152
525
677
70
359
248
1,236
204
2003
142
235
377
70
155
152
956
118
2002
137
280
417
60
215
142
956
141
2001
116
230
346
55
154
137
1,038
106
2000
124
188
312
50
146
116
450
201
1999
160
161
321
55
142
124
618
125
1998
170
165
335
51
124
160
445
178
1997
207
285
492
41
280
170
865
158
1996
183
400
583
64
312
207
699
275
1995
132
377
509
69
257
183
850
213
1994
170
184
354
60
161
132
425
208
1993
221
207
428
51
207
170
850
117
1992
111
441
552
64
266
221
1,063
199
1991
83
390
473
73
289
111
1,112
168
1990
106
220
326
64
179
83
791
134
PlantingSeasons
TheplantingandtheharvestingseasonvariesintheWesternandtheEasterngrowingareasinthe
region. In WCGA, cotton is planted between midNovember to midDecember, late planting
continuestillendJanuary;harvestingandmarketingbeginsinJulyoffollowingyear.InECGA,cotton
is planted between February and March; and harvesting and marketing is done between July and
Augustofthesameyear.
The cultivated cotton in Tanzania is mainly of the American Upland type (Gossypium hirsutum L).
TanzaniacottonissoldonthebasisofGrade,togetherwiththecorrespondingstaplelengthknown
asType.Therearesevengradesofcottonoutofwhichfivearephysicalandtwoaredescriptive.The
basicsellinggradeisGany,asadoptedbytheInternationalCottonAssociation(ICA).
CottonGrades
Page66of154
Table29:CottonGrades,Tanzania
Grade
Universalgrades
%oftotalcrop
Remarks
Tang
Goodmiddling
1.40
Physical
Gany
Strictmiddling
41.63
Physical
Gany
Middling
39.73
Physical
Gany
Strictlowmiddling
13.81
Descriptive
Gany
Lowmiddling
1.80
Physical
Gany
StrictGoodOrdinary
0.40
Descriptive
Yika
Goodordinary
0.32
Physical
Undergrade(UG)
Belowgrade(BG)
0.91
Nograde
CottonTypes
Table30:CottonTypes,Tanzania
Type
Type1staplelength11/18
Millimeter
Code
%ofthetotal
28.228.7
36
36.17
27.427.9
35
50.56
26.727.2
34
13.27
Type2staplelength1 /32
Type3staplelength1 /16
Over82%ofthecottongradingismiddlingandabove.ThestaplelengthofcottoninTanzaniavaries
from11/16to11/18.Morethan85%ofcottonproducedismediumtolongstaplelength.
KeyInitiatives
ContractFarming
Inordertoprotectandpromotetheindustry,thecottonstakeholdersinTanzaniahavedecidedto
opt for contract farming. For two consecutive years, contract farming pilot studies have been
conductedinSerengeti,BundaandMusomadistricts,andin2011theschemehasbeenextendedto
fourwardsinBariadiandKibondodistrictsinShinyangaandKigomaregions.Itwillnowbeextended
tomanyotherregions.
Thecontractfarmingmodelentailsformationoffarmerbusinessgroups(FBGs)comprisingbetween
50and90smallholders.Inthismodel,ginnerswillberequiredtoworkwithfarmersfromploughing
topricing,henceenhancingqualityandquantity.Earlierthecultivatorsandtheginnersusedtoenter
inanagreementonlyatthetimeofcultivation,whichresultedininferiorandlowproduceofcotton.
Contract farming will keep the agents away from the cotton trade and provide assurance to both
ginnersaswellasfarmers.
Severalissuesincottonproductionlikeinferiorqualityofcotton,lessproductivityandlowlevelof
mechanism have remained important concerns in Tanzania which has discouraged the cotton
cultivators and induced them to switch to cultivation of other cash crops like tobacco. Contract
farming is seen to reverse the trend as it provides the farmers with an assurance for inputs,
marketingsupportandalsoasteadypriceandincome.
Page67of154
The programme is sponsored by Tanzania Gatsby Trust, under Cotton and Textile Development
Programme (CTDP) and implemented by Tanzania Cotton Board (TCB), which is committed to
overseeing the implementation of the new system in order to safeguard interests of farmers and
ginners.
OrganicCottonProduction
Initiativeshavebeentakenbyvariousorganizationstoimprovetheworkingconditionofthesmall
holderfarmersandpromotetheorganiccottonproductionindifferentregionsofTanzania.
Organic cotton fetches better prices at the international market than the traditional one in the
marketforseedcotton.
Table31:OrganicCottonProductioninTanzania
ProductioninTons
200506 200607 200708 200809
TZorganiclint
649
TotalAfricanorganiclint 2,377
Totalglobalorganiclint 37,799
1662
4,359
57,731
2852
4181
7,285
9,168
145,865 175,113
Thevariousorganizationsthatsupportorganiccottonproductionarelistedbelow:
Remei/BioRe
Bio Re Tanzania Ltd coordinates the growing and processing of

organiccottoninTanzaniasMeaturegion
Biosustain
Biosustain was established in the year 2006 with an aim to revive
cotton production using organic farming and to provide markets for
organiccertifiedproductswithanemphasisonquality.Itcoordinates
thegrowingoforganiccottoninTanzaniasSingidaregion.
Rural
Livelihoods RLDC is working with the private enterprise and cotton farmers to
Development Company facilitate the sustainable growth of organic cotton farming. It is
involved in thecoordinationoforganiccotton in theMaswa district
(RLDC)
inTanzaniasShinyangaregion
3.3.3.2.
Presence of a large number of buyers of the Tanzanian cotton is one of the key features of the
sector.Mostofthesebuyersalsoownginneries,whocompetetopurchaseseedcotton.Duringthe
year199495,22privatecompaniesstartedtradingcotton,and8newprivateginnerieswereadded.
Initially, many ofthe privatebuyers whodid notownginneriesentered into toll ginning contracts
withthecooperativeunionsthatownginnery.However,thesecooperativeunionsgotsupportfrom
thegovernmentandtheywerereluctanttoenterintotollginningcontractswiththeprivatebuyers.
Thecooperativeunionswerenotevenconsideringsellingginningfacilitiestotheseprivatebuyers.
This encouraged the expansion of the private ginning capacities, despite the existence of under
utilizedcapacityatginneriesownedbycooperativeunions.
Another factor that has contributed to the expansion of the private ginning capacity is that the
ginningequipmentsheldbythecooperativeunionswereoldorpoorlymaintained.Theoldestare
Page68of154
Ukerewe (1923) and Nassa (1924); and the newest are Chato and Ngasamo (1966) and Kahama
(1967).Mostoftheprivateginneries,withtheexceptionofManonga(1958),wereconstructedafter
1995;and17ofthemwereconstructedafter2000.Witholdequipmentinplace,itwasdifficultto
achievegoodqualitylintandfragmentationofseedcoatwasanothermajorproblem.
Post liberalization, the sector has experienced multiple entry and exit of firms from year to year.
Whilesomeofthisiscompletelynewentryorfinalexit,someginneriesareleftunderutilizedsimply
for aseason or two,either because the company concerned has financialdifficulties or becauseit
feelsthatbuyingpricesaretoohightomakebuyingworthwhile.
Table32:GinningSectorProfileintheWCGA,Tanzania
No.ofginneries
Cooperatives
PrivateInvestors
Numberofgins
RollerGins
SawGins
InstalledGinningCapacity(estimated)
Ginningequipment
AverageGinningOutturn(GOT)
PriceforcottonseedFOB/FOTginnery
62
21
41
1,368
1,279
89
1.2mbalesof200kgeach
Mainlyrollergins,butalsohavesomesawgins
36%
Tanzaniashillings(TZS)500/kgcottonseed
In WCGA there are a total of 62 ginneries equipped with 1,279 roller gins, and 89 saw gins. 21 of
these ginneries are owned and operated by cooperatives. The remaining 41 are owned by private
companies.InECGAthereare8ginneries;7outofwhichareoldand1isnew.
Mostoftheginnershaveoilmillsasanimportantcomponentoftheircottonbusinessoperations.At
present32ginnershaveoilmillstoo,whichprocessesabout16,121MTp.a.ofcottonoil.However,
thisrepresentsonly14%oftheinstalledcapacitywhichstandsat115,150MT.Theseoilmillsalso
producearound52,000MTofcottoncakeannually.
3.3.3.3.
Textiles
Thetextilegrewrapidlybetween1966and1985withsupportivegovernmentpolicytoindustrialize
the country. The policy aimed at producing consumer goods locally and adding value to primary
products, including cotton. The growth was triggered by high demand for cloth kikoi, khanga,
kitenge, bed sheets, blankets and other dressing materials. However, after the privatization
programmeofthelate1990smanyofthesemillsclosedaltogether.
Currently, the spinning, weaving and textile mills industry comprises of 25 firms employing about
20,000workers.Itisestimatedthatabout30,000tonsofTanzaniascottoncropislocallyprocessed
intotextileseveryyear.
Tanzaniaistheworlds2ndlargestsisalproducer.Tanzaniahas anumberofsisalprocessorswhich
spin/weavesisalandmakeproductssuchassacks,ropes,twines,mats,etc.
Page69of154
Table33:TextileManufacturingIndustryProfile,Tanzania
Segment
No.offirms
Description
CottonSpinning
2
standalone
firms
Yarnoutputpartlysoldlocallyandpartlyexported
InstalledSpinningCapacity:(Spindles)
ShortStaple:400,000
LongStaple:3,000
TraditionalFabrics
10firms
Concentrate in making woven printed women kanga and

kitenge;aswellasyarndyedwovenkikoifabrics,bedlinenand
home textiles. Most of these traditional fabrics are sold in
Tanzania; a few exported in the surrounding landlocked
countries; and limited amounts into some of the island states
offtheeastAfricancoast.
SpecialistTextile
6firms
1 firm manufactures heavier weight woven canvas textiles

which are mainly exported; 3 firms make mosquito bednets
sold locally and to other African states; 2 firms make limited
volumesofblanketssoldlocally
Sisaltextilesandproducts
Anumberoffirmspresenttoprocessdomesticsisalcropinto
textilesandmadeupitemssuchasyarn,fabrics,ropes,sacks,
carpetsandmats
Source:PrimaryResearch,InternationalTextileMachineryShipmentStatisticsVol32,2009
Table34:MarketAccessandSales,Tanzania
Local
MajorityoflocallyproducedtextilesaresoldinTanzaniaintheformofkanga&kitenge
thesearewovencottonprintedclothwrapsmainlywornbywomen
Regional Large volumes of Tanzania made kanga &kitenge, and mosquito nets are sold into
regionalEastAfricanmarkets(e.g.Mozambique,Zambia,Malawi)
Export
Limited volumes of textiles & apparel are currently sold into the US and EU. In recent
times,volumesofTanzaniagarmentsarenowbeingsolddutyfreeintoSouthAfrica
Source:PrimaryResearch
3.3.3.5.
Apparel
In Tanzania, there are five large apparel producers mainly making knitted garments. These firms
includeMazavaFabrics&Production,Sunflag,Kibotrade,EllenKnitweaveMills,andAtoZTextiles.
Theyusebothlocalandimportedfabric;andproducelargelyforexportmarketwithinEastAfrica,
SouthAfrica,theEuropeanUnionandlimitedsalestotheUS.
3.3.3.6.
SupportInstitutes
ThecottonsectorofTanzaniaissupportedbyvariousinstituteslistedbelow:
Page70of154
TanzaniaCottonBoard
Tanzania Cotton Board (TCB) was established on July 1, 2004. TCB major roles are regulation,
promotion,monitoring,advisory,facilitation,coordination,developmentandrepresentationinthe
cottonsector.
CottonResearchInstitutes
Currently, there are two institutes which directly deal with cotton research the Lake Zone
AgriculturalResearchDevelopmentInstitute(LZARDI);andtheIlongaAgriculturalResearchInstitute
(IARI).Botharegovernmentowned.LZARDIisinWCGA;whileIARIisinECGA.
TanzaniaCottonAssociation
TanzaniaCottonAssociationwasformedin1997asanapexorganizationofcottonstakeholdersto
promote the interest of the sector in a unified approach. Currently TCA has 50 members which
include ginners, traders, exporters and Tanzania Cotton Growers Association. TCA has played an
important role in promoting selfregulation amongst its members as well as in increased cotton
outputvolumesandyieldsthroughtimelyavailingfarmerswithinputsandtractorhireservices.
GovernmentInstitutions
Anumberofgovernmentownedentitiesintheagriculturalsectorplayacriticalpublicroleinvarious
sectors, including the cotton sub sector. These include the Tanzania Official Seed Certification
Institute (TOSCI), Tropical Pesticides Research Institute (TPRI) and others like the National
EnvironmentManagementCouncil(NEMC)andTanzaniaBureauofStandards(TBS).
DevelopmentPartners
The development partners which include multilateral and bilateral organizations and agencies
supportGovernmentandcommunityintheagriculturalsector,ingeneral,andcottonsubsector,in
particular,throughgrantsandsoftloans.Theyalsoprovidetechnicalsupportintheimplementation
of agreed programmes. Most financial and technical assistance is now provided through basket
funding, a framework for coordinating and managing external resources and for forging closer
partnershipbetweentheGovernmentandDevelopmentPartners.
Page71of154
3.3.4.1.
Rawmaterial
Tanzania is one of the key cotton growing countries in East African subcontinent. Of the overall
production,about80%isexportedandonlyrestisutilizedinthedomesticmarket.Over82%ofthe
cotton is middling and above. Cotton production is 100% rain fed and thus, the production varies
withtheclimaticconditions.Tanzaniahasinherentstrengthsincottonproductionbutislatelybeen
effectedbyincreasingissuesofcontamination.Withnewfarminitiativessuchascontractfarming,
thisissueisexpectedtoresolvetoalargeextent.
3.3.4.2.
Manpower
Thereisavailabilityofmanpowerbutthepresentworkforcelackstherequisiteskillsandtrainingto
do the required job. There is requirement of skilled workers especially in areas like efficient farm
practices,weavingandtextilemanufacturing.
3.3.4.3.
Power,Water&Fuel
Availabilityofpowerishighlyerraticandabigconstraintforthesector.Thecostsarereasonablebut
there are too many disruptions in the power supply and voltage due to which machines fail to
operate continuously. Water supply isalso irregular as it is dependent on power.Allthesefactors
increasethecostofpower,water&fuelandthereby,increasedproductioncosts.
3.3.4.4.
Financialsupport
Therearelargeno.oflocalandinternationalbanksandfinancialinstitutionspresentinthecountry
such as Bank of Africa, Tanzania Investment Bank, Commercial Bank of Africa, Barclays Bank,
StandardChartered,CitiBank,etc.TheseInstitutions lend funds tothetextileindustrybutatvery
highcostsof~15%.So,itbecomeshighlyunaffordableforthemanufacturerstoborrowfromthese
banks.
3.3.4.5.
Marketaccess
Tanzaniamadetextileandapparelproductscanentermostoftheworldsrichereconomiesfreeof
any customs duties and with limited quota restrictions. Some of the trade agreements that they
havesignedupforpreferentialmarketaccessincludes:
SouthernAfricanDevelopmentCommunity(SADC)
LeastDevelopedCountry(LDC)
Page72of154
3.3.4.6.
Technology
The technology currently in use is highly outdated in all areas like ginning, spinning and weaving.
Manymillshavelotofdysfunctionalmachinerieswhichisjustlyingwiththemformanyyears.There
is huge requirement of modern technology and training people to operate these machineries, to
improveproductivityinthesector.
3.3.4.7.
Industrialzones
EPZAuthorityhasidentifiedmajorareasoftheEPZ/SEZinthe17regionsinTanzanianMainland.
Currently3oftheseEPZhavealreadybeenestablished,whichare:
BenjaminWilliamMkapaSpecialEconomicZones
EPZMsamvu,Morogoro
KamalIndustrialEstateEPZBagamoyo,Pwani
WithcontinuedeffortsbytheMinistry,manyinvestorshavecontinuedtoshowinterestinbuilding
industrialandbusinessinvestmentthroughthefreeinvestmentareasofEPZandSpecialEconomic
Zones(SEZ).
3.3.4.8.
Fewresearchinitiatives havebeenundertakenby ResearchAssociationlikeLakeZoneAgricultural

ResearchDevelopmentInstitute,intheEasternZoneandtheWesternZone.Theseinitiativeshave
led tothe introductionof new varietiesof seedsresulting in higheryields, good fibre content and
better resistance. These initiatives have been funded partly by government and partly by Cotton
TrustFundandNGOs.
However,theresearchinitiativesarecurrentlynottakingplaceinbigwayduetolackofsufficient
researchers.Thefundingsupportforresearchanddevelopmentisalsolimitedasthereisnoprivate
sectorparticipationinthearea.
3.3.4.9.
Valueaddition
Tanzaniahaslimitedvalueaddedservicesand80%ofthecottonproducedinthecountryisexported
withoutanyvalueaddition.Countryoffershugescopeforintroductionofvalueaddedservicesbut
requiresadditionalmanufacturingfacilityforthesame.
3.3.4.10.
MajorityofthefirmscontributetocharitiesandmakedonationsaspartofCSRactivitiesandsupport
villagers needs of building schools, hospitals, etc. Few firms which are located at farflung areas
create provision for various facilities for employees like training, employees children education,
canteenfacilities,activityzone,etc.
Page73of154
3.3.4.11.
LogisticsandBusinessCost
Tanzania has advantage in terms of presence of port at DaresSalaam. It takes about 10 days for
documentshipment&processing,customsclearanceandthen~3weekstoreachthedestination.
Sometimesthereisadelayinshipmentorclearancebutnotamajorconcernfortheindustry.The
costs of doing business in Tanzania are one of the most competitive as compared to other target
countries.Costsintermsofwages,power,waterandlogisticsarereasonable.Buttheinterruptions
in supply lead to increased costs for the manufacturers. The borrowing costs for the sector are
relativelyhighat~15%.
Table35:LogisticsandBusinessCosts,Tanzania
PowerAvailability
Inadequate
Powercost
UScents14/units
Lendingrate
~15%
Watercost
US$0.5/cu.m
Wage/month
US$80100
OwnPort
Yes
Nearestport
DarEsSalaam
18days
SailingtimetoUS
25days
Export US$ 1,300

ImportUS$1,500
3.3.4.12.
Cotton is one of the priority sectors of the Government and is supporting the sector through
formationofvariousboardsandrelevantorganizationstooverseethedevelopmentofthesector.It
hascreatedExportProcessingZones(EPZ)alongwithEPZAuthority(EPZA)whichoffersvariousfiscal
and nonfiscal incentives to the investors and the units. Government also provides support to the
farmers by giving subsidies for procuring inputs like seeds, fertilizers, etc. Government through
TanzaniaCottonBoardandcottonauthoritiesfunds6070%ofthecostwhiletherestiscontributed
bythefarmers.
3.3.4.13.
Domesticmarket
ThedomesticmarketischaracterizedbylocalfabricKangaandKitenge.Kangaisusedasagarment
by local residents, as skirts, wraparounds, head gear, etc. These printed fabrics are available in
varied designs and patterns. There is not much demand for domestically manufactured textile
garmentssuchaswomendresswear,shirtsandtrousersformen.
Page74of154
Therearealsootherformsofgreydyedprintedcottonfabricslikesheetingcanvas,twill,bedsheets,
pillowcovers,tableclothandotherslikemosquitonets.
Domesticmarketissaturatedbyhugeimportsofsecondhandclothingatverylowprices.Thishas
led to dependence on imported clothing and domestic producers have also losing interest in local
garmentmanufacturing.
3.3.5. ForeignTrade
3.3.5.1.
Overview
TanzaniaisanetimporterinT&Asector,withnetimportsamountingtoUS$0.23Bn.T&Aexports
haveslightlyincreasedsince2005fromUS$0.16BntoUS$0.17Bn.However,shareofT&Aexports
incountrystotalexportshavedeclinedgraduallyfrom11%in2005to8%in2009.
registeringacompoundedgrowthof12%.ShareofT&Aimportshavebeen~78%inthelast5years.
Thoughthesharehasgoneupto13%in2008butitagaindippeddownto7%in2009.
Tanzaniamainlyexportscottonfiberandhomefurnishingwhereasimportsconstitutewornclothing
andwovenfabricofsyntheticfilamentyarn.ChinaandIndiaarethemajorsuppliersoftextileand
apparelandKenya&IndiaarethemajormarketsforTanzania.
Figure15:TanzaniasOverallTrade
Figure16:TanzaniasCTASectorTrade
ValuesinUS$Bn
6.1
5.1
5.5
0.82
3.8
3.2
1.6
ValuesinUS$Bn
1.8
2.4
2.3
1.9
0.16
2005
2006
2007
TotalExports
2008
2005
2009
TotalImports
0.25
0.28
0.15 0.12
2006
0.19
2007
T&AExports
0.40
0.39
0.17
2008
2009
T&AImports
Page75of154
Table36:KeyCTASectorExportandImportStatistics,Tanzania(2009)
85%
46%
Cottonfiber
58%
WornClothing
14%
Homefurn.excl.blanket&linen
17%
Wovenfbofsyntheticfilamentyarn
14%
Otherveg.fib.(coconut,abaca,etc.)
6%
Wovenfb>85%ctn,<200gsm
13%
Wovenfbofsyntheticfilamentyarn
4%
Womenwovensuit,jacketetc.
5%
Leading4markets
56%
Leading4suppliers
74%
Kenya
19%
China
36%
India
19%
India
25%
VietNam
10%
UnitedArabEmirates
9%
Indonesia
8%
USA
4%
3.3.5.2.
ExportstoEU
TanzaniaisaminorsupplieroftextilesandapparelsproductstotheEUmarket.Tanzaniassupplyto
theEU27countriesin2010was~US$9.1Mn.Further,theoverallvalueoftradewithEU27isalso
onadecliningtrendoverlast5years.
Figure17:TanzaniasCTASectorExportstoEU
ValuesinUS$Mn
17.5
16.4
14.9
CAGR
14%
9.1
6.9
2006
2007
2008
2009
2010
Source:Eurostat
Page76of154
Table37:MajorCategoriesofImportsbyEUfromTanzania
ValuesinUS$000
2006
2007
2008
2009
2010
2010share
CAGR
RawCotton
5505
3438
7253
2658
2732
16%
30%
Cottonyarn,with>=85%cotton
3864
3426
1857
815
1300
24%
14%
Other veg. fiber e.g. coconut,

abaca,sisal,ramie,etc.andtheir
waste
Yarn of vegetable textile fibers
likeflax,jute,otherbastfibers
Knitted TShirts, singlets and
othervests
Cardedorcombedcotton
2287
2709
3565
913
1166
15%
13%
260
717
509
482
1163
45%
13%
3088
2069
1563
972
1610
15%
18%
711
1662
1811
773
710
0%
8%
15716
14019
16558
6614
8681
14%
95%
717
867
968
308
453
11%
5%
16433
14885
17526
6922
9134
14%
100%
Others
Total
Source:Eurostat
3.3.5.3.
ExportstoUSA
Limited volumes of Tanzanias textiles and apparels products are exported to the US market.
TanzaniassupplytotheUSin2010was~US$1.9Mn.Further,theoverallvalueexporttotheUShas
declinedovertheyears.
Figure18:TanzaniasCTASectorExportstoUS
3.7
ValuesinUS$Mn
3.3
1.9
CAGR
12%
2006
2007
2008
1.9
1.2
2009
2010
Source:Otexa
Page77of154
Table38:MajorCategoriesofImportsbyUSfromTanzania
ValuesinUS$000s
2006
2007
2008
2009
2010
CAGR
Mens, boys suits, jackets,

trousersetcknitorcrochet
Clothing accessories or
parts,knitorcrochet
Tshirts, singlets and other
vests,knitorcrochet
Jerseys,
pullovers,
cardigans, etc, knit or
crochet
Womens, girls suit, dress,
skirt,etc.
Garments,knitorcrochet
785
2010
share
41%
517
27%
710
518
846
814
298
16%
15%
276
529
76
250
2%
13%
24
17
41
12%
2%
20
78%
1%
SubTotalTop6categories
1,011
1,064
924
815
1,912
14%
99%
Others
2,707
2,217
948
389
11
67%
1%
Total
3,718
3,281
1,872
1,204
1,923
12%
100%
Source:Otexa
3.3.6. SWOTAnalysis
Strengths
1. Mainstayofeconomy:Thecottonindustryhasbeenasocioeconomicmainstayinthecountry
assignificantpopulationhasbeendependantonthesectorformorethanacentury.Theprimary
producersarededicatedtocotton.
2. Favourable climatic conditions: Existence of large tracts of fertile soils; numerous and large
permanentwaterbodiesaresuitableforincreasedacreageandirrigationcottonfarming.
3. Large cotton production: Tanzania is one of the key growers of cotton in Africa and supplies
cotton to many countries including Kenya, China, Indonesia, Thailand, Bangladesh, Vietnam,
Pakistan,etc.Thus,itisoneoftheprincipalcropgeneratingexportrevenues.
Weaknesses:
1. Poorfarmpractices:Thesectorisdominatedbysmallholderproducerswithlimitedknowledge
on crop and farm management practices, price and market trends, input procurement and
supplytrends.
2. Weak linkages across the value chain: The stakeholders in spinning, weaving and textile
manufacturingaredisorganisedwithlittleornocooperation,andothersupportinstitutionsand
Page78of154
local governments not playing effective role in supervising operations of agriculture, including
cotton.
3. Lackofvalueadditioninthesector:ThoughTanzaniahas abundant cottonproduction; about

80% of the cotton is exported. There is limited value addition happening in terms of
manufacturingoffinishedgoods/garments.
4. Interruptions in power supply: The power supply in Tanzania is highly erratic and a big
constraintforthesector.Therearetoomanydisruptionsinthepowersupplyandvoltagedueto
whichmachinesfailtooperatecontinuously.Manymillscanoperateonly3daysaweekdueto
powershortage.
5. Outdatedtechnology:Currentmachineries/technologyinuseareveryoutdatedparticularlyfor
ginning and textile sector. This further adds to the costs of manufacturing. Sector is currently
facinglackofnewinvestmentsforupgradingtechnology.
6. Lackofsupportinstitutionsfortrainingandskilldevelopment:Theskilllevelofpeopleworking
in a mill or at farm is very low. They need to be constantly trained and monitored to ensure
smooth functioning of work. There is lack of training and skill development institutions which
canenhancetheirjobskillstoacertainlevelandthereby,increasesproductivity.
7. Underdevelopeddomesticmarket:Thedomesticmarketiscompletelyunderdevelopedandis
largelydependenton local fabricKangaand Kitengeorsecondhandgarments.Thereislittle
availability as well as little demand for domestically manufactured textile garments such as
womendresswear,shirtsandtrousersformen.
Opportunities:
1. Huge demand potential: Enduring demand for cotton fabrics and textiles due to rising
population,increasingincome,andchangingconsumerpatternsinpreferenceforcottontextiles
andapparel.
2. Use of better practices: There is an inclination towards adopting new improved practices in
cotton production and processing; e.g. contract and irrigation cotton farming, and systematic
breedingofbetterqualityhybridseedsforhighercropyieldsandoutputvolumes.
3. Increasedinvestmentsinthesector:Risinginvestmentsintextilesmanufacturingwillenhance
skills development, boost incomes and jobs, and underpin a more sustainable domestic
industrialisationstrategy.
Threats:
1. Deterioratingcottonquality:Thecontaminationlevelsinthecottonareincreasingandthismay
poseathreattothecountryscottonsector.Thiswillnegativelyimpacttheearningsaswellas
competitivenessofTanzaniascottonifsuitablemeasuresarenottakenintime.
Page79of154

2. Increased focus towards other profitable cash crops: Emergence of alternative cash crops,
especially green gram, which are cheaper to grow but fetch higher returns than cotton in the
majorcottongrowingareasofWCGA,isathreatforthesector.
3. Competition from leading global textile manufacturers: Expanding acreage, increasing yields
and falling production costs in major producing and consuming countries pose threat to
TanzaniacottonsectorleadingtoreducedpricesandmarketsforTanzaniacotton.
4. Threatfromsecondhandarticles:Therearehugeimportsofsecondhandclothesinthecountry
whichisposingabigthreattotheeconomy.Thepresentlegalframeworkisnotstrongenough
topreventthispractice.
Page80of154
AfterconductingacomprehensiveanalysisofCTAsectorinTanzania,wedidaSWOTanalysiswhich
be addressed keeping in mind the relative strength areas of Tanzania and its cotton, textile and
apparel sector. Following recommendations are made for improving/strengthening the CTA sector
performance:
S.no. Objectives
Recommendations
SupportR&Dcentersforintroducinghighyielding
seeds
Increasingcottonqualityandyield
Exercise stringent quality controls at the ginning
level
Tanzania has abundant cotton supply but the

downstream industries i.e. textile and apparel
manufacturingarelimited.
Promoting value addition in the Value addition in the sector should be promoted by
providing:
sector
Support schemes/fiscal incentives on value
addition
Interestsubsidiesshallbeprovidedforupgrading
Support for modernization and Textile & Apparel sector shall be classified as
capacityexpansion
Prioritysectorandthus,increasedlendingtothe
sectorshouldbeaprimefocus
Introduceschemesfortrainingandskilldevelopment
andcreateafundforimplementingtheschemewhich
willaid:
Improving skills of people through
adequatetraining
Page81of154
Promote education in the field of

textiles
Improve existing infrastructure and

rationalizecostsofdoingbusiness
Update course curriculum regulatory as per
industryrequirements
Tieup with other international colleges for
studentexchange/knowledgeexchangeprograms
Adopt cluster based development approach

where suitable infrastructure is provided to the
units operating within those and at reasonable
costs
Various clusters should be identified by doing a

detailed study and then promoted as Textile &
Appareldistrictswithintheregion
Phase out supply of secondhand clothing from

the market through appropriate policy
Initiatives to promote domestic
interventions
marketdevelopment
Develop a mechanism to regulate flow of cotton
todomesticmarket
Organize Annual Investor Summit showcasing

Investmentpromotionactivities
business opportunities in Tanzanias cotton and
textilesector
Page82of154
3.4. Uganda
Uganda,knownasthePearlofAfricaisalandlockedcountryinEastAfrica.Itpossessessubstantial
natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper,
cobalt,gold,andrecentlydiscoveredoil.
Fordecades,Uganda'seconomysufferedfromdevastatingeconomicpoliciesandinstability,leaving
Ugandaasoneoftheworld'spoorestcountriesintheworld.However,thecountryhascommenced
economic reforms and since then growth has been robust. In 2008, Uganda recorded 7% growth
despitetheglobaldownturnandregionalinstability
ThecurrentsizeofUgandaneconomyisUS$~17Bn(2010,nominalGDP).ThepercapitaGDPinis
estimatedat~US$504(2010, Nominal).Theservicessectoristhelargestcontributortoeconomic
activity, contributing ~52% to the GDP; dominated largely by wholesale & retail trade, real estate
activities,educationandtransport&communications.
Figure19:EconomicSnapshot,Uganda
750
15
500
10
250
5
0
GDPpercapita(US$)
GDPinUS$bn
20
0
2000
2001
2002
GDP(nominal)
2003
2004
2005
2006
2007
2008
2009
2010E
Cottonfarmingbegan intheyear1903andisoneofthemajorUgandastraditionalcrops.Cotton
canbeproducedinmostpartsofUganda,butover50percentofthecropistodayproducedinthe
areasnorthandeastofRiverNile.Cottonisnormallygrownonsmallplotsoflessthanhalfanacre
andisoftenintercroppedwithothercashandfoodcrops.Farmersusetraditionalfarmingpractices
and tools for cultivation and all crops are rainfed. During the 1960s, Uganda was SubSaharan
Africas largest cotton producer. It represented 40% of foreign earnings. However, political
instabilityandpoorpolicychoicesofthe1970scausedaseriousdeclineinthesector.
In1994,Ugandascottonsubsectorwasliberalizedbythegovernmentwiththehopetoaddressthe
decline. In particular, the government hoped to solve the problem of crop financing in order to
Page83of154
increaseproductionandproductivityandtoremoveinefficientinstitutions.By2004,theproduction
of cotton increased but after that there was decline in the production largely due to reduction in
areaundercottoncultivation.
Today,althoughmanyginneriesoperateatlessthan40percentoftheirestimatedcapacity,cottonis
estimatedtocontributetotheincomesof10percentof Ugandaspopulationinrural areasinthe
North,East,andWest.
The Ugandan textile sub sector was founded in the 1950s and 60s spearheaded by the Uganda
DevelopmentCorporation(UDC).ANationalTextileBoardwasestablishedinthelate1960stoguide
textile industry activity in Uganda that focused at import substitution. The textile and apparel
sectionofthecottonvaluechaintypicallyconsistsofthreetypesoffirms.Thesearetextilemillsthat
primarily carry out spinning and weaving, finishing mills that do bleaching, dyeing, printing, and
garment cutters and household manufacturers. Most of the larger firms are vertically integrated,
carryingoutspinning,weaving,finishing,converting,andinsomecases,tailoring.
The spinning and weaving capacities are low and the existing mills cannot process more than 10
percent of the cotton lint currently being produced in Uganda. The annual output aggregates to
about25millionmeters.
Government of Uganda and the private sector have plans and budgets to further improve
production and value addition in the chain and to make the sector more competitive. In order to
makethe sectormore efficient and spur investments intothe sector,thegovernmenthas drafted
NationalTextilePolicyforthecountry.
InDecember2009,UgandangovernmentlaunchedNationalTextilePolicy,withavisiontocreatea
strong and vibrant textile and clothing industry with sustainable capacity utilisation and enhanced
investmentthroughthetextilevaluechain.
Thespecificobjectivesofthepolicyincludeathreestepdevelopmentprocess:
Improvementperiod(12years)withafocusonimprovingthecapacitiesofexistingtextile
companies,reducingcostsofdoingbusinessinUganda,controllingcounterfeits.
Expansion period (35 years) with a focus on capacity addition, quality improvements,
developmentofindustrialtextileparks,etc.
Period of steady and sound development (within 5 years and beyond) with a focus on
increasingdownstreamlinkageswithinthesectorforancillaryproductslikethreadmaking,
garment accessories, food oils extraction, animal feeds making , etc. and seeking active
cooperationandpartnershipofindustrialbodies.
Page84of154
3.4.3.1.
Overview
Figure20:UgandaCTAValueChainOverview
No.offarmers:
~10,000
Averagefarm
size:<0.5ha
Page85of154
InstalledCapacity:
1,000,000 bales
Ginning equipment
inuse:
Rollergin
SpinningCapacity:
(2008)
Shortstaple
spindles:500,000
OERotors:1,200
Nooftextilemills:
~3
No.
of
garment
Companies:
~24
Dominated by micro
andsmallscalesectors
manufacturing various
garments mainly for
domesticpurpose
3.4.3.2.
CottonFiber
Duringthe1960s,UgandawasSubSaharanAfricaslargestcottonproducer.Itaccountedforover
40%offoreignearnings.However,politicalinstabilityandpoorpolicychoicesofthe1970sledtothe
sectorsdecline.Thoughtheattemptstorevivethesectorwithlendingoperationsduringthe1980s
failed, policy reforms combined with a lending operation and high cotton prices revitalized the
sector in the 1990s. Nevertheless, there remains the sense that the sector lags behind its full
potential.
regularbasis byover10,000 farmers.Over90%of cottonisexportedrawoutofUgandaontothe
global market wherepricescontinue to fluctuate from timetotimebased on levelsof production
globally. Cotton faces constraints like pests, weeds, diseases, declined soil fertility, changing
climate,pooragronomicpracticesandmarketingsystem.
Therehasbeenaremarkableincreaseinthecottonlintproductionovertheyears
Table39:CottonProductionStatistics,Uganda
Period
Cotton Lint
Production
(Bales@185
Kg)
200607
200708
200809
200910
201011
TOTAL
134,000
66,500
125,310
70,300
146,500
542,610
Earningsfromlint
Ave.
Value
FOB
($
price
millions)
($/Kg
oflint)
1.10
27.27
1.60
19.68
1.06
24.57
1.59
20.68
3.06
82.93
175.14
Earningbyfarmers
Ave. Farm Value
gate price (Sh.
(UGX/Kg
Billion)
of
seed
cotton)
470
32.50
750
25.74
650
48.49
900
27.94
1,600
58.23
134.67
SaleofSeedsbyginners
Total
Ave.
Total
quantity price
value of
of seed per MT seed
produced (UGX)
(UGXBn)
(MT)
46,500 180,000
8.37
17,350 340,000
5.90
42,731 350,000
14.96
23,972 400,000
9.59
49,957 700,000
34.97
130,553
73.78
Source:CottonDevelopmentOrganisation
Therehasbeenatremendousimprovementincottonyieldsinrecentyears,whichhasalmosttripled
during2005to2010.However,theproductioncontinuedtodeclinelargelyduetoreductioninarea
under cotton cultivation. Most of the cotton produced in Uganda is exported. Major importers of
UgandascottonareIndonesia,Portugal,Pakistan,KenyaandIndia.Theexportsofcottonhowever
varyalotdependingoninternationalcottonprices,politicalinstabilityinmajorgrowingareasaswell
as a heavy dependence on weather. The internal demand of cotton for mill use in Uganda has
remainedstagnantsince2003.
Page86of154
Table40:CottonBalanceSheet(19902010),Uganda
YearfromAug1toJul31
Year
OpeningStocks
Production
Imports
TotalSupply
MillUse
Exports
EndingStocks
Harvested
Area
(000)
Acres
2010
50
125
175
20
90
65
247
243
2009
65
60
125
20
55
50
173
166
2008
60
100
160
20
75
65
247
194
2007
85
60
145
20
65
60
247
117
2006
90
95
185
20
80
85
395
115
2005
135
90
225
20
115
90
667
65
2004
80
200
280
20
110
135
988
97
2003
80
125
205
20
105
80
618
97
2002
68
95
163
15
68
80
618
74
2001
42
90
132
57
68
618
70
2000
22
85
107
58
42
618
66
1999
19
100
119
90
22
618
78
1998
19
70
89
65
19
618
54
1997
19
50
69
45
19
124
194
1996
14
80
94
70
19
247
155
1995
14
45
59
40
14
371
58
1994
37
44
25
14
319
56
1993
19
18
37
25
175
49
1992
51
54
10
25
19
430
57
1991
32
41
10
28
331
46
1990
41
44
26
220
89
Yield
Pounds/Acre
PlantingSeasons
In the northern areas, with one rainy season, cotton planting start at the beginning of April June
rainsandintheSouth,withtworainyseasons,plantingoccurslaterintheJuneJulyperiod.
UgandasCottonisamongthemostcommonlyproducedandtradedcottonvarietyintheworldand
belongs to the species Gossypium birsidum, accounting for 75% of world trade. American Upland
varietyofcottonismostsuitablefortheUgandasclimaticandsoilcondition.Twouplandvarieties
AllenandsunflowerhavebeendevelopedthroughselectionsandbreedingtothecurrentBukalasa
PedigreeAlbar(BPA)andSerereAlbarTypeUganda(SATU)typesgrowninUganda.
CottonGrades
The Uganda Cotton grade are classified into two sets i.e. roller and saw gin set. The roller grade
includesUCON,UCOB,UCOP,UCOAandUCOM.ThetwoUgandanstandardsforsawginnedcotton
are UCOSA I and UCOSA II. These grades are determined by micronaire and staple length. All
Page87of154
exportersarerequiredtomarketUgandancottononthebasisofthesegrades.Over98%ofthecrop
isrollerginnedannually.
Table41:MainFiberPropertiesandGradesofUgandanCotton
GradeStandard
Length(mm) Strength(g/tex) Micronaire
Value Differences Universal

(Points/UScts/lb)
Grades
RollerGinned
UCON
29&above
3033
3.74.3
UCOB
2829
3033
3.74.3
UCOP
UCOA
2829
2627
2832
2830
4.04.2
4.04.2
UCOM
26&below
2730
4.24.4
150points
(+1.5cts)
75pts
(+0.75cts)
BaseGrade
100points
(1.0cts)
225points
(225cts)
SawGinned
UCOSAI
27&above
2830
4.04.2
27&below
2730
4.04.2
UCOSAII
100points
(1.0cts)
BaseGrade
GoodMiddling
StrictMiddling
Middling
Strict
Low
Middling
LowMiddling
StrictMiddling
Middling
CottonTypes
UgandacottonbelongstotheG.HirsutumspecieswhoseoriginstracebacktotheAmericanupland
varieties(AllenandSunflower).Thesetwovarietiesunderwentselectionsandbreedingtoproduce
theUgandaBukalasaPedigreeAlbar(BPA)andSerneAlbarTypeUganda(SATU)types.Ugandaonly
cultivatestheBPAtype.
CottonvarietyinUganda
i.
ii.
EastandNorth
South&west
Page88of154
Shortstaple
Longstaple
KeyInitiatives
OrganicCotton
OrganicCottonwasintroducedinUgandain1998.TheorganicgarmentsexportpioneeredbyPhenix
has brought incredible hope for the sector as it improved the yield. During the year 200607 the
interestinorganiccottonproductionincreasedtremendouslyandparticularlyinNorthernandWest
Nileregionsandhencetherewasalotofproductionoforganiccottonintheseareas.
Massproductionoforganiccottonhadanegativeimpactontheproductionandtheproductivity.As
therequiredtechnologyismissingandfarmersarenotwelltrained,yieldsarelowerthan70to90%
ofnormalones.SotheGovernmenthasstoppedpromotingOrganicCotton.
Table42:HistoricOrganicCottonProductioninUganda
Period
199495
Organic
Lint National
lint
production
production (bales
(bales)
@185kg)
115
33,000
Percentage
of
Organic to National
production
0.3
199596
392
56,416
0.7
199697
1,533
110,700 1.4
199798
2,393
32,000
7.5
199899
1,285
82,000
1.6
199900
983
117,000 0.8
200001
1,383
100,000 1.4
200102
1,391
120,000 1.2
200203
1,300
110,000
200304
3,808
160,000 2.4
200405
5,809
254,000 2.3
200506
2,763
102,000 2.7
200607
12,775
134,000
9.5
200708
11,274
65,000
17.3
1.2
BtCotton
CottonhasbeenplantedinUgandaformorethanacentury,despiteitslowproductivity.Inaneffort
toimproveproductivity,theUgandangovernmentisconsideringgeneticallymodified(GM)varieties
suchasinsectresistant(IR)andherbicidetolerant(HT)cotton.Theresearchthatisbeingcarriedout
by Ugandan scientists at the National Agricultural Crop Resources Research Institute (NaCRRI), in
Namulonge,andNationalSemiAridResourcesResearchInstitute(NaSARRI),intwosites,onebeing
inSerereinSorotiandtheotheratMubukuinKasesegeneticallymodified(GM)cottonisshowing
promisingsigns.
Page89of154
Currently, the team is in the second phase of conducting the trial. The first phase was done from
September2009toMarch2010.Thefirsttrialhadencouragingresultsandthefundersdecidedthat
theresearchersconductasecondphaseofthetrialforfurtherevaluation.
The team is conducting the research on herbicidetolerant cotton as well as boll worm infection.
Withherbicidetolerantcotton,theplantislefttogrowwithoutweedingandherbicideisappliedto
eliminate the weed without affecting the plant. The boll worm trial is where both the Bt cotton
speciesandthelocalvarietiesareplantedinthesamefield.Oncethebollwormlandsonthecotton
plant,itiskilledimmediatelywhichisnotthesamecasewiththelocalvariety.
UgandaNationalCouncilofSciencethatauthorizestrialsofGMcropsinUgandahasgiventheteam
agoaheadtoremovethelintofthe cottonandsell itbutits seedsshouldbeburnt immediately.
Thisistoavoidfarmersfromobtainingseedsforplantingbeforethebiosafetylawisputinplace.
The objective of the trial is to assess the ability of Monsanto's GM cotton varieties to tolerate
applicationsofroundupherbicide,asaweedcontrolmethodunderUganda'sconditions.GMcotton
onceadoptedforcommercializationwillleadtoincreasedyieldsleadingtoincreasedincomeinthe
farmingcommunitysinceitwillnotbeaffectedbytheballwarm.
3.4.3.3.
SincecottoninUgandaisasmallholder,ratherthanestatecrop,traditionallytherehavebeenlittle
ornoorganizedbackwardlinkagesbetweenginnersandfarmerssincenoginneryproducesitsown
cotton. However, ginners are now being supported through the efforts of CDO and USAIDfunded
SPEED Project, to provide extension services to the farmers, including supervising demonstration
plots.
Ugandahasadequateginningcapacity.Therehasbeenaremarkableincreaseintheginningcapacity
from 100,000 bales to 1,000,000 bales in to 1,000,000 bales in Uganda. Moreover, the Cotton
Development Organization is striving to rediscover the pre1972 annual production levels of over
500,000balesperannum.
3.4.3.4.
Textiles
Ugandas textile milling capacity was founded in the 1950 &60s. The Uganda Development
Corporation(UDC)spearheadedestablishmentofmills,workinghandinhandwithCALICOPrinters
oftheUK,YAMATOInternational&otherAsianFamilyinitiatives.
Likeanyothersector,thetextilemillswereaffectedbythechaosthatUgandawentthroughwhich
resultedintomismanagementandclosures.BythedivestitureofsomemillsownedbyGovernment,
machinerywasobsoleteandthestateofrepairwasgenerallypoor.
InUganda,textilefirmsaremostlysmallormediumsized,andlowcapacityuseiscommon.These
millsproducebothclothingandclothforsaleonthelocalmarket.MostUgandantextilemillsdonot
Page90of154
producelargevolumefabricorders,butratherconcentrateonproducingsmallrunsofavarietyof
fabrics. Some firms utilize state of the art electric spinning machines and weaving and knitting
looms,whileotherfirmsproducefabriconmanuallyoperatedmachinery.Threemills[Phenix,Sigma
KnittingIndustries&SouthernRangeNyanza]arenowfunctional,havinginvestedinexcessofUS$
30 Million in modernization and equipment upgradation. Idle capacity exists in terms of non
functioningmillslikeLiraSpinningMill,Mulco&ATMwhileRayonTextileswasscrapped.
FabricsaresourcedaboutevenlyfromlocaltextileoperationsandAsianimports.Roadwaysarethe
dominantmethodofexportforUgandanapparelmanufacturers
The production of fabrics has gradually improved in quality and quantity to enable millers offer a
broader variety of products for the local regional and international market. The organic garments
exportnichebreakthroughpioneeredbyPhenixhasbroughtincrediblehopeforthesector.
The sector supplies about 10% of the UGX 350 Billion textile market annually. The mills have
potential to produce 2530% of the market demand. The 3 functional mills directly support the
livelihood of more than 3000 Ugandans whose aggregate annual income is in excess of
UGX2.5Billion.
ThroughTEMAU,themillshavemanagedtoestablishhumanresourcesmanagementbestpractices
inthesector,enablingunionization of workforce to eliminate industrial unrests that characterized
thesectorearlier.
Table43:KeyYarnCharacteristicsmadefromUgandanCotton
Staplelength
FibreStrength
Fineness(micronnaire)
Yarnstrength
Yarnappearance
30mm(11/5'')
>20g/tex
3.54.0
>2200LCCSP
white,freefromNeps
Apparel
ThemanufacturingofapparelandclothinginUgandaislimitedandisdominatedbymicroandsmall
scale tailors of various garments, mainly for domestic consumption. The production of clothing in
Ugandaisveryminimalduetothelowpurchasingpowerofconsumers,competitionfromsecond
handclothingmarketsandcheapimports.MostapparelinvestorsinUgandaarelocalentrepreneurs
thatmanufactureclothinganduniformsforthelocalandregionalEastAfricanmarkets.Manyhave
considered or tried to take advantage of AGOA, but have not found it to be profitable, unlike the
marketstheyalreadyserve.
Page91of154
SupportInstitutes
ThekeysupportinstitutesinvolvedintheUgandanCottonIndustryare:
Table44:CTASectorSupportInstituteinUgandaandtheirFunctions
Institutions
MainFunctions
Cotton
Development Establishedin1994,itsobjectiveistoregulatetheindustryaswell
Organization(CDO)
ascollectanddisseminatestatistics.Itisfinancedbyalevyimposed
on all cotton exports. Its Board of directors consists of the
Chairman (appointed by the Minister), representatives from
MFPED, MAAIF, and NARO, and six private sector representatives
fromcottonrelatedindustries.TheManagingDirectorisappointed
bytheBoard.
Uganda Ginners & Cotton Formedin1997withcompulsorymembershipforallcottonginners,
Exporters
Association its objective is to coordinate activities such as input financing,
(UGCEA)
operatingdemonstrationplots,andprovidingaforumfordiscussing
issuesaffectingginnersandexporters.
CottonResearchInstitute
All cotton research activities take place at the Cotton Research
Station, located in Serere (Soroti district). Its main responsibilities
consist of studying and controlling cotton diseases, seed
multiplication,andintroductionofnewvarieties.
National Agricultural Advisory NAADS was established by the National Agricultural Advisory
Services(NAADS)
Services Act of 2001 as a statutory corporation, its mandate is to
promote marketoriented agriculture through provision of
extensionservices.
Ministry of Agriculture, It isresponsible forsupporting andguidingthe agriculturalsector.
Animal Industry and Fisheries Most of its cottonrelated activities are performed through the
(MAAIF)
CottonResearchInstitute.
Ministry of Finance, Planning It oversees the planning of strategic development initiatives in
and Economic Development order to facilitate growth, efficiency, stability, and poverty
(MFPED)
eradication. It also mobilizes resources for public expenditure
programs
Ministry of Tourism, Trade, Three departments within the Ministry (Trade, Cooperatives, and
andIndustry(MTTI)
Industry) deal with cottonpolicy issues such as value addition,
enhancementofcompetitiveness,andextensionservices.
Uganda
Manufacturers UMAwasestablishedin1960stopromote,protectandcoordinate
Association(UMA)
the interests of industrialists in Uganda. UMA initiates discussions
and exchange of information amongst members on industrial
issues.ItalsoadvisesGovernmentonkeypoliciesaffectingindustry.
UgandaInvestmentAuthority TheUganda Investment Authority(UIA)is a semiautonomous
investment promotion and facilitation organization inUganda,
ownedbytheGovernmentofUganda.ThemissionoftheUIAisto
promote and facilitate investment projects, provide serviced land,
andadvocateforacompetitivebusinessenvironment.
Page92of154
Private Sector Foundation PSFU is Ugandas apex body for private sector. It has been
Uganda
Governments implementation partner for several projects and
programmesaimedatstrengtheningtheprivatesectorasanengine
of economic growth. Such programmes include; the
implementation of the Business Uganda Development Scheme
(BUDS), the BUDSEnergy for Rural Transformation (ERT)
programmeandadvisinggovernmentonpositivepolicyreforms.
3.4.4.1.
Rawmaterial
regularbasis byover10,000 farmers.Over90%of cottonisexportedrawoutofUgandaontothe
global market wherepricescontinue to fluctuate from timetotimebased on levelsof production
globally. Uganda has an advantage in production like availability of cheap labor, low pest
pressureandfavorableweather.AllthesefactorsUgandatogrowthecropthroughbetter
agronomyforincreaseproductionandproductivity.
3.4.4.2.
Manpower
Thereisavailabilityofabundantcheapmanpowerbutthepresentworkforcelackstherequisiteskills
andtrainingtodotherequiredjob.Thereisrequirementofskilledworkersespeciallyinareaslike
efficientfarmpractices,weavingandtextilemanufacturing.
3.4.4.3.
Power,Water&Fuel
Availabilityofpowerishighlyerraticandabigconstrainttothissector.Thecostsarehighandhighly
fluctuating.
3.4.4.4.
Financialsupport
Creditavailabilityisveryless.Longtermloansareavailableataninterestrateof18to20%witha
repayment period of 3 years. Foreign currency loans may be available to businesses with at least
20%ofearningsinforeigncurrency,ataninterestrateof7to12%.However,theavailabilityisvery
less.
3.4.4.5.
Marketaccess
Ugandamadetextileandapparelproductscanentermostoftheworldsrichereconomiesfreeof
any customs duties and with limited quota restrictions. Some of the trade agreements that they
havesignedupforpreferentialmarketaccessincludes:
Page93of154
LeastDevelopedCountry(LDC)
3.4.4.6.
Technology
The technology currently in use is highly outdated in all areas like ginning, spinning and weaving.
Manymillshavelotofdysfunctionalmachinerieswhichisjustlyingwiththemformanyyears.There
is huge requirement of modern technology and training people to operate these machineries, to
improveproductivityinthesector.
3.4.4.7.
Industrialzones
UgandahasfourfunctionalindustrialparksatNalukolongo,Luzira,BweyogerereandNamanve.
3.4.4.8.
ResearchinitiativescurrentlybeingundertakenbyCottonResearchInstitute.Itsmainresponsibilities
consist of studying and controlling cotton diseases, seed multiplication, and introduction of new
varieties
3.4.4.9.
Valueaddition
Uganda has abundant cotton supply but the downstream industries i.e. textile and apparel
manufacturing are limited. Currently, most of the products made are very basic in designs at the
textilelevelaswellasgarments(finishedproduct)level.Thereisverylimitedfocusonvalueaddition
w.r.todesigns,specializedfinishes,embroidery,sequins,etc.
3.4.4.10.
SouthernRangeNyanzaLtdhasbeen sponsors medicalcampwheretotalof 1200patientsaccess

freeworldclassmedicationannually.TheyhavealsosponsoredNationalBadmintonchampionship
manyothersupportingactivitiestonurturetalentinUganda.Donateclothestounderprivileged.
3.4.4.11.
Uganda is a land locked country and utilizes Kenyan port of Mombasa for exports. The intercity
connectivity from port tomanufacturing locations is satisfactorywith lot of highway development
happeningallacross.Theissuesometimesisofpaperworkandhasslesatborderpost(fromUganda
toKenya)anddelaysforclearancesattheportitself.
Page94of154
Table45:LogisticsandBusinessCosts,Uganda
PowerAvailability
Erratic
Powercost
UScents12/unit
Lendingrate
1820%
Wage/month
US$90100
OwnPort
No
Nearestport
Mombasa
17days
SailingtimetoUS
25days
ExportsUS$2100
ImportsUS$2200
3.4.4.12.
Thegovernmentisprovidingsupportbyfundingtheseedforplantingandrelatedactivities.
3.4.4.13.
Domesticmarket
The domestic markets Uganda is dominated by imports of yarn, fabrics, finished goods. Domestic
market is affected by huge imports of secondhand clothing at very low prices. This has led to
dependence on imported clothing and domestic producers make products mainly for the export
markets.
3.4.5. ForeignTrade
3.4.5.1.
Overview
Uganda isanetimporterinT&Asector,withnetimportsamountingtoUS$0.09Bn.T&Aexports
havedeclinedsince2005fromUS$0.06BntoUS$0.03Bn.ShareofT&Aexportsincountrystotal
exportshavedeclinedgraduallyfrom8%in2005to2%in2009.
consistentlybeenat5%.
Cotton Fiber accounts for 81% of Uganda exports whereas it imports mainly worn clothing and
twines, cords. China is the biggest supplier to Uganda whereas the biggest export market is
Indonesia.
Page95of154
Figure21:UgandasOverallTrade
Figure22:UgandasCTASectorTrade
ValuesinUS$Bn
2.4
ValuesinUS$Bn
2.3
2.0
1.7
1.5
0.7
1.1
1.0
1.1
0.08
0.07
0.06
0.7
0.03
2005
2006
2007
TotalExports
2008
2005
2009
TotalImports
0.04
2006
0.02
2007
T&AExports
0.12
0.11
0.09
2008
0.03
2009
T&AImports
Table46:KeyCTASectorExportandImportStatistics,Uganda(2009)
88%
54%
CottonFiber
81%
Wornclothing
20%
Woven fabric with more than 85%

3%
cotton,lessthan200gsm
Twine,cordageetc.
17%
Sacksandbags
2%
Men'sshirts.
9%
Knittedtshirt
2%
Mens wovensuit,shirtetc.
8%
Leading4markets
53%
Leading4suppliers
70%
Indonesia
17%
China
26%
Portugal
14%
India
22%
Pakistan
14%
UnitedArabEmirates
12%
Burundi
8%
Kenya
10%
3.4.5.2.
ExportstoEU
UgandaisaminorsupplieroftextilesandapparelsproductstotheEUmarket.Ugandassupplyto
theEU27countries in2010was~US$2.7Mn.Further,thevalueoftradewithEU27isalsoona
decliningtrendoverlast5yearswithaCAGRof8%.
Page96of154
Figure23:UgandasCTASectorExportstoEU
ValuesinUS$Mn
5.5
5.4
5
4
4.3
3.8
2.7
CAGR
8%
2
1
0
2006
2007
2008
2009
2010
Source:Eurostat
Table47:MajorCategoriesofImportsbyEUfromUganda
ValuesinUS$000
2006
2007
2008
2009
2010
CAGR
RawCotton
3746
5273
5467
4173
2584
9%
2010
share
95%
Knitted TShirts, singlets and other Na

vests
Women's suits, jackets, dresses, 4
skirts,shorts,etc.
80
14
68
49
15%
2%
11
20
45%
1%
3751
5356
5481
4252
2653
8%
98%
Others
32
42
40
61
18%
2%
Total
3782
5359
5523
4292
2714
8%
100%
Source:Eurostat
Page97of154
3.4.5.3.
ExportstoUSA
UgandasexportoftextilesandapparelproductstotheUShasbeenverylow.Ugandasexportto
theUSintheyear2010was~US$0.4Mn.Further,thevalueoftradetoUShasdeclinedoverthe
years.
Figure24:UgandasCTASectorExportstoUSA
ValuesinUS$Bn
1.4
1.3
1.2
1.2
1.0
CAGR
21%
0.8
0.6
0.4
0.4
0.4
0.2
0.2
0.0
2006
2007
2008
2009
2010
Source:Otexa
Table48:MajorCategoriesofImportsbyUSfromUganda
2006
2007
2008
2009
2010
Women's suits, jackets, 25,506

dresses, skirts, dress, shorts,
etc,woven
Knitted TShirts, singlet and 40,695
othervests
20,369
Na
Na
264,436 60%
953,937
402,725 144,223 44,956
2%
12%
Women's suits, jackets, Na

dresses, skirts, dresses etc,
Knittedorcrochet
Jerseys,pullover,Cardigans
Na
Na
Na
Na
34,080
Na
9%
5,853
Na
Na
12,872
Na
3%
Womensblousesandshirts
1,881
Na
Na
Na
8,643
49%
2%
67,382
980,159
402,725 144,223 364,987 40%
93%
Others
1,190,195 225,289
9,537
7%
Total
1,257,577 1,205,448 412,262 185,846 390,551 21%
41,623
25,564
CAGR
54%
2010
share
68%
100%
Source:Otexa
Page98of154
3.4.6. SWOTAnalysis
Strengths
1. Availability of abundant good quality cotton: Ugandas cotton is of medium to long staple
lengths.Inthelastfiveyears,thehighestannualcottonproductionregisteredwas200,000bales
(185kgeach).
2. Conducivebusinessenvironment:Thefreemarketeconomicreformsintroducedinthe1990s
have over the years created macroeconomic stability in Uganda. In addition, partnership with
theprivatesector,asanengineofgrowth,isthecoreoftheGovernmentpolicy.
Weaknesses:
1. Lowspinningandweavingcapacity:Currentspinningandweavingcapacitiesareverylow(~25
Mnmeters)despitethepresenceofanabundantrawmaterialbase.Technologyisanotherkey
area of concern which needs upgrading to enhance the competitiveness of the overall textile
industry.
2. Exportofunprocessedcotton:MostofthecottonproducedinUgandaisexportedwithoutany
valueaddition.
3. Highproduction&financecost:CurrentlyUgandanenergyratesarethehighestintheregion,
whilereliabilityofelectricityserviceisalsoanissue.Alsosincetheregionislandlocked,firms
havetoincurhighinternalandexternaltransportcosts.Textilesectormanagestoborrowfunds
ataveryhighfinanceraterangingbetween1824%.
4. Weaklinkagesacrossthevaluechain:Thereisverylittletonocooperationamongthevarious
stakeholders within the value chain. Human resources training and supporting services like
internationalsourcingandbuyinghousesarelacking.
Opportunities:
1. Hugedomestic/regional/internationalmarketdemand:Thecurrentsectoroutputisnotableto
meetthecountry'sdemand.Alotofuntappeddemandexists.
2. Idlecapacityintheprivatesector:Ugandahasonlytwofunctionalverticallyintegratedtextile
millsandseveralgarmentingfactorieswhicharealloperatingbelowcapacity.MillslikeMulco,
AfricanTextileMills,RayonTextilesaswellasLiraSpinningMillareclosed.
3. Explorationoftheorganiccottonniche:Theworldorganiclintdemandisincreasingand~33%
oftheglobaloutputisproducedinEastAfrica.Invalueterms,organiccottonfetchesupto40%
aboveconventionalcottonpriceswhileyarnsandfabricderivedfromorganiccottonfetchesup
totentimes.Therefore,itisopportunityforthesectortoattractinvestmentinorganiccotton.
Page99of154
Threats:
1. ThreatfromCounterfeitsandsecondhandarticles:Allmajorlocalbrandshavehadtheirbrands
copiedbyunscrupulousbusinesspeople.Thepresentlegalframeworkisnotstrongenoughto
preventthispractice.Therearehugeimportsofsecondhandclothesinthecountrywhichisalso
athreat.
2. Competitionfromleadingglobaltextilemanufacturers:WiththeendofMultiFiberAgreement
Page100of154
AfterconductingacomprehensiveanalysisofCTAsectorinUganda,wedidaSWOTanalysiswhich
be addressed keeping in mind the relative strength areas of Uganda and its cotton, textile and
apparel sector. Following recommendations are made for improving/strengthening the CTA sector
performance:
S.no. Objectives
Recommendations
Support R&D centers for introducing high yielding
Increasing cotton quality and
seeds
yield
Uganda has abundant cotton supply but the downstream

industriesi.e.textileandapparelmanufacturingarelimited.
Promoting value addition in Value addition in the sector should be promoted by
providing:
thesector
Supportformodernizationand
capacityexpansion
Introduce schemes for training and skill development and

createafundforimplementingtheschemewhichwillaid:
Improving skills of people Establishingnewtrainingcenters
throughadequatetraining
Promoteeducationinthefield LinkexistingcenterswiththeIndustry
oftextiles
Update course curriculum regulatory as per industry
requirements
Page101of154
Interest subsidies shall be provided for upgrading

Textile & Apparel sector shall be classified as Priority

sectorandthus,increasedlendingtothesectorshould
beaprimefocus
Tieup with other international colleges for student

Adopt cluster based development approach where

suitable infrastructure is provided to the units
operatingwithinthoseandatreasonablecosts
Variousclustersshouldbeidentifiedbydoingadetailed
studyandthenpromotedasTextile&Appareldistricts
withintheregion
Improveexistinginfrastructure
and rationalize costs of doing
business
Initiatives
to
promote
domesticmarketdevelopment
Investment
activities
Phase out supply of secondhand clothing from the

marketthroughappropriatepolicyinterventions
Develop a mechanism to regulate flow of cotton to
domesticmarket
promotion
OrganizeAnnualInvestorSummitshowcasingbusiness
opportunitiesinUgandascottonandtextilesector
Page102of154
4. RegionalLevelAnalysis
4.1. Snapshot
Table49:IntercountryComparisonKeyStatistics
Overview
Area(000sqkm)
Climate
Kenya
Sudan
580.3
Tropical
2,506
Tropical in south;
ariddesertinnorth
Limestone,sodaash, Petroleum;
small
salt,
gemstones, reserves of iron ore,
fluorspar,
zinc, copper,zinc,etc.
diatomite
Tanzania
241
Tropical
Naturalresources
Hydropower,
Copper, Cobalt,
tin,
Hydropower,
phosphates,
Limestone, Salt,
iron ore, coal, Gold
diamonds,
gemstones
Major
agricultural Tea, coffee, corn, Cotton, groundnuts, Coffee, sisal, Coffee,
Tea,
wheat, sugarcane, sorghum,
millet, tea,
cotton, Cotton,Tobacco,
products
fruit,vegetables
wheat,gum
pyrethrum
Cassava
Majorindustries
Smallscale
Oil, cotton ginning, Agricultural
Sugar, Brewing,
consumer
goods, textiles
processing,
Cement,Tobacco,
agriculturalproducts
diamond, gold Cotton textiles,
and
iron Steelproduction
mining,salt
Economy
GDP (Nominal, 2010
US$32Bn
US$65.9Bn
US$22.4Bn
US$17.1Bn
est)
GDP(Real,2010est)
US$18Bn
US$11.7Bn
US$11.2Bn
US$8.8Bn
GDPgrowthrate
4%
5.2%
6.4%
5.8%
(Real,2010est.)
GDPpercapita
US$888
US$1705
US$543
US$504
(Nominal,2010est.)
GDPcomposition
Agriculture
22%
32.1%
41.6%
23.6%
Industry
16%
29.0%
18.1%
24.5%
Services
62%
38.9%
38.4%
51.9%
Labour force (2010
17.94Mn
12Mn
21.87Mn
15.5Mn
est.)
Inflation
4.2%
11.8%
7.2%
9.4%
Exports
US$5.14Bn
US$9.8Bn
US$3.8Bn
US$2.9Bn
Imports
US$10.4Bn
US$8.5Bn
US$6.3Bn
US$4.5Bn
Externaldebt
US$7.9Bn
US$38Bn
US$7.6Bn
US$2.9Bn
Currencyrate
1US$=80 KES
1US$=2.7 SDG 1US$=1500 TZS
1US$=2400
UGX
Page103of154
947
Tropical
Uganda

Demographics
Population
Kenya
Sudan
Tanzania
Uganda
41Mn
40Mn
41.3Mn
35Mn
42.1%
55.2%
2.7%
18.5years
2.48%
40%
61.1%
42%
55.1%
29%
18.5years
2.0%
26%
69.4%
370,400
15.3
4.2
140(19paved)
5,978
11,900
173,552
18
0.68
124(9paved)
3,68
78,892
Agestructure
014years
42.20%
1564years
55.10%
65years+
2.70%
MedianAge
18.9years
Population growth 2.5%
rate(2011est.)
Urbanpopulation
22%
Literacyrate
85%
Infrastructure
Landlineusers
664,100
Mobileusers(Mn)
19.4
Internetusers(Mn)
4.0
Airports
191(17paved)
Railways(Km)
2,778
Roadways(Km)
160,886
Cottonfiberstatistics(2010)
Cotton
production
49
(000bales,)
Area under cotton
104
cultivation(000acres)
Cotton yield (lb /
226
acre)
MillUse(000bales)
50
Exports(000bales)
0
T&Atradestatistics(2009)
Exports
US$252Bn
Imports
US$681Bn
Suits, jackets,
Major
exported
etc.
products
Jerseys,
pullovers,etc.
Major
products
imported
125
104
741
247
462
178
243
8
100
150
225
20
90
US$33Bn
US$418Bn
US$26Bn
US$118Bn
Cottonfiber
Worn
Clothing
Twine,
Cordage,etc.
USA
Majorsuppliers
China
India
UAE
Page104of154
233,500
9.4
3.2
46(5paved)
1244
70,746
275
Majormarkets
13%
66.8%
100
WornClothing
Woven fiber of
syn.
filament
yarn
49.9%
48.1%
2.1%
15.1years
3.6%
US$174Bn
US$400Bn
Cottonfiber
Home furn.
Cottonfiber
excl. blanket
&linen
WornClothing
Suits, jackets,
Woven fb of
etc.
syn.filament
Men's woven
Cotton woven
Shirts
fb<200gsm
Kenya
Egypt
India
China
Vietnam
China
China
India
India
Egypt
Indonesia
Portugal
Pakistan
China
India
UAE
4.2. ValueChainAnalysis:Summary*
* Reflectsthecurrent,relativestatus
4.3. CostComparison
Table50:IntercountryComparisonCosts
Parameter
Powercost
Kenya
US cents 20 /
unit
Lendingrate
1618%
Wage/month
~US$100
Freight cost / ExportUS$2100
container(20ft)
ImportUS$2200
CorporateTax
30%
Sudan
UScents12/unit
Tanzania
Uganda
US cents 14/
units
912% ( short 1416%
termonly)
US$160300
US$80100
ExportUS$2000 ExportUS$1300
ImportUS$2100 ImportUS$1500
10%
30%
US12cents/unit
1820%
US$90100
ExportUS$2100
ImportUS$2200
30%
Page105of154
4.4. SWOTAnalysis
Strengths
1. Availabilityofcotton:Kenya,Sudan,TanzaniaandUgandatogetheraccountsforsignificant
amountofcottonproduction.Thisissufficienttonotonlymeetthedomesticrequirements
butalsoexportsignificantquantities.Thecottonindustryhasbeenoneofthekeyareasin
thesecountriesandsignificantpopulationhasbeendependantonthesectorformorethan
acentury.
2. Increasingfocusonthesector:Governmentislayingfocusonthesectorandiscommitted
torevitalizethecottonsector.Thiswillprovideadditionalmomentumtothesectorandwill
createinterestsofamongsttheexistingindustryplayersaswellasthepotentialinvestors.
Weaknesses
1. Outdated technology: The target countries lack stateoftheart machinery for textile
manufacturing.Mostoftheginningunitsinallthecountrieshadquiteoldmachinery,which
has been refurbished to keep functioning. Similarly at textile level (yarn, fabrics and
processing) very few units exist with new technology machines. This further adds to the
costs of manufacturing. The reason behind nonupgradation of machines is lack of major
newinvestmentinthesector.
2. Lack of Skills/ training: There is a huge requirement for enhancing the skills of people to
increase their efficiency levels. The current infrastructure provides for very few such
institutionswithlimitedcapacitiesandhasfewenrollmentsforthetrainingfacilities.There
isaneedforpromotingtheseinstitutions(newandold),supportthesewiththenecessary
infrastructureandchurnoutlargeno.oftraineeseachyear.
3. Absence of integrated chain: Kenya has a strong garment manufacturing capacity but
limited backward linkages within the country to support it. Uganda and Sudan produces
cotton,butlacksfurtherdownstreamprocesses.Tanzaniahassomecapacitiesfromcotton
tofabrics,butlacksvalueadditionintermsoffabrictypeaswellasgarmentconversion.For
countrieswheresubstantialbenefitsforexportsareavailable,itbecomesimportanttohave
acompletesupplychainasbuyerspreferintegratedsupplybases.
4. Limitedvalueaddition:MostofthecottonproducedintheTanzania,SudanandUgandais
exported out of the country in raw form. A major reason behind this is the limited value
additionhappeningintermsofmanufacturingoffinishedgoods/garments.InKenya,cotton
exportsarenil,butthecottonproductionvolumethereisalsolow.
5. Highcostofmanufacturing:Theexistingcostsofborrowingaresohighthatitalmostmakes
it impossible for the sector to rely on these financial institutions. The high cost of capital,
whenavailable,notonlydetersnewinvestmentintheproductionofyarn,fabric,andother
inputs, but it also increases the costs of existing production. There are difficulties in
Page106of154
obtainingloanatcompetitiveratesforpurchasingequipmentandrawmaterials,aswellas
for financing trade. Even if they manage to bear the high costs, the formalities for loan
approvals,requirementsforcollateralsandotherdocumentationareintense.
6. Poor farm practices: The sector is dominated by smallholder producers with limited
knowledge on crop and farm management practices, price and market trends, input
procurementandsupplytrendswhichresultsinlowcottonyield.
7. Under developed domestic market: Domestic garment industry is underdeveloped and is

notpromotedinthetargetcountries.Itishighlyimpactedbysecondhandclothingimports.
There is a need to phase out supply of secondhand clothing from the market through
appropriatepolicyinterventions.
8. Cotton quality issues: The cotton from Sudan and Tanzania is found to have more
contamination than the world average. Cotton suffers from contamination from
polypropylene fibers that are introduced into the cotton during the picking and baling
process. The quality of cotton is also compromised by stickiness resulting from insects,
which can cause irregularities in the yarn production, including yarn breakages.
Contaminationandstickinesslimitthedownstreampotentialfortextileproducts.
Opportunities
1. Hugedemandpotential:Thereishugedemandforcottonfabricsandtextilesinthetarget
countries due to rising population, increasing income, and changing consumer patterns in
preferenceforcottontextilesandapparel.
2. Preferentialtradeaccess:Theseregionshavepreferentialmarketaccessandtheirproducts
canentermostoftheworldsrichereconomiesfreeofanycustomsdutiesandwithlimited
quota restrictions. Some of the trade agreements these countries have signed up for
preferentialmarketaccessincludes:
a. AfricanGrowthandOpportunityAct(AGOA)
b. SouthernAfricanDevelopmentCommunity(SADC)
c. EconomicPartnershipAgreement(EPA)withEU
d. LeastDevelopedCountry(LDC)
e. EastAfricanCommunity(EAC)
3. Scope for value addition: There is a lot of scope for making value added products
particularly for the export markets such as adding embroidery, sequins, and other
style/designelements.Thiswillbringinincrementalrevenuetothesectorandwillalsolead
tomoreemploymentcreationandskillenhancement.
Page107of154
Threats
1. Threatfromsecondhandarticles:TherearehugeimportsofsecondhandclothesinKenya,
Tanzania and Uganda which is posing a big threat to the economy. The present legal
framework is not strong enough to prevent this practice. In Sudan, the import of second
handclothingisalreadybannedandthus,freefromitsrepercussions.
2. Lack of sector specific incentive/ policy framework: There is lack of specific incentives by
the government to promote Textile & Apparel sector in the target countries. Absence of
sectorspecificpoliciesinmostofthesecountrieslimitsinvestmentsinthesectorasforeign
investorsarenotconfidentenoughtoinvestinthissectortilltheyaresureofthecontinuity
ofbenefits.
3. Limitedfocusontextileeducation:Therearefewinstitutes/universitiesofferingeducation
in textile programmes. Moreover, students interest is very low in comparison to other
courses.Theno.ofstudentspassingouteachyearwithdegreeinTextilesisverylow.Other
courses like IT, graphic designs, etc. are gaining popularity as students get better salary
packagesfromthesecourses.
4. Shifttoothercashcrops:Emergenceofalternativecashcrops,whicharecheapertogrow
butfetchhigherreturnsthancottoninthemajorcottongrowingareas,areathreatforthe
sector.
5. Competition from global textile manufacturers: Expanding acreage, increasing yields and
fallingproductioncostsinmajorproducingandconsumingcountriesposeagreatthreatto
thetargetcountries.
Page108of154
4.5. KeyIssuesandRecommendations
Table51:IntercountryComparisonKeyIssuesandRecommendations
S.No. Head
Parameter
Kenya
Sudan
Tanzania
Uganda
Lint(inKg/ha)
Cotton
productivity:
253kg/ha
Cotton
productivity:
518kg/ha
Cotton
productivity:
200kg/ha
Cotton
productivity:
272kg/ha
Lowto
Medium
High
Lowto
Medium
World's4th
largest
producerof
organic
cottonin
2010
Organiccotton
productionhas *Promotionoffairtradecotton
gonedown
*Promotionoforganiccotton
drastically
CottonProductivity
Fiber
OnascaleofLowtohigh LowtoMedium
contaminationlevel
Fiberlevel
3
ValueAddition
Technologylevel
Supplychain
linkages
Page109of154
TrialsforOrganic
Limitedfocus
cottonproduction
onorganic
isgoingonforlast
cotton
2years
Textilelevel
Mostlybasicproductmanufacturing
Finishedproductlevel
Fiberlevel
Textilelevel
Mostlybasicproductmanufacturing
Mostlyoutdatedtechnology
Mostlyoutdatedtechnology
Finishedproductlevel
Technologyismostlyupdatedandwellfunctioning
ExistingCapacitiesand
utilization
Recommendation
*IntroductionofBtCotton
*Improvedfarmpractices
*SupporttoR&Dcentersfor
introducinghighyieldingseeds
*Promotionofcontractfarming
*Improvedfarmpractices
*Extensionprograms
*Stringentqualitycontrolatginning
level
*Focusonvalueaddedproductsin
linewiththeavailableinfrastructure
*Focusonvalueaddedproducts
*Modernization/technology
upgradationneedstobefocusedon
EstablishingJVswithinternational
partners
Industry is not well integrated from farmtofield and has certain

weak linkages across the value chain. Ginning capacity is surplus in *Focusonclusterbased
comparison to current cotton production, and hence it is largely developmentapproach
underutilized. Capacities in textiles (Spinning, weaving, knitting and Identifykeybottlenecksand
processing) are low In comparison to downstream local demand.
encourageinvestmentstopromote
However, existing capacities also remain underutilized. Local
thoseareas
demandisprimarilycateredbyimportsofyarnandfabric.
S.No. Head
Parameter
Operatorlevel
Sudan
Tanzania
Uganda
Lackofskilledworkforce
Training
Supervisor&Middle
managementlevel
Kenya
Lackoftrainingprogrammes.Hence,mainlyexpatsare
employed
Technicalcourses
Selectedprogramsarebeingrun.
Studentinterestislow
Fashiondesigncourses
Selectedprogramsarebeingrun.
Studentinterestislow
Education
Page110of154
Recommendation
*Establishingnewtrainingcenters
*Establishingnewtrainingprograms
*Strengtheningexistingtrainingcenters
*LinkingexistingcenterswiththeIndustry
*Establishingnewtrainingcenters
*Establishingnewtrainingprograms
*Strengtheningexistingtrainingcenters
*Establishingnewcolleges
*Establishingnewdiplomaanddegree
programs
*Strengtheningexistingcolleges/
universities
*Updatingcoursecurriculum
*Tieupwithotherinternationalcolleges
forstudentexchange/knowledge
exchangeprograms
*Establishingnewfashiondesign
institutes
*Strengtheningexistinginstitutes
*Linkingexistinginstituteswiththe
Industry
*Updatingcoursecurriculum
*Tieupwithotherinternationalinstitutes
forstudentexchange/knowledge
exchangeprograms
*increasestudentinterestbyholding
regionallevelannualdesigncontest
S.No. Head
Logistics
Parameter
Kenya
Sudan
NearestPort
Mombasa
PortSudan
SailingtimetoUS
FreightCost/container(20ft) Exports
FreightCost/container(20ft) Imports
Availability
Power
Cost
Availability
10
17 days
25 days
US$2100
US$2200
Consistent
supply
High:
UScents
20/units
Low
Business
financing
Cost
1618%
Page111of154
20days
18days
US$2000
US$2100
Tanzania
DarEs
Salaam
18 days
25 days
US$1300
US$1500
Uganda
Erratic
Erratic
Erratic
Medium:
UScents
12/units
Longterm
financingis
unavailable.
912%
(short
term)
Medium:
UScents
14/units
Medium:
UScents
12/units
Low
Low
1416%
1820%
Recommendation
Mombasa
17days
25 days
US$2100
US$2200
*Adoptclusterbasedsector
developmentandprovide
goodinfrastructurefacilities
withinthecluster
*Worktowardsimprovement
ofcreditavailabilityand
reductionincostofborrowing
S.No. Head
Parameter
Investorinterestcreation
11
Kenya
Sudan
Uganda
Limitedpromotionalactivities
Market
development
&Investment
promotion
Domestic
garment
industryis
not
promoted,
Localmarketdevelopment/Domesticconsumption
highly
impactedby
secondhand
clothing
imports
Page112of154
Tanzania
Domestic
garment
industryis
not
promoted,
highly
impacted
byimports
Domestic
garment
industryis
not
promoted,
highly
impacted
by
second
hand
clothing
imports.
Majority
ofthe
Raw
material
(cotton)is
exported
Domestic
garment
industryis
not
promoted,
highly
impacted
by
second
hand
clothing
imports
Recommendation
*OrganizedMegaTrade
Showstofacilitatebuyer
sellermeet,investor
conference,etc.
*Createaseparatecellfor
textilesforpolicysupport,
implementationandhandling
investorqueries
*Createanincentivepackage
forindustrypromotion
Organizeleadingtrade&
industrialdelegationto
keycountriesof
investments
*Phaseoutsupplyofsecond
handclothingfromthe
marketthroughappropriate
policyinterventions
*Scheme/mechanismto
regulatetheflowofcottonto
domesticmarkets
5. BenchmarkingandRecommendations
5.1. Cotton Productivity
Kenya, Tanzania, Sudan and Uganda all have
cotton productivity far less than the world
average. Most of the large cotton producers
globally have better productivity levels than
these4countries.
Though, the climate and soil quality of these
nations provide ample scope for increasing
cotton yields to a much higher level, but the
growth has hampered by lack of awareness of
better farm practices, standard operating
procedures, low mechanization of farm
activities,lackofirrigationnetwork,etc.
Severalstepshavebeentakenbytheconcerned
authorities in each of the countries to improve
cottonproductivityandtheirresultcanbeseen
inthecottonproductivitydataforlast10years,
whichlargelyshowsanupwardtrend.
Figure25:CottonYieldinSelectedCountries(2010)
Valuesinkg/Ha
Australia
Brazil
Turkey
China
USA
Greece
World
Uzbekistan
Pakistan
Turkmenistan
Sudan
India
Uganda
Kenya
Tanzania
1,597
1,457
1,429
1,289
910
771
742
703
661
544
518
468
272
253
200
Source:USDAandNationalCottonCouncilofAmerica
Thechartbelowdepictsthecottonyieldsinthetargetcountriesfrom1991to2010.Aswecanseein
lastfiveyearsorso,mostlytheyieldshavestartedgrowingafteralongperiodofstagnancy.Among
thesefournations,theproductivityincreaseismoreprominentinUgandaandKenya.
Figure26:CottonYieldinTargetCountries(19912010)
Valuesinkg/Hectare
600
500
400
300
200
100
0
Sudan
Tanzania
Kenya
Uganda
Page113of154
Australia is the country which has highest cotton yield in the world: more than twice the world
average,morethanthricetheSudansyieldvaluesandalmost8timesthatofTanzania.Beforelast
threeyearstheyieldswereabove2000kg/halevel.
About85%ofcottonareainAustraliaisirrigated,whichpartlyexplainswhytheaveragecottonyield
ishigh.However,theAustraliancottonyieldremainsmuchhigherthaninotherirrigatedcountries
also. Apart from fertile soil and a favorable climate, the high yields are a result of the national
cottonbreedingprogramandimprovedfarmmanagementpractices.
Figure27:AustralianCottonYield
ValuesinKg/Hectare
2,250
2,000
1,750
1,500
1,250
1,000
ReasonsforhighcottonproductivityinAustralia:
A. LocalAdvantages:ThesoilinmostcottonareasofAustraliaisrelativelyfertileandrarelyneeds
applicationsofphosphorusandpotassium.Onlynitrogenapplicationsareneeded.However,the
soilissodic,andcottonvarietiesdevelopedinAustraliaareadaptedtosodicsoils.Soilinmost
cottonareasisheavyclay,whichhelpstoretainwater.Inaddition,Australiabenefitsfromalong
growingseasonof180days,whichcontributestoincreasedyields.
B. Cotton breeding program: Cotton Seed Distributors (CSD), an Australian company created in
1962, initially sold Delta Pine varieties that had been developed in the United States. The
Australiancottonbreeding program started in1972 inNarrabri, attheCSIRO CottonResearch
Unit, and it released its first variety in 1984. Since 1995, locally developed varieties have
represented 90% to 95% of cotton area in Australia, and CSD now sells only CSIRO seeds.
Australian cotton breeding is achieved through a partnership between industry and public
research.About95%ofcottonareainAustraliaisplantedtobiotechvarietiesandtheremaining
5% is planted to conventional varieties. The strengths of the Australian breeding program
include locally adapted varieties with improved yields, pest and disease resistance, wateruse
efficiencyandfiberquality.
Page114of154
C. Farmmanagementpractices:Optimalusesoffarmmanagementpracticesthatareemployedin
therestoftheworldhaveenabledAustralianfarmerstoachievebetterproductivitylevels.The
limited number of cotton producers (around 600 in 2009/10) and the concentration of cotton
productionintwostates(NewSouthWalesandQueensland)makesitrelativelyeasyandfastfor
the lessons drawn from cotton research to be communicated and implemented on farms.
ExtensionservicesaremanagedthroughtheCottonCRCinpartnershipwithstategovernments.
Extension resources are available online and free of charge. Australian farmers are very well
educatedregardingcottonproduction.Thelargesizeofcottonfarms(400hectaresonaverage
but with a large range of 200 to 10,000 hectares) allows for economies of scale. In addition,
cotton producers often help each other. The limited water resources have pushed farmers to
optimizetheefficiencyofwateruseontheirrigatedfarms.Theabsenceofgovernmentsubsidies
forcesfarmerstobeveryrational:theydonotgrowcottonifitdoesnotmakeeconomicsense,
and if they do grow it they are careful about optimizing their yields while minimizing their
production costs. Small cotton farmers usually rent their pickers from large farmers or
independentcontractors.
Table52:LandunderBtCottonplantationinselected
countries(2009)
Several countries have also achieved better

productivities and economies by use of
genetically modified cotton varieties, including
India.Btcottonhassofarbeencommercialized
in 9 countries the USA (first introduced in
1996), Mexico (1996), Australia (1996), China
(1997), Argentina (1998), South Africa (1998),
Colombia(2002),India(2002)andBrazil(2005).
In2010,PakistanalsoplantedtheBtcottonfor
first time. In 2007, Bt cotton cultivation
occupied globally 15 m ha which comprised
43% of the total cotton area of 35 m ha. Bt
cotton coverage in 2010 increased by 126% to
reach 260,000hectares(65% adoption)farmed
by 80,000 farmers, compared with 115,000
hectaresin2009.
Page115of154
Country
Btcottonplantations(2009)
India
8.4mn.hectare
China
3.7mn.hectare
USA
2.2mn.hectare
Argentina
0.25mn.hectare
Australia
0.19mn.hectare
Brazil
0.12mn.hectare
Mexico
0.06mn.hectare
Colombia
0.03mn.hectare
SouthAfrica
0.01mn.hectare
Source:Q&AonBtcottoninIndia,Dr.
Manjunath
InIndia,6.3millioncottonfarmersplanted9.4millionhectaresofBtcotton,equivalentto86%adoption
rate.TodayIndiahasthelargestlandunderBtcottoncultivation.BtCottonwasapprovedforplantation
byIndianauthoritiesin2002.Sincethenithasgainedwidespreadpopularityamongfarmers.
The Indian cotton yield at present is approximately 468 kg / Ha, which is about 37% lower than the
world average. Main losses in cotton production in India are due to its susceptibility to about 160+
species of insect pests and a number of diseases. Introduction of Bt cotton in India has led to higher
yields(atleast50%ofincreaseisattributedtoBttechnology),reductioninuseofpesticidesandmore
employment(becauseofhigherfarmproduction).
Page116of154
Figure28:AdoptionofBtcottoninIndia
ValuesinMn. hectares
Totalareaundercottoncultivation
9
8
AreaunderBtcottoncultivation
9
10
11
9.4
8.4
7.6
8
6.2
3.8
1.3
0.0
0.1
2002
2003
0.6
2004
2005
2006
2007
2008
2009
2010
Source:Q&AonBtcottoninIndia,Dr.ManjunathandISAAA
However,itisimportanttomentionherethatthoughGeneticallyModified(GM)cropsareexpectedto
playanimportantroleinimprovingagriculturalproductionandeconomicbettermentoffarmers,itmay
entailunintendedrisksandhazards.Eachcountryneedstoadoptapolicyofcarefulassessmentofthe
associatedbenefitsandrisksatvariousstagesofdevelopmentandfieldreleaseofBtcottontoensure
biosafety. It took almost 7 years of research and trial work in India, before the first Bt cotton got
commercialized.
In India, the rules governing the handling of genetically modified crops and products thereof were
notifiedin1989,whichareimplementedbytwonodalagenciesMinistryofEnvironmentandForests
(MoEF) and Department of Biotechnology (DBT). Further there are 6 bodies entrusted with non
overlappingrolestohandlevariousrelatedissues,theyare:
a. RecombinantDNAAdvisoryCommittee(RDAC)
b. InstitutionalbiosafetyCommittee(IBSC)
c. ReviewCommitteeonGeneticManipulation(RCGM)
d. GeneticEngineeringApprovalCommittee(GEAC)
e. StateBiotechnologyCoordinationCommittee(SBCC)
f. DistrictLevelCommittee(DLC)
Page117of154
Theoverallmechanismandfunctionallinkagesamongvariouscommitteesanddepartmentsconcerned
withtheapprovalofGMcropsforcommercialreleaseareillustratedbelow:
Figure29:ApprovalMechanismofGMcropsinIndia
Appl icationInvestigator
IBSCfunctions:
Tonote
Toapproveca tegoryIa ndIIexperiments
Torecommenda nds eeka pprovalofRCGMfor

categoryIIIexperiments
Ins titutionalBiosafety
Commi ttee
RCGMfunctions:
Tonote
Toapproveca tegoryIIIandfieldexperiments
Torecommendgenerationofappropriatebiosafety
a nda gronomicdata
Revi ew
Moni toring
Commi ttee
cum
onGeneric
Eva l uation
Ma ni pulation
Commi ttee
GeneticEngineeringApproval
Commi ttee
Indian
Councilof
Agricultura
lResearch
MECfunctions:
Tovi s i ttrialsites
Toanalys edata
Toi ns pectfacilities
Torecommendsafeanda gronomicallyvi able
transgenics
Appl icantInvestigator
Sta teGovts
GEACfunctions:
Toapproveforlargescaleuse
Toapproveopenreleasetoenvironment
Toi nformdecisiontoadministrativeministrya nd
a pplicantsinvestigatorstofollowPVP,SeedsAct
permi ssionfors ale
Rel easeforopenfield/
commercialcultivation
ICARfunctions:
Togeneratecompleteagronomicdataontra nsgenics
Torecommends uitabletransgenicsforcommercial
rel ease
Source:Govt.ofIndia
Page118of154
In additiontothis, for improvingthe qualityofcotton,increaseperhectare productivity, increasethe

incomeofcottongrowersbyreducingthecostofcultivation,toimprovetheprocessingfacilitiesetc.,
the Government of India launched Technology Mission on Cotton (TMC) in February 2000. The broad
objectivesofthefourMiniMissionsareasunder:
MiniMissionI
WiththeIndianCouncilofAgriculturalResearch(ICAR)astheNodalAgency,thisMiniMissionhasthe
followingobjectives:
Developmentofshortduration,highyielding,diseaseandpestresistantvarieties/hybridswith
appropriatefibreparameterstomeettheneedofthetextileindustry.
Development of integrated water and nutrient management practices for cotton and cotton
basedcroppingsystem.
Development and validation of Integrated Pest Management Technology for different cotton
growingareasofIndiatoimproveyieldandreducethecostofcultivationtoensurebetternet
returntothecottongrowers.
Mini Mission I is being implemented under the overall supervision of Secretary, Department of
Agriculture and Director General, ICAR, Ministry of Agriculture, Government of India by The Central
Institute for Cotton Research (CICR), Nagpur, Central Institute for Research on Cotton Technology
(CIRCOT), Mumbai, National Bureau of Soil Survey and Land Use Planning, Nagpur and other ICAR
Research Institutes, as well as research centres of State Agricultural Universities under All India
CoordinatedCottonImprovementProject(AICCIP).
MiniMissionII
With the Ministry of Agriculture and Cooperation as the Nodal Agency, this Mini Mission has the
followingobjectives:
TechnologyTransferthroughdemonstrationandtraining.
Supplyofdelintedcertifiedseedbysettingupofdelintingunits.
AcceleratingIntegratedPestManagementactivities.
Providingadequateandtimelyinformationinputtothefarmersperiodically.
This is being implemented by the Department of Agriculture & Cooperation, Ministry of Agriculture
through State Agriculture Department of cotton growing States in the country under Intensive Cotton
DevelopmentProgramme(ICDP)undertheoverallsupervisionofSecretary,DepartmentofAgriculture
&Cooperation.
Page119of154
MiniMissionIII
TheMinistryofTextilesistheNodalAgencyforthisMiniMission.Itaimsatimprovementofmarketing
infrastructure through setting up new market yards and activation/improvement of existing market
yards.
MiniMissionIV
The Ministry of Textiles is also the Nodal Agency for this Mini Mission. This Mini mission aims for
modernizationandtechnologicalupgradationofexistingginningandpressingfactoriessoastoimprove
theprocessingofcotton.
MiniMissionIII andIV are implementedbythe MinistryofTextiles,GovernmentofIndiathroughthe
Cotton Corporation of India Ltd. and the help of other field agencies shall also be taken whenever
required.TheSecretary,GovernmentofIndia,MinistryofTextileswillbeoverallinchargeofthesetwo
MiniMissions.
Recommendations
In order to improve the cotton productivity in the region, it is recommended that an intervention be
plannedforindividualcountrieswherein
a. Farmer training programs on a larger scale may be undertaken under guidance of international
subject matter experts. The aim of such programs will be create awareness among farming
communityaboutinternationalbestpracticesandadoptthosemethodsasperthesuitabilityinthe
region.
b. Farmers should be provided with or incentivized to buy productivity improvement machinery and
tools.
c. Theareaunderirrigationshouldbeimprovedinaphasewisemanner,tosupportcottonproduction,
andothercropsaswell.
d. Support should be provided to seed research institutes for developing high yielding varieties, in
liaisonwithinternationalbodies,ifrequired
e. TheBtcottontrialsandapprovalsshouldbeputonafasttrack.Thetimetakenforfieldtrialsetc.
cannotandshouldnotbebargainedwith.However,beforethefinaloutcomeitisimportanttohave
clearcutguidelinesforgoverningthehandlingofgeneticallymodifiedcottoncrop.Themechanism
to approve GM varieties need to be in place which means formation of relevant authorities and
delineatingtheirauthorityinlinewiththerequirements.
Page120of154
The productivity may also improve as an indirect impact of promotion of cotton farming with
internationalpartners.Theinternationalpartnerswillbringtheirownexpertiseinthefieldandwilltrain
the cotton growers accordingly. Assurance of market will also prompt farmers to put more focus
towardsthecottoncrop,ultimatelyimprovingtheproductivityaswellasthequality.
Page121of154
5.2. Fiber Contamination

ITMFs cotton contamination survey 2009 shows that among the target countries, contamination is a
majorissuewithSudanesecottonwhereasUgandancottonisthebetterone.
Figure30:DegreeofCottonContaminationinTargetCountries,2009
World
Sudan:Barakat
Tanzania:Coastal
Uganda
92
78
67
62
38
16
22
8
Nonexistent/Insignificant
Moderate
11
0
Serious
Source:CottonContaminationSurveys,ITMF
Note:Kenyaisnotcoveredinthesurvey,beingaminorproducingnation
The above chart indicates that globally 72% of the respondents found nonexistent / insignificant
contamination; whereas 92% of the respondent users of Ugandan cotton found it to be free of
contamination. The cotton from other two countries is found to have more contamination than the
world average. 16% of the all respondents found that the cotton used by them had moderate
contamination,whereas38%and22%usersofTanzanianandSudanesecottonrespectivelyfounditto
have moderate contamination. 11% of the users of Sudanese cotton found it to be seriously
contaminated,whereastheworldlevelis6%.
However, it is also important to note that the biannual surveys have reported a wide variation in the
contamination levels, as depicted in charts below. Tanzanian and Ugandan cotton were continuously
reportedtohaveseriouscontaminationinsurveysfrom2001to2007;onlyin1999and2009,werethey
reportedbetterthanworldaverage.Sudanesecottonontheotherhandisreportedtobemoderately
contaminatedbymaximumrespondentsinallthesurveys.
Page122of154
Figure31:HistoricalchangesinDegreeofCottonContaminationinTargetCountries
ShadedareaWorldaverage
SolidlineSudan DottedlineTanzania
DashedlineUganda
Source:CottonContaminationSurveys,ITMF
Note:Kenyaisnotcoveredinthesurvey,beingaminorproducingnation
Degree of Contamination varies a lot with growing area and farm practices. In general, cotton from
India,Pakistan,SyriaandsomeAfricancountriesareknowntohavehighercontaminationlevelthanthe
world average, whereas cotton varieties of Australia, Brazil, China, Mexico and USA possess minimum
contamination.
Contamination of cotton can take place at every step i.e. from the farmpicking to the ginning stage.
Manual picking of cotton is one of the biggest causes of cotton contamination. In addition
polypropylene bags used by pickers, brackish and decayed seed cotton, leaves, flowers, sticks and
weeds, immature balls, trash and dust, plastic bags are the other sources of contamination. Similarly,
cottonpackaginginthejuteorpropylenebagssewedwithjutetwineandmixingoftwovarietiesortwo
gradesofthesamevarietytogeteconomyoftransportationcancausecontamination.
Themajorreasonsforcontaminationare:
Lackofawarenessoftheimportanceofreducingcontamination
AbsenceofQCprocedures
Manualpicking
Dirtystorageenvironment
UseofPPandjutebagsorwrappings
Poorsupervision
Improperginningprocess
Contamination in raw cotton causes downtime in processing, wastage of dye stuff, extra manpower
requirement for cleaning inflating the cost, customer rejection of the raw or finished product, costly
claimsandpenalties,lowerpricesand,inevitably,thelossofcustomersorendmarketbuyers.
Page123of154
Recommendations
Inordertoreducethecottoncontaminationandsupplyaconsistentquality,itisrecommendedthat:
a. Alargescaleextensionprogrammaybeplannedmakingfarmersawareabout:
lossesbecauseofcottoncontamination
majorreasonsofcottoncontamination
methods/practicestopreventcottoncontamination
b. TheQCmustbeensuredattheginninglevelalso,ifrequiredbyengaginginspectorsfromcotton
development authorities. The authorities may provide their own certification to ginneries on
basis of their inspection, which can be used by the ginners as a marketing tool for cotton
exports.
The contamination may also be reduced as an indirect impact of promotion of cotton farming with
internationalpartners.Theinternationalpartnerswillbringtheirownexpertiseinthefieldandwilltrain
the cotton growers accordingly. Assurance of market will also prompt farmers to put more focus
towardsthecottoncrop,ultimatelyimprovingtheproductivityaswellasthequality.
Page124of154
5.3. Value Addition

Table53:LevelofCottonExportsintheTargetCountries
Most of the cotton produced in the Tanzania,

Sudan and Uganda is exported out of the
countryinrawform.Amajorreasonbehindthis
is the absence of sufficient manufacturing
capacitiesinthecountriestoconsumecotton.In
Kenya, the exports are nil, but the cotton
productionvolumethereisalsolow.
Most of the large cotton producing countries
have established capacities to consume
maximum cotton within their own countries.
Exceptions to this are US and Australia where
the textile manufacturing is not viable because
of high manpower costs and they have as a
policydeicedtoexportthecottonproduced.
Country
Levelofcottonexports
Kenya
Negligible
Sudan
Most of the production is

exported
Tanzania
Apart from own consumption of

150,000bales/annum;restcrop
isexported.In2010,exportswas
225,000 bales which has
remainedatthislevelforlastfew
years
Most of the production is
exported
Uganda
Source:PrimaryResearchfindings
IfweanalyzethecottondemandsupplyscenarioofChinaforlast20years,wecanseehowthecotton
consumptionwithinthecountryhasgrownwithincreasingproduction&importsandreducingexports.
Since the turn of last decade, Chinas exports have been miniscule whereas it became the largest
importerofcottonintheworld.
Figure32:China'sCottonScenario
Production(LHS)
Imports(LHS)
Valuesin'000balesof480lbseach
Exports(RHS)
40,000
5,000
30,000
3,750
20,000
2,500
10,000
1,250
Anotherlargeproducerofcotton,Indiaalsoconsumesmostofthecottonproducedinthecountry.In
recent years, the cotton exports have increased but that is supported by an equivalent increase in
productionvolume.
Page125of154
Figure33:IndiasCottonScenario
Valuesin'000balesof480lbseach
30,000
Production
Imports
Exports
20,000
10,000
Increaseincottonconsumptionwithinthecountrywillservetwopurposes:firstiscreationofextrajobs
acrossthevaluechainspinning,weavingorknitting,dyeing&processingandgarmenting.Secondlyit
also enables the country to move up the value chain. Value addition opportunity is lost by exports of
rawcotton.Companieslookingtosustaininlongrunneedtointegratetheiroperationsbymovingup
thevaluechain.
Figure34:ValueAdditionacrosstheValueChain
Page126of154
Source:WazirAnalysis
As a next step, within the finished goods also, it is important to spot the value added products.
CountrieslikeGermany,Italy,USA,Japan,etc.wherethecostofmanufacturingishighandmostofthe
textile and apparel manufacturing industry has shifted elsewhere, still feature among the largest
exporters of textile and apparel, because of their focus on value added items like: lingerie, suits,
sportswear,specialtyfibers,technicaltextiles,etc.Thesecountrieshavecarvedanicheforthemselves
inthemarketbyfocusingontheseproductswhichhaveahighvaluerealization.Themanufacturingand
marketingofvalueaddedproductsprovidesbettermarginsandbeinganichecategoryisquiteresistant
todownwardchangesindemandandprice.
Table54:GlobalTradeofFewValueAddedTextile&ApparelProducts
Commodity
Globaltradevalue
(2009,inUS$Mn.)
Leading
supplier
(shareinglobaltrade)
Wovenfabricofcombedwoolorfineanimalhair
2,352
Italy(35%)
Artificialfilamenttow
2,232
USA(40%)
Syntheticstaplefiber
4,344
S.Korea(17%)
Nonwovenstextilesexceptfelt
9,602
Germany(17%)
Fabricimpregnated,coatedorcoveredwithplastic
8,720
China(32%)
Specialtextileproductsfortechnicalpurposes
3,687
Germany(17%)
KnittedPantyhose,tights,hosiery,etc.
10,278
China(37%)
Tracksuits,skisuitsandswimwear
7,870
China(34%)
Men'ssuits,woolen
2,375
China(26%)
Source:WazirAnalysis,UNcomtrade
Recommendations
Toencouragemanufacturerstooptforvalueaddition,theyneedtobeencouragedbytheauthorities
by:
Providingsubsidiestopurchaseplantandmachineryformanufacturingsuchproducts
Providingcreditsupportinformofguaranteesorsubsidizedrateofinterests
Providingdrawbackonexportsofsuchproducts
Otherfiscalincentiveslikeallowanceofhighermachinerydepreciation,dutyexemptions,etc.may
alsobeconsidered
Theauthoritiesmayalsothinkofadoptingaclusterbasedapproachforpromotionofvalueadditionin
the country. Appropriate locations within the country may be adopted for establishing the complete
value chain infrastructure for such products: ginning, spinning, weaving, knitting, processing,
garmenting,tradecenter,designcenter,testinglabs,trainingcenter,warehouses,customsoffices,etc.
Page127of154
Thegovernmentcancreatetheinfrastructureatsuchplacesinpartnershipwithprivateoperatorswhich
willinclude:powerstations,waterreservoirs,roads,ETP,etc.andtheninviteinvestmentsbytheprivate
playersinthezone.Specialincentivesmayalsobethoughtofforthebusinessesoperatinginthezoneto
attractlargescaleinvestment.
Within the zone, government may also form an own JV company with some international partner, in
ordertoestablisheitheramodelunitand/ormajorcapacitytocatertoorbuyfromotherbusinesses.
Page128of154
5.4. Technology Level

The primary survey conducted for this assignment in all the four countries revealed a general lack of
stateoftheartmachineryfortextilemanufacturing.Mostoftheginningunitsinallthecountrieshad
quiteoldmachinery,whichhasbeenreconditionedtokeepfunctioning.Similarlyattextilelevel(yarn,
fabricsandprocessing)veryfewunitsexistedwithnewtechnologymachines.Inapparel,however,the
technology employed by most of the units can be classified as latest. The reason behind non
upgradation of machines is lack of major new investment in the sector. Whatever new expansions or
greenfield units being planned by the organized sector now are being conceived with the new
technologylike,highcapacityrotorkniferollerginningmachinesandshuttlelessloomsfromTurkeyand
Europe being sourced by Sudanese authorities for textile mill revival plans; expansion of a couple of
spinnersinKenyaandUgandawithtechnologyfromSwitzerlandandGermany;andforwardintegration
plansofaTanzaniancompositetextilemillintogarmentmanufacturing.However,someplansareon
drawing boards at the moment and even collectively not enough to upgrade the technology level of
entireregion.
There are a number of technological developments that have happened across the textile
manufacturingvaluechain,whichhavecaughttheattentionofmanufacturersacrosstheglobelike:high
capacity ginning machines, extensive use of electronics for automation, quality control and better
precision at yarnpreparatorystage,compactspinning,electroniccontrol andyarnclearers atwinding
stage,higherspeedandmoreprecisefabricpreparatorymachines,electronicdatamonitoring&control,
higher speeds and automation at weaving stage with shuttleless looms, machines and processes for
applicationofspecializedfinishesandwashes,automationatgarmentmanufacturingstageetc.
Twofactorswhichleadstodeploymentofimprovedtechnologymachinesbybusinessesare:capacityto
payforthat(whichunfortunatelyisamajorissueinallofthetargetcountries)andsecondlythetechno
commercialsuitabilityoftechnologyforthetargetproducts.
In many of the countries, the first factor is addressed to by reducing the effective cost of investment
thusencouragingtheentrepreneurstoinvestinthesector.ForexampleinIndia,theflagshipschemeof
Ministry of Textiles, known as Technological Upgradation Fund Scheme (TUFS) provide an interest
subsidy of 5 percentage points on the bank credit for modernization of ginning, textile and apparel
companies.Italsoprovidesacapitalsubsidyof10%or25%onselectedmachineryforprocessingand
technicaltextiles.Theschemeclearlyidentifiesthemachineryonwhichthebenefitswillbeavailable;so
astoensurethatonlymodernmachinerywithimprovedtechnologyispromoted
Page129of154
Figure35:ProgressmadeunderTechnologyUpgradationFundScheme(TUFS),India
$14,718
16,000
No.ofprojectssanctioned
$12,379
Totalprojectcost(US$million)
12,000
8,000
$6,136
4,000
$1,128
$973
199900
200001
$293
$320
$731
200102
200203
200304
$1,633
$4,426
$3,340
200405
200506
200607
200708
200809
200910
Source:MinistryofTextiles,GovernmentofIndia
Similarly, in April 2009, State Council of China announced a 3 year plan (20092011) to upgrade the
textileandapparelindustries.ThemainfeaturewastoimprovetheR&Dfordevelopmentofnewfibers
andapplications,increaseautomation,reduceenergyandwateruse,developmentofdomesticmarket
and lower dependence on textile machinery imports. Vat application has been reformed from
productiontoconsumptionbasedtoencouragecompaniestoimprovetheirtechnology.
Recommendations
Inordertopromotethemodernization,authoritiesneedtoincentivizebusinesses,fiscallyorotherwise,
todoso.Therecouldbevariouswaystodosolike:
Providingcapitaland/orinterestsubsidiesforadoptionofsuchtechnology
Facilitatingcreditflowtopurchasesuchtechnology
EncouragingbusinessestoparticipateininternationalmachineryexhibitionlikeITME,bytakingan
industrydelegationthere
Liaisonwithmachinerysuppliersandtechnicalconsultantstopreparecountryspecificandproduct
specificprojectreports,encompassingthelatest,suitabletechnologywhichcanbeadoptedbythe
industry.Theproductsmaybeidentifiedinlinewithgovernmentsaimtopromotevalueaddition
also.Suchprojectscanthenbepresentedtoinvestorsdomesticaswellasinternational.
Herealso,aclusterbasedapproach,asdescribedinprevioussection,canbedovetailed.
Government can also establish a JV unit with an international partner, with the stateoftheart
technology.Successfulfunctioningofsuchunitwillprovethetechnocommercialviabilityoftechnology,
thusworkingasamodelunitwhichotherscanfollow.Theunitwillbemorebeneficialtotheindustryif
itismodeledasacommonfacilitycenterfortheuseof industrystakeholderse.g. aprocessinghouse
whereaweavinghouseoragarmentunitcangetitsfabricprocessedonjobworkbasis.
Page130of154
5.5. Logistics
In todays price and time sensitive markets, logistics holds the key to make or break an exporters
position in its target market. Lack of logistical infrastructure can make economies unable to take
advantageofresourceswithwhichtheyhavebeenendowed.
Outofthetargetcountries,UgandaisalandlockedcountryandutilizesKenyanportofMombasafor
exports. The intercity connectivity from port to manufacturing locations is satisfactory with lot of
highwaydevelopmenthappeningallacross.Theissuesometimesisofpaperworkandhasslesatborder
post(fromUgandatoKenya)anddelaysforclearancesattheportitself.However,fromthefeedback
received during primary research, it came out that there are very few such instances at Port Sudan,
Sudan and DaresSalaam, Tanzania; whereas in Mombasa port, which handles much larger volumes
than the other two, a lot remains desirable in terms of efficiency. In all the ports, because of smaller
size,berthavailabilityandvesselschedulesaresometimesadeterrenttotimelydeliveries.
Table55:TransitTimeforImportsandExportsbyTargetCountries
ValuesIndays
INBOUND
To
From
Shenzhen,China
Mumbai,India
Mombasa,Kenya
PortSudan,Sudan
DaresSalaam,Tanzania
17
08
20
10
18
08
NewYork,USA
LosAngeles,USA
London,UK
25
18
25
25
34
36
30
36
31
20
19
19
20
19
30
OUTBOUND
To
From
Mombasa,Kenya
PortSudan,Sudan
DaresSalaam,Tanzania
Mumbai,India
Shenzhen,China
Source:Searates
Improvement in logistics is a broader issue that affects the country beyond the CTA sector.
Improvementininfrastructureforlogisticsisakeyareaoffocusforallthecountriesaroundtheworld.
The availability of international funding to do this may also be explored by governments of individual
countries in view of their policy and larger vision for the nations development. The cluster based
approach,asmentionedabove,canalsoaddressthisissuealbeitinalimitedmanner,beingconstrained
tothezonesphysicalexpanse.
Page131of154
5.6. Power Scenario

Therearetwoaspectsrelatedtopowerscenarioofacountrycostofpowerandqualityofpower.In
terms of cost of power, a comparative analysis of target countries with some of the large textile and
apparel producing nations show that the power cost in Tanzania is quite competitive whereas that in
Kenyaishighest
Figure36:PowerCostsinSelectedCountries
ValuesinUS$cents/Unit
0.2
0.12
0.12
Sudan
(SDG0.32/unit)
Uganda
(UGX287/unit)
0.1
0.08
0.06
0.06
Bangladesh
(Taka4.11/unit)
Tanzania
(TSH85/unit)
SriLanka
(Rs.9.10/unit)
India
(Rs.4.50/unit)
Kenya
(KES16/unit)
Source:PrimaryResearchandIndustryReports
Amongthefourcountryanalyzed,thequalityofpowerwasreportedsatisfactoryonlyinKenya;whereas
inothercountriestheavailabilitywaserraticandfluctuationwascommon.
The model followed by some of the countries to promote captive power generation to improve the
power scenario is allowing manufacturers to produce, say hydrobased, power at one place in the
country,sellittothemaingridandpurchaseatitsmanufacturinglocationatsamecost.Similarlysome
countries promote alternative power sources like windmills by providing appropriate incentives e.g.
subsidies,accelerateddepreciation,taxexemption,etc.
Recommendations
In order to improve the power scenario, first thing a government can do is to invest in large power
projects, either alone or in partnership with an investor. Another way to address this issue is to
encouragebusinessestosetuptheirownpowergenerationstationsbyprovidingfiscalandnonfiscal
incentiveslike:
Capitalandinterestsubsidyforprocurementofequipment
Page132of154
Facilitatepartnershipprocesswithanyinternationalplayer
Policiessupportinggenerationandconsumptionatdifferentplaces
In addition, policy to establish CTA clusters can take into account the power requirement for the
proposedclusterandestablishapowerstationexclusiveforthecluster

Page133of154
5.7. Business Financing

Highcostcoupledwithlowavailabilityofbusinessfinancingisoneofthemajorissuesintheregionthat
hasresultedinlowinvestmentinCTAsector.
Table56:BusinessFinancingStatusinTargetCountries
Country
Kenya
Sudan
Tanzania
Uganda
Status
Banklendingrateisinrangeof16to18%,plusotherchargestoanextentof5%
(bank charges, negotiation charges, commitment fee, ledger fee, a/c
maintenancefee,etc.Creditavailability,specificallytotextilebusinesses,islow.
Longtermloansarenotmadeavailablebybanks.CertaindonorloansfromArab
countriesareavailable,whichareveryfew.Loansareavailableonlyforworking
capitalforupto3monthsataninterestrateof9to12%p.a.
Bankinterestratesareinrangeof14to16%.Ginnershaveacomparativeeasier
accesstocreditlines,whereasthetextilebusinessesfaceissuesinthesame.
Creditavailabilityisveryless.Longtermloansareavailableataninterestrateof
18 to 20% with a repayment period of 3 years. Foreign currency loans may be
available to businesses with at least 20% of earnings in foreign currency, at an
interestrateof7to12%.However,theavailabilityisveryless.
Source:PrimaryResearchfindings
Figure37:ComparisonofPLRofSelectedCountries
The lending rates in countries are quite high in

comparison to other nations which have got
significantinvestmentsintheCTAsector,asshownin
adjoiningfigurescomparingPLR(PrimeLendingrate)
of target countries with some of the bigger textile
and apparel producing nations and a neighboring
country,Ethiopiawhichismakingsignificantinroads
to attract investment in different segments in the
country. PLR is the annual interest rate that
commercial banks charge on new loans,
denominatedinthenationalcurrency,totheirmost
creditworthy customers. Without reduction in
lending rates and improvement of credit flow, large
scaleinvestmentsareboundnottohappen.
Uganda
20.5%
Tanzania
15.0%
Kenya
14.0%
India
13.3%
Egypt
12.3%
Vietnam
11.2%
Ethiopia
7.0%
Thailand
China
Taiwan
6.0%
5.3%
2.6%
Source:CIAworldfactbook
Therateofinterestchargedbybanksismorerelatedtothemacroeconomicenvironmentofthecountry
and policies. The effective rates to any sector may however be reduced by the Government by
identifying it as a priority segment and providing interest subsidies on loans offered by banks to
Page134of154
businessesinthatsector.Ononehandwhereinvestorswillhaveareductionintheirinterestburden,
lenderswillbemorecomfortablewithgovernmentbackingtotheloan.Thiswillalsoimprovethecredit
availability. However, a proper policy with strict guidelines regarding the nature of business to be
financedneedstobeformulatedbeforehand.
InIndia,forexample,theschemeofTechnologicalUpgradationFundScheme(TUFS),asmentionedin
previous section on Technology Level, provides interest reimbursement of 5 percentage points to
eligibleprojectsonselectedplantandmachinery.Beforeacommitmentofsupportbythegovernment,
a complete due diligence of the project is done either by the financial institute or a third party
empanelledconsultantinordertoensuretheprojectviability.
Recommendations
TheCTAbusinessfinancingscenariocanimproveinacountryintwoways.Firstisonautomaticmode,
whenthebusinessesstartperformingconsistentlyandcatertheirfinancialcommitmentsontime.The
secondiswhenthesectoritselfisrecognizedasprioritysectorbygovernmentandfinancialinstitutes
get some commitment by government on behalf of borrowers as well. Hence, an intervention to
improve the credit flow should start with government backing up CTA sector business and instructing
financialinstitutestooperatespecialschemesforit.Theseschemesmaybephasedoutinduecourseof
time,whenthebusinessesstartperformingaboveacertainfinancialbenchmarklevel.
Page135of154
5.8. Supply Chain Linkages

Ananalysisofoperationalcapacitiesineachofthetargetcountryrevealsanunbalancedsupplychain:
Table57:OperationalCTACapacitiesoftheTargetCountries
Cotton
Kenya
2010 Production:
49,000bales
Smallest producer
among
four;
possibility
of
improvement in
area under cotton
cultivation
and
productivityexists
Ginning
Largely
underutilized
Yarn
2010 Mill use of
manufacturing
cotton:
50,000
bales
Capacity is more
than of cotton
production, some
imports are also
there. But yarn
production
is
insufficient
to
cater to fabric
producers.
Fabric
Very less capacity.
manufacturingand Mostofthefabrics
processing
used by apparel
manufacturers are
imported.
Garmenting
Largest capacity in
theregion
Sudan
2010 Production:
100,000bales
Large scope of
increase; current
production is 80%
lower than peak
production level
of 525,000 bales
(2004)
Largely
underutilized
2010 Mill use of
cotton:
8,000
bales
Negligiblecapacity
Tanzania
2010 production:
275,000bales
Largestproduction
among four; still
half of the peak
production level
of 575,000 bales
(2005)
Uganda
2010 Production:
125,000bales
38% below the

peak production
level of 200,000
bales(2004)
Largely
underutilized
2010 Mill use of
cotton: 150,000
bales
Mill use has

improved in last
fewyears,butstill
is way below the
own
cotton
production
capacity
Largely
underutilized
2010 Mill use of
cotton:
20,000
bales
Verylesscapacity
Negligiblecapacity Limited capacities,

major focus is on
traditional fabrics
like kitenge and
kanga
Negligiblecapacity Negligiblecapacity
Very less capacity.

Only
two
manufacturing
unitsexist
Very less capacity.
Only
two
manufacturing
unitsexist
Kenya has a strong garment manufacturing capacity but no backward linkages within the country to
supportit.UgandaandSudanproducescotton,butlacksfurtherdownstreamprocesses.Tanzaniahas
Page136of154
some capacities from cotton to fabrics, but lacks value addition in terms of fabric type as well as
garmentconversion.
For countries where substantial benefits for exports are available, it becomes important to have a
completesupplychainasbuyerspreferintegratedsupplybases.Importingyarnorfabricleadstohigher
costs,higherleadtimeandlossofemploymentopportunity.
Figure38:TextileandApparelSupplyChain
The countries which have emerged as the leading manufacturer exporter of textile and apparel
productslikeChinaandIndia,featureacompletesupplychain,fromfibertofinishedgoods.
Table58:SupplyChainAnalysisofChinaandIndia
Fiber
Page137of154
China
LargestproducerofCotton
2ndlargestproducerofwool
Largest producer of polyester
filamentyarnandstaplefiber
3rdlargestproducerofpolypropylene
Largestproducerofacrylic
Largestproducerofnylon
India
2ndlargestproducerofCotton
2ndlargestproducerofSilk
3rd largest producer of Cellulosic
fibre/yarn
5th largest producer of Synthetic
fibers/yarn
HometoLargestProducerofPolyester
LargestproducerofJute
Yarn
110millionringspindles
2.2millionrotors
Fiberconsumption:38Mn.MT
Weaving
522,000shuttlelesslooms
18,000shuttlelesslooms
690,700shuttlelooms
53,000shuttlelooms
Largest manufacturers and exporter ApparelExports:US$10Bn
in the world. Apparel exports: US$
120Bn.
Garments
42millionshortstaplespindles
0.7millionrotors
Fiberconsumption:7Mn.MT
Source:ITMF,UNComtrade,OerlikonFiberYearReport2009andvariouscountryreports
Recommendations
Improvement in supply chain linkages is a broader concept which will encompass a lot of other
interventions like identifying key value chain bottlenecks and encouraging investments in it; promote
capacityexpansionandtechnologyupgradation,improvingHRskillsforthesector,improvingtheoverall
infrastructurelevelinthecountry,attractingForeignDirectInvestments,etc.Herealso,aclusterbased
developmentapproachcanproveuseful.ThemainideashouldberecognizingCTAsectorasapriority
segmentandtakingvariousstepstoensurethatexistingbusinessesareprofitableandtheyreinvestin
businesses,inadditionnewinvestmentsalsohappenfromdomesticaswellasinternationalinvestors.
Page138of154
5.9. Training and Education

Cotton,TextileandApparelsectorisonelargestemploymentprovidersindevelopingnations.The
sector has potential to employ manpower in significant quantum specifically at the start of value
chain(farmingandginning)andtowardstheend(apparelmanufacturing).
Inordertosupporttheincreaseinproductionbaseofthesector,itessentialtofocusontrainingand
educating the human resources so that they may take up positions at different levels of machine
operators,supervisors,technicalstaff,managerialstaff,designers,etc.
CountrieslikeIndiahavepaidspecialattentiontothisaspectandhavebuiltupastrongeducation
infrastructure, and also have launched several capacity building programs. The educational
institutes in India provide 3 year diploma, 4 year degrees (B. Tech or B.E.), 2 year post graduate
degrees (M.Tech.) and doctorate (Ph. D.) level programs. There are about 20 major textile
engineeringcollegesbygovernmentwithacapacityofproviding1500+graduateandpostgraduate
engineers to the industry every year. Some of the better known colleges include Technological
InstituteofTextileandSciences,NewDelhibranchofIndianInstituteofTechnology,DKTESocietys
Textile&EngineeringInstitute,etc.Inadditionthereareseveralotherinstitutesforotherprograms.
Foreducationinfashiondesigning,MinistryofTextilesinIndiahasestablishedNationalInstituteof
Fashion Technology, which has completed 25 years this year with 15 institutes across India. Every
yearover1500graduatesandsome500postgraduatespassfromcollegeandjointheindustry.NIFT
has set academic standards and excellence in thought leadership by providing a pool of creative
genius designers who have achieved global success like Ritu Beri, Rohit Bal, Manish Arora, Ritu
Kumar,etc.ApartfromNIFTthereareotherwellknowninstituteslikeNationalInstituteofDesign,
PearlAcademyofFashion,LadyIrwinCollege,etc.
To promote vocational training in the sector, Apparel Export Promotion Council (AEPC)
conceptualized the Apparel Training & Design centers (ATDC) to meet the industrys growing
requirement for a steady supply to trained workforce and professionals with domain expertise
especially in apparel manufacturing technology. From an initial strength of a mere 195 student
trained in 1996, number of students passing out every year has risen to over 5000. Overall more
than 50,000 students have been trained in different centres of the ATDC since its inception. The
students trained at various centres of ATDCs are suitably employed in the garment industry units
andclusters.
There are a host of schemes launched by various Government arms for development of skills
requiredinthetextilesector,like:
MinistryofTextilesIntegratedSkillDevelopmentProgram,whichaimstotrainandemploy
additional12millionpeopleintextilesector.Thiswillbedoneinpartnershipwithprivate
firms,consultingagenciesandsocialworkers.
Page139of154
Ministry of Textiles Mega Cluster Scheme for Powerloom, Handlooms and Handicrafts,
wherein government supports establishment of worldclass infrastructure for various
manufacturingandsupportactivities,includingtraining.
MinistryofLabour&employmentsdressmakingandfashiontechnologyschemewhichis
specificallyrunforfemaleworkforceandmanagedbyWomentrainingDirectorate
MinistryofRuralDevelopments
Ministry of Agricultures extension program to support cotton production in India by
Promotion and Strengthening of Agricultural Mechanization through Training, Testing &
Demonstrationthatbasicallycovers:
o Needbasedskillorientedtraininginagriculturalmachineryandfarmmechanization
tofarmers,trainers,ruralyouth,technicians,etc.
o Testing of machines with a view to ascertaining their performance characteristics
andsuggestingimprovementthereonfortheirqualityupgradation.
o Demonstration of equipment with a view to increase productivity, production and
profitabilityoffarmersbythewayofinductionofnewtechnologyintheagricultural
productionsystem.
Inadditiontothis,industryhasalsobeensupportivetothevariouscollegesandinstitutesandsupport
government programs in different ways like accepting trainees for a short span of time, providing
infrastructuretoconducttrainingprograms,etc.
In each of the target countries there exist educational institutes but the focus on training is largely
missing.Consideringtheneedofproductivityimprovementandprovidingemployment,importanceof
having a structured training program cannot be over emphasized. The education infrastructure also
needsupgradationintermsofsyllabus,equipments,labs,industrycollaboration,etc.
Recommendations
For improvement of education institutes, it is recommended that they tie up with three types of
stakeholders:
Industryforgettingstudentstrainedatthefactorieswhiletheyarestudyingandgettingthem
placedwhentheircoursesarecomplete.
Technology suppliers for getting sponsorships, maybe in form of factory equipment like
cardingmachine,airjetweavingtechnology,etc.onwhichstudentscanbetrainedsothatthey
arereadilyabsorbedbycompaniesoncompletionofcourses
International institutes for knowledge exchange as well as student exchange program. The
former will help institutes to improve their course curriculums and own body of knowledge,
whereasthelatterwillprovideinternationalexposuretothestudents.
Page140of154
Theexistinginstitutesmaynotbeabletodotheaboveactivitiesontheirown,governmentdepartment
or an international development body may empanel a consultant for these activities on a deliverable
basis.Governmentshouldalsothinkoffinanciallysupportingthetextileanddesigninstitutesonaper
studentbasis,whichwilleffectivelybesponsoringstudentstotakeupcoursesinsuchinstitutes.
On the training issue, the implementing agency (government or international development agency)
needtoestablishanumbrellaschemefortrainingmanpoweratvariouslevelsoperators,supervisors
andmiddle level.To impartthetraining,national and internationalconsultantsshould beempanelled
andshouldbeengagedonapertraineebasis.Inlinewiththerequirements,establishmentoftraining
institutesmayalsoberequired.Theindustryalsoneedstosupporttrainingprogramsbyprovidingtheir
infrastructureforthesame.
Organizing an annual design competition for students in the region will help improve the sectors
visibilityandencouragestudentstotakeupacareerinthissegment.
Page141of154
5.10.
Market Development
Thedomesticmarketsofallthetargetnationsaredominatedbyimportsofyarn,fabrics,finishedgoods
andsecondhandclothing(exceptinSudan).Ananalysisofimportsofindividualcountryisgivenearlier
inthisreportintheforeigntradeoverviewsectionofeachcountry.Thedatabasicallyindicatesheavy
dependenceonimportsatalllevels.Ananalysisofimportsofsecondhandclothesisgivenahead.
Figure39:ImportsofSecondHandClothinginTargetCountries
Kenya
Uganda
Sudan
Tanzania
66
Valuesin$/kg.
ValuesinMn.kg.
2008
2009
2010
65
2.1
57
51
48
1.8
44
1.4
1.3
1.2
18
11
1.4
1.2
1.1
1.1
1.2
1.1
1.1
10
2008
2009
2010
Kenya
Sudan
Uganda
Tanzania
Source:UNComtrade
Amongthefournations,Kenyaimportsmostofthesecondhandclothing,tothetuneof65millionkg.It
isalsoimportanttonotethattheunitpriceisUS$1/kg,whichimpliesthatforUS$1onecanimporta
pair of trousers and a shirt. Such low cost imports may benefit those who are unable to afford new
clothing; but the actual situation in all countries is that many other consumers also buy second hand
clothes because of various reasons, including their better design and styles. As a result there is a
perpetualdownfallinregionsapparelmanufacturingsegment.Banningimportsoftheseclothes(orany
other commodity) is neither advisable nor feasible on account of various factors; the answer lies in
developingowncompetenciestosubstitute/phaseoutimportsprogressively.
For development of exports market, it is important to showcase the product range, manufacturing
capacities, etc. to buyers who have not yet made inroads in the region. Such buyerseller meets /
programsarerunallovertheworldbytradeandgovernmentbodies.Forexample,inIndiathereare10
export promotion councils in CTA sector, entrusted with export market development of specific
products:
ApparelExportPromotionCouncil
CarpetExportPromotionCouncil
CottonTextileExportPromotionCouncil
Page142of154
ExportPromotionCouncilForHandicrafts
PowerloomDevelopmentandExportPromotionCouncil
HandloomExportPromotionCouncil
TheIndianSilkExportPromotionCouncil
WoolIndustryExportPromotionCouncil
Synthetic&RayonTextileExportPromotionCouncil
Wool&WoolensExportPromotionCouncil
Theycarryoutanumberoffunctionslike:
Arrangingvisitofforeigndelegationinthecountry
ArrangingBuyerSellerMeetsinIndiaandabroad
Maintainingcloseliaisonwithrelevantinternationalbodies
Arranging trade fairs and exhibitions in order to project the quality and variety of Indian
products
Researchforeignmarketsandarrangingdelegation/studytourabroad
AdvocacyrelatedtoimprovetheproductionbaseoftheIndustry
Maintainandsharingsupplierdatabaseswithoverseasbuyersandviceaversa.
Resolvingshipping&transportproblems
PublicityinIndia&abroad
Recommendations
Adetailedstudyisrequiredtoassesstheimpactofsecondhandclothingontheconsumers,economy,
trade and local manufacturing industry. Such a study should be aimed to bring out the mechanism to
controlsecondhandclothing(ifatall)sothatthelocalindustrysgrowthisnothampered.
For development of export markets, a separate export promotion council can be formed to carry out
activitiesinlinewiththosementionedabove.
One of the most important steps that can be taken for market development is organizing an annual
mega trade show / buyer seller in the region inviting all the prospective regional and international
buyers.
Page143of154
5.11.
Investment Promotion
In each of the target countries special cells exists for investment promotion, albeit not exclusively for
CTAsectors:
Kenya:
Sudan:
Tanzania:
Uganda:
KenyaInvestmentAuthority
MinistryofInvestment
TanzaniaInvestmentcenter
UgandaInvestmentAuthority
Thekeybenefitsprovidedbyeachcountryforinvestmentisasbelow:
Kenya
Investment Protection Guarantee The constitution of Kenya guarantees protection of life and
privateproperty.TheForeignInvestmentProtectionActguaranteesagainstexpropriationofprivate
propertybygovernment.
ExpropriationKenyanlawprovidesprotectionagainsttheexpropriationofprivatepropertyexcept
wheredueprocessisfollowedandadequateandpromptcompensationisprovided.
Furtherprotectionisalsoguaranteedbythevariousbilateralagreementswithothercountries.
Regional or zonal restrictions do not exist. Investors are free to invest in any part of the country
subjecttotheobservationofenvironmentallaws
Thekeypolicyinitiativesinclude:
o Liberalizingtheexchangecontrols
o Removingpricecontrols
o Freeingtheshillingexchangeratetobemarketdriven
o Abolishing import licensing except for cases that impact directly on national security,
health,andenvironment.
o Openingupofthecapitalmarketstoforeignparticipation
o GenerousInvestmentandcapitalallowance
o RemissionofdutyandValueAddedTax(VAT)
o ManufactureunderBondstatus
o Exportprocessingzonesstatus.
o Doubletaxationagreements
o Signatory of a range of tax treaties , Investment Protection Agreements and bilateral
investmenttreaties
Sudan
TheMinistryofInvestmentprovidesservicestoinvestorsamongwhichthefollowingarethemost
important:
Completeexemptionfromcustomsfeesforcapitalprojects
Freedomofcapitaltransfer
Page144of154
SimplifyproceduresthroughasingleoutletOneStopShop
Grantexemptionsfromprofittaxesof5to10yearsforinvestmentprojects
Grantcustomsexemptionsforstrategicprojectsandnonstrategiccapitalgoods
Strategicprojectsaregiventhenecessarylandfreeofcharge
Nonstrategicprojectsaregivenlandatanencouragementprice
TheinvestorhastherighttooperatewithoutaSudanesepartner
Theinvestmentlawhasprovidedthefollowingfundamentalguarantees:
Noconfiscationofpropertywilloccurexceptthroughthelegalsystemandafterpaymentofa
reasonablecompensation
theinvestorhastherighttoretransferthecapitalincasetheprojectisntexecutedorisliquidated
Transferofprofitsandcostsoffinancewillbeexecutedinthecurrencyofimportandonthedate
due(afterpaymentofthelegalduties)
Theprojectisautomaticallyincludedintheregistryofimportersandexporters.
Tanzania
InvestmentsinTanzaniaareguaranteedagainstnationalizationandexpropriation.
Tanzaniaisasignatoryofseveralmultilateralandbilateralagreementsonprotectionandpromotion
offoreigninvestment.
TanzaniaisamemberofMultilateralInvestmentGuaranteeAgency(MIGA)andInternationalCentre
forSettlementofInvestmentDisputes(ICSID).
Fiscalincentives:
o ImportdutyandVATexemptiononproject/capitalgoods.
o ImportDutyDrawBackScheme
o Refund of duty charged on imported inputs used for producing goods for export and
goodssoldtoforeigninstitutionslikeUNanditsagenciesoperatinginTanzania.
Nonfiscalincentives
o Immigrationquotaofupto5people
o Guaranteedtransferof:
Netprofitsordividendsoftheinvestment
Paymentinrespectofforeignloans
Remittanceofproceedsnetofalltaxesandotherobligations
Royaltiesfeesandothercharges
Paymentofemolumentandotherbenefitstoforeignpersonnel
StrategicInvestorStatus: ForabigprojectofoverUS$ 20millionofferingspecific/great impactto
thesocietyoreconomy,InvestorscanrequestforspecialincentivesfromtheGovernment.
Import Duty Draw Back Scheme: Refund of duty charged on imported inputs used for producing
goods for export and goods sold to foreign institutions like UN and its agencies operating in
Tanzania.
Page145of154
ExportProcessingZoneAct,2002:Underthisact,allinputslikerawmaterialsandmachinerywhich
are imported and used to process or manufacture goods in the designated areas as EPZ are
exemptedfromimportdutyandothertaxes.
SpecialEconomicZone(SEZ)Act,2005:EconomicactivitiesunderSEZarenotsubjectedtocustoms
duty; value added tax and any other tax payable in respect of goods purchased for use as raw
materials,equipment,machineryincludingallgoodsandservicesusedinundertakingthelicensed
businesses.
Uganda
InvestmentCapitalAllowances
Initialcapitalallowanceonplantandmachinery
Startupcostspreadover4years
Scientificresearchexpenditure
Trainingexpenditure
Mineralexplorationexpenditure
InitialAllowanceonhotel,hospitalsandIndustrialbuildings
Deductible
annual
Allowances
(depreciable
assets)Depreciationratesofassetsrange
Depreciation rate for Hotels, Industrial Buildings and
Hospitals
2040%
5%
Investors who register as investment traders are entitled to VAT refund on building materials for
industrial/commercialbuildings.
DutyandTaxfreeimportofPlant&Machinery.
First Arrival Privileges in the form of duty exemptions for personal effects and motor vehicle
(previouslyownedforatleast12months)toallinvestorsandexpatriatescomingtoUganda.
ExportPromotionIncentivesandFacilities
o ManufacturingUnderBond.
o Dutyexemptiononplantandmachineryandotherinputs
o Stampdutyexemption
o Dutydrawbackarefundofallorpartofanydutypaidonmaterials,inputsimported
toproduceforexport
o Withholding tax exemptions on plant & machinery, scholastic materials, human &
animaldrugsandrawmaterials.
o Tenyeartaxholiday
o Dutyremissionschemeforexportersinvolvedinvalueaddition.
Page146of154
5075%
25%p.a.
100%
100%
100%
20%
Recommendations
TheincentivesprovidedbylargetextileandapparelmanufacturingnationsofChina,India,Bangladesh
and Turkey are mentioned in the annexure to this report. In line with learning from these nations, a
largerinterventiontoattractFDIinCTAsectorwhichcancover:
Organizeannualinvestorsummitshowcasingbusinessopportunityinthecountry
Leadingtradeandindustrydelegationtokeycountriesfromwhereinvestmentcanhappen
Creating awareness about the countrys CTA sector, the advantages it offers and existing
opportunitiesthroughinternationalmediaandforums.
Page147of154
5.12.
Government Support
Growthofanysector,anywhereintheworldmaybecatalyzedbyGovernmentsthrougharangeoffiscal
and nonfiscal promotion policies. Governments may act as facilitator to promote sectors, which will
eventually bring significantreturnstothenation in termsof increased employment,foreignexchange
earnings,growthofalliedsectors,lessdependenceonimports,increasedtaxcollection,etc.Acrossthe
globe, different states have focused on different sectors and formulated policies to aid the sector
growth, like SingaporeFinancial sector, Middle East nationsOil, Chinamanufacturing, IndiaServices,
MalaysiaTourism,etc.
Manytimes,ithashappenedthatthewelldefinedpolicyinitiativesweredraftedforupliftmentofthe
sectorbutwereleftmidwayinabsenceofanyimplementingcummonitoringagency.Likewise,there
arecertaininitiativeswhichneedstobeundertakenonregularbasislikemaintainingsupplierdatabase,
exportperformancestatistics,etc.
Any of the initiatives described in previous sections, would first of all require an institution for its
implementationandformonitoringtheongoingperformanceandmeasurethedeviationsoftheresults
achieved versus the planned outputs. In absence of a strong institute, none of the interventions can
bringresults.
In an ideal scenario, following should be the institutional framework for implementing various
initiatives:
Figure40:InstitutionalframeworkforCTASectorDevelopment
In cotton, textile and apparel sector an entire gamut of sector promotion methods are employed by
differentcountrieslike:
Page148of154
1. Providing suitable infrastructure for doing businesses e.g. connectivity to ports, good quality
poweratsubsidizedrates
2. Incentives for investments like land availability at subsidized cost, capital subsidy, interest
subsidy,taxfreeperiod,etc.
3. Makingtheentireinvestmentprocessfaster,easierandbetterbyestablishingsinglewindow
clearanceauthorities,easierlandacquisition,supportingcreditflowtoindustry,etc.
4. Incentivesforexportslikedutyfreeimportsofinputs,fiscalbenefitsrelatedtoforeignexchange
earned,etc.
5. PromotingPublicPrivatePartnership(PPP)modeltoencouragelargescaleinvestments
6. Specialsupporttohandholdthebusinessforfewinitialyears
7. Virtualintegrationofsupplychainbyadoptingaclusterbasedapproache.g.textileparks
8. Tradeagreementswithmajorsuppliersandmarkets
9. MarketingsupportbyestablishmentofTradepromotionbodies,arrangingbuyersellermeets,
supportingindustriestoshowcasetheirproductsoverseas,brandingacountriesproducts,etc.
10. Supporting research and product development activities by establishing such centres and
providingbenefitstobusinessesthatdothis.
SpecificsupportprovidedbygovernmentsinChina,India,BangladeshandTurkeyarementionedinthe
annexuretothisreport.
FornationslikeKenya,Uganda,SudanandTanzania;CTAsectorisanaptchoiceforbeingselectedas
theprioritysectorbygovernmentsbecauseofvariousreasons.Firstofallthebasicrawmaterial,cotton
isavailableintheregionandtheprospectstoincreasetheproductivityandlandundercultivationexists.
It makes natural sense to focus on promotion of a sector whose raw material is available locally (or
regionally).Secondly,allthesecountrieshavepreferentialmarketaccessfortextileandapparelgoodsto
USA, EU and other major markets under various agreements. Thirdly, CTA sector holds the key for
providingbigemploymentopportunities,whichisimportantconsideringthehighunemploymentrates
in all four nations: Kenya~40%: Sudan~19%, Tanzania~12% and Uganda~3.5% (urban
unemployment~12%).
Recommendations
Most of the interventions mentioned in the different preceding subsections talk about government
support. In order to implement them successfully, the utmost importance is of establishing strong
institutionsinthecountry.
Considering the necessity and benefits of development of CTA sectorto thecountry, government can
takeupvariousdevelopmentalplanstobeimplementedinshortterm,mediumtermandlongterm,and
thenphasedoutsuccessivelyafterachievementofthedesiredresults.
Page149of154
6. Proposed Interventions
6.1.Cluster Development
6.1.1. Objective
Establishment of industrial zones in the country attracting investments by providing special incentives
forthesame.
6.1.2. Broad contours of the intervention

Unitsinsidetheclusterwillbeprovided
Interestandcapitalsubsidyonselectedplantandmachinery
Fiscalincentivesforexports
Exemptionfromcustomsduty,VAT,corporatetax,etc.foraperiodof10years
Providing readymade infrastructure to the businesses e.g. roads, ETP, power station, training
center,displayhalls,residentialcomplexetc.
Singlewindowclearancesforinvestments
6.1.3. Implementation framework
EngagementofaClusterDevelopmentSupportAgency(CDSA)for:
Identificationoflocationwithinthecountrytoestablishthecluster
Developingthevisionandbroadconceptforthecluster
Identificationofinfrastructurerequirements
Identificationofkeyinvestors(domesticandabroad)andsensitizethemforinvestmentin
thecluster
Developmentofrequiredinfrastructure
Invitingpotentialinvestorsandshowcasingtheinfrastructure
6.1.4. Impact
Largescaleinvestmentinthesectoraddressingissuesofsupplychainlinkages,technologyupgradation,
capacityaddition,valueaddition,creditavailability,costoffinance,infrastructure,etc.
6.1.5. Cost Estimate

US$ 1015 million per cluster for infrastructure development plus relinquishing of certain sources of
revenuetogovernment.
Page150of154
6.2.Training Program
6.2.1. Objective
Impartinglargescalevocationaltrainingandemploymentassistanceatoperatorandsupervisorlevelfor
textileandgarmentmanufacturingprocesses
Governmenttocreatecertaintraininginstitutesincoordinationwiththeindustry
EngagementofTrainingAgencywhowillhavethefollowingrole:
Identificationofskillgap
Developmentofcoursecurriculum
Identificationandmobilizationofemployableyouth
Selectionandtraining(classroom,shopfloorandsoftskills)
Placementassistanceinmanufacturingunits
Followupexerciseofallrecruitedpeople
6.2.3. Impact
LargescaleavailabilityofskilledmanpowertotheCTAsector
Increaseinemploymentandearnings

US$300400pertrainee
Page151of154
6.3.Upgradation of Education Institutes

6.3.1. Objective
Improvement in delivery mechanism of fashion and technical institutes by improvement in course
curriculumandinternationalpartnerships.
Revisionofcoursecurriculuminlinewithindustryrequirement
Partnerships with international institutes for student exchange, knowledge exchange and visiting
facultyprogram
Liaisonwithmachineryandequipmentmanufacturers
Association with industry to sponsor students, accepting students for industrial training, sponsor
researchworkatuniversitiesandemploythelocallyeducatedstudents
Formationofaconsortiumoftechnical,fashion,educationalandindustryexpertsdrawnfromacross
theworldtoidentifytheindustryneedandrevisetheexistingcurriculumaccordingly.
Engagementofaexternalagencyto
Developvariouspartnershipmodelswithprobablepartners
Identifyprobablepartner
Institutes
Industry
Machineryandequipment,manufactures
Facilitatepartnershipprocesswithidentifiedorganizations
6.3.4. Impact
Revitalizationoftheentiretextileandfashioneducationinfrastructure

US$1to2millionpercountry
Page152of154
6.4.Creating various Networking Platforms

6.4.1. Objective
Providing opportunities to various stakeholders of the industry to interact with global and regional
stakeholdersotherslikebuyers,investors,subjectmatterexperts,etc.

A fund may be created for organizing events targeted to provide interactive platform to 3 types of
stakeholders
Thefundmaybemadeavailabletoselected,eligibleorganizationscalledImplementingAgency(IA)
whichwillberesponsibleforentireconceptionandexecutionoftheinterventions.
IA will then appoint external agencies like Knowledge Partner, Event Management Companies, PR
agencies,etc.tosuccessfullyconducttheevent
6.4.4. Impact
Increaseintradeandinvestment
Establishmentoflongtermbusinesslinkages
AwarenessamongentrepreneursaboutbenefitsofinvestmentinCTAsector
Increaseinbuyerawareness
Developmentofcoordinationamongdifferentsectorstakeholders

US$100,000toUS$200,000pereventdependingonscopeoftheinitiative.
Page153of154
6.5.Investment Support Scheme

6.5.1. Objective
Encouragement of investments in CTA sector by private players, both local and international by
providingvariousbenefitsforthesame
Aschemecanbeenvisagedthatprovidesfiscalincentivesforinvestmentse.g.
Interestsubsidyonselectedplantandmachinery
Capitalsubsidyonselectedplantandmachinery
Dutyfreeimportofmodernmachinery
Provisionoflandatnotionalvaluetoprojectsgeneratingaminimumemploymentlevel
Other incentives e.g. subsidized power cost, allowing accelerated depreciation of machinery,
dutydrawbackorexemptions,taxexemptions,etc.
TheGovernmentBodiesneedtodrafttheseschemesbybenchmarkingagainstglobalbestpractices
andtakingopinionoflocalbusinessesaswell.
Forthis, athird party agencymaybe engagedwhocancoordinatedirectly withthe local industry

and authorities to formulate the scheme. The agency will arrange various workshops involving
industry, government authorities, experts, etc. to arrive at best fit model for sustainable industry
growth.
6.5.4. Impact
Increased focus of investors in the regional CTA sector adding capacities which will generate
employment,foreignexchangeearnings,etc.

Tostartwith,afundofUS$25millionpercountrymaybeearmarkedforsuchintervention,whichcan
be increased as investor interest grows. It will also encompass relinquishing of certain sources of
revenuetogovernment.
Page154of154
African Cotton & Textile Industries Federation
AfricanCotton&TextileIndustriesFederation
P.OBox124900606,Nairobi
Tel:254725038884/733247052
Fax:+254202022531
Email:info@cottonafrica.com
Supportedby:

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COMPETITIVE

SUPPLY SIDE ANALYSIS OF COTTON, TEXTILE & APPAREL

Forcountrieswhere substantialbenefits forexportsare available,itbecomes importanttohavea

Adoption / emergence of new

Gossypium Hirsutum (American upland

LocalJobs Exports Sales Investments

Growers An umbrella body of farmers with representation all over the

of An umbrella body of manufacturers which provides an essential

zones andhavemade cumulative investmentsofUS$ 290million.The locationdetails of these 42

Majority ofthefirmscontributetocharities andmakedonations as partof CSRactivities and also

Woven fabric with more than 85%

Other veg. fiber e.g. coconut, abaca,

Women's suits, jackets, dresses,

Womens, girls suits, jacket, dress,

Garmenting sector is relatively big in Kenya but the

Establish new colleges for textiles/fashion

Update course curriculum regulatory as per

Adopt cluster based development approach

Various clusters should be identified by doing a

Improve existing infrastructure and

Phase out supply of secondhand clothing from

Initiatives to promote domestic

Organize Mega Trade shows in the country to

No.of Garment factory:

Sudan has abundant cotton supply but the downstream

Improving skills of people

Interest subsidies shall be provided for upgrading

Textile & Apparel sector shall be classified as Priority

Introduce schemes for training and skill development and

Adopt cluster based development approach where

Phase out supply of secondhand clothing from the

Tanzania shillings (TZS)

148,142 187,883 139,829 341,789 374,657 130,585 200,664 368,697

200506 200607 200708 200809

Bio Re Tanzania Ltd coordinates the growing and processing of

Concentrate in making woven printed women kanga and

1 firm manufactures heavier weight woven canvas textiles

Fewresearchinitiatives havebeenundertakenby ResearchAssociationlikeLakeZoneAgricultural

Export US$ 1,300

Other veg. fiber e.g. coconut,

Mens, boys suits, jackets,

3. Lackofvalueadditioninthesector:ThoughTanzaniahas abundant cottonproduction; about

Tanzania has abundant cotton supply but the

Promote education in the field of

Improve existing infrastructure and

Adopt cluster based development approach

Various clusters should be identified by doing a

Phase out supply of secondhand clothing from

Organize Annual Investor Summit showcasing

Length(mm) Strength(g/tex) Micronaire

Value Differences Universal

SouthernRangeNyanzaLtdhasbeen sponsors medicalcampwheretotalof 1200patientsaccess

Woven fabric with more than 85%

Knitted TShirts, singlets and other Na

Women's suits, jackets, 25,506

402,725 144,223 44,956

Women's suits, jackets, Na