Clothing industry wants trading agreement resolved

INTERVIEW Mthandazo Nyoni

Our business reporter, Mthandazo Nyoni, spoke to the Zimbabwe Clothing Manufacturers’ Association chairman, Jeremy Youmans, (JY) to discuss the state of the sector.

Below are excerpts of the interview:

ND: What is your assessment of the clothing sector’s performance in the first-half of the year?

JY: The sector has taken a knock over the last six months, with challenges being met from many directions. Employment figures are down, as is capacity utilisation. We have not seen the export figures yet, but we do expect these to be up.

ND: What major challenges have industry players encountered in the period under review?

JY: The challenges continue to grow. Firstly, the process of redefining the bi-lateral trade agreement with South Africa made little progress, even given the
bi-national commission in Harare. A private sector paper was presented to government in good time, but there has been no feedback as to what has been achieved
so far.

We will continue to pursue the completion of this process. While we still have duty-free agreements with Sadc, Comesa, the European Union, Malawi, Botswana and
Namibia, the finalisation of the SA bilateral trade agreement is crucial as is the commencement of the process to gain membership to the African Growth and
Opportunities Act with the United States.

The changes, together with the introduction of the Zimdollar and its movement towards finding its correct value against the US dollar, have created severe
volatility and uncertainty.

However, the devaluation does create an opportunity for local manufacturing in favour of international trading. Hopefully, the rates will become relatively
stable in the near future as costs and prices also adjust to correct and stable positions.

The sector is still starved of foreign currency via the interbank market in order to procure raw materials not made in Zimbabwe. This will remain a
constraining factor until it is rectified.

The local textile industry can still only provide a fraction of the needs of local manufacturers. So, most raw materials must be imported. However, during the
period, investments into David Whitehead, Cotton Printers and Modzone Textiles have provided a positive boost to confidence.

We just hope they produce some of the fabrics which are currently not made locally and do not simply replicate what is already available, such that they will
be competing against each other. We still need to import most fabrics.

Like all manufacturing industries, we are reliant on electricity supplies and cannot cope with a lot of load shedding.

ND: Taking in mind these challenges you have just mentioned, what does the future of the clothing sector in Zimbabwe hold?

JY: We are still positive about the future. Government must sort out the access to international markets issue and we will give them our full support. The task
is achievable if the will is there. We have settled on wages in April. Inflation has forced companies to deal with wage increases at factory level, but this is
being done and it is working.

The Reserve Bank of Zimbabwe is promising more forex for local manufacturers and the increase in locally made textile goods should make the supply better. On
the basis of everyone doing their part, we can still become one of the most significant drivers of industrialisation in the country.

ND: What are you doing as industry to ensure viability of the sector?

JY: We need to produce, and to market ourselves better. We need to defend our markets against imported goods and the clothing manufacturers’ rebate (CMR) is
fundamental to this. Not all manufacturers have access to CMR yet due to strict conditions set by Zimbabwe Revenue Authority (Zimra), which we are talking to
them about. Zimra rightly insists on tax compliance in order for one to enjoy CMR, which is why it is not fully supported by everyone.

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