Discussions
The textile and clothing trade in Botswana, Lesotho, Namibia and Swaziland (BLNS)
During the most recent ‘Geek Week’ (11-15 April 2016), participants worked on a number of research projects. This note is drawn from a paper of the same name prepared during the week by Maria Immanuel and Ron Sandrey.
The only manufacturing sector in Sub-Sharan Africa (outside of South Africa) that has consistently performed in global export markets is the textile and clothing (TC) sector, but even here its performance from countries other than Lesotho has been modest. In response to demands from its domestic sector South Africa has, in recent years, adopted protectionist measures in the form of quotas on Chinese imports and an increase in non-preferential TC tariffs to the WTO bound rate of 45%. This has, however, done little to revive the South African TC sector.
Against this background it is instructive to examine the performance of the smaller BLNS countries of Lesotho in particular and Swaziland as they react to preferential access into the increasingly protected South African market. This note assesses the trade profile of the TC sector in the BLNS countries over the last six years, a period was chosen as reliable BLNS trade data is not readily available prior to that time. The data is sourced from the International Trade Centre (ITC) and expressed in US dollars using both direct trade data as supplied by the country itself or mirror data as assessed by trading partners.
Despite South African endeavours to protect its clothing market its global imports have been stable in recent years, while those from both Lesotho and Swaziland are increasing. China is the main supplier to South Africa, with intra-SACU imports stable at around one quarter of the total South African imports.
Meanwhile, on the wider scene, since 2001 SACU’s share of the narrower global clothing (excluding textiles) export market (including intra-SACU exports) has varied from a low of 0.17% during 2005 to a high of 0.53% in 2003. Over the last few years this global share has stabilised at around 0.20%. While this may seem a reasonable contribution to a vast market, further examination shows that around 60% of this is intra-SACU exporting and a very large % of the remainder is to the single US market. It is on this ‘outside’ market of the US that the real export attention is focussed, and here we find that the contribution is now almost entirely from Lesotho under the tariff preferences of the Africa Growth and Opportunity Act (AGOA). It is somewhat disconcerting to learn that even though the US is the major ‘outside’ export market for not only SACU but also the nascent sub-Saharan countries the total combined sub Saharan share of the US market is lower than Cambodia’s and of course significantly lower than China’s. And this is in a market where BLNS exporters have until very recently all had tariff preferences.
In the second section of the paper we turn attention towards an analysis of the wider textile and clothing sectors TC trade profiles for the BLNS countries. As there are data limitations for the BLNS countries, and we use both direct data as presented from the respective countries themselves and ITC mirror data as assessed from the trading partner. As a point of clarification trade Chapter HS 63 is reported somewhat misleadingly as ‘worn clothing’ but it in fact includes a very eclectic mix of products from rugs and blankets to sacks and bags for packaging goods as well as the minor category of worn clothing.
Lesotho is the BLNS country of most interest. Their trade data shows imports of between $73 million during 2011 to $204 million during 2013. Unsurprisingly fabric (from China and Taipei, China) for the clothing manufacturing is the main import, and this is followed by the made-up clothing from mostly South Africa rather than China. Exports from Lesotho are primarily to the US under AGOA preferences, with these exports to the US consistently around $300 million or above in recent years. Next are exports to South Africa have been increasing to be around $100 million annually and other than some exports to Canada in recent years other exports are minimal. Fully finished clothing completely dominate these exports.
Mirror data on TC exports from Swaziland to the US had been as high as $77 million in 2011 before stabilising around $50 million in 2013 and 2014 dramatically falling to $3 million in 2015 as the US withdrew AGOA preferences from Swaziland. In contrast to Lesotho, South Africa has been the dominant Swaziland market, with an export destination share of 91% on the direct data and 73% on the mirror data in aggregate over the last few years. Imports into Swaziland are spread equally into fabric and finished clothing, and South Africa is the dominant source of imports, followed by China.
Botswana is a net importer of TC products, with annual imports of around $130 million to $140 million, and South Africa the dominant source of these imports in recent years. Fully made-up clothing is the main import. Exports have declined significantly in recent years: down to $40 million in both 2013 and 2014 from a recent high of $267 million during 2011, with South Africa the main destination. Finally, Namibia’s exports are minimal and are mostly ‘worn clothing’ to Angola and finished clothing to South Africa and Botswana. Imports are around ten times the export values and are completely dominated by imports from South Africa.
As is generally the case for all intra-BLNS trade, outside of all trade between Namibia and Botswana there is very limited intra-BLNS textile and clothing trade in any direction. The BLNS is virtually all about Lesotho and Swaziland and their exports to the US and South Africa and their imports from South Africa and China.