Identifier
Created
Classification
Origin
05ACCRA2565
2005-12-19 11:21:00
UNCLASSIFIED
Embassy Accra
Cable title:  

GHANA'S TEXTILES AND APPAREL SECTOR: UPDATED

Tags:  KTEX ECON ETRD 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ACCRA 002565 

SIPDIS

PASS FOR USTR LAURIE-ANNE AGAMA
TREASURY FOR LUKAS KOHLER

E.O. 12958: N/A
TAGS: KTEX ECON ETRD
SUBJECT: GHANA'S TEXTILES AND APPAREL SECTOR: UPDATED
STATISTICS AND PROJECTIONS OF FUTURE COMPETITIVENESS

REF: A. STATE 146213

B. ACCRA 1391

UNCLAS SECTION 01 OF 02 ACCRA 002565

SIPDIS

PASS FOR USTR LAURIE-ANNE AGAMA
TREASURY FOR LUKAS KOHLER

E.O. 12958: N/A
TAGS: KTEX ECON ETRD
SUBJECT: GHANA'S TEXTILES AND APPAREL SECTOR: UPDATED
STATISTICS AND PROJECTIONS OF FUTURE COMPETITIVENESS

REF: A. STATE 146213

B. ACCRA 1391


1. Summary: Ghana's textile and apparel sector is small and
-- despite the extension of AGOA benefits -- continues to
shrink. Labor problems, cheap imports, lack of access to
capital, smuggling, and copyright infringements have all
contributed to a slow but steady decline over the last 30
years. Ghana's unique textile products, however, continue to
attract interest and could contribute to a revival of the
industry if the business climate improves. End Summary.


2. Per ref A's request for information, Post provides the
following information and analysis for Ghana's textile and
apparel sector for 2004.

--------------
2004 Statistics
--------------

Total industrial production: USD 2.1 billion

Total textiles and apparel production:(not available)

Textiles and apparel's share of imports and exports: USD 159
million (2% of total imports and exports)

Total manufacturing employment:(not available)

Total Textiles and apparel employment: 14,000 (estimated)

NOTE: The Ministry of Trade and the Ghana Statistical Service
do not have good data for the textile and apparel sector.
Many small apparel firms operate on the informal market and
are impossible to track.


3. In response to ref a, para 5, Post provides the following
analysis.

-- Are host country producers receiving lower prices due to
heightened international competition?

Producers report that once quality thresholds are met, price
is the primary issue in all transactions with foreign buyers.
Buyers are typically asking for a certain number of pieces
for a predetermined price. Neither the size nor cost of
orders is negotiable. The domestic market for locally
produced goods has also been negatively affected by
international competition. Ghana is the largest importer of
used clothing in Africa (source: International Trade Center,
Geneva). Used clothing sales hurt sales of domestically
produced textiles and apparel, although they are an important
source of inexpensive clothing for poor Ghanaians.

The smuggling of counterfeit Ghanaian prints from China has
also impacted the market. One textile maker closed recently
with the loss of 1,000 jobs, and another stopped production

for several months to cut costs. Both companies blamed
illegal imports for their problems, although neither has made
strong efforts to modernize facilities or equipment to lower
costs. The GoG hopes new rules requiring textiles and
apparel to be imported through a single port facility in
Takoradi, coupled with more rigorous inspection, can stem the
tide of illegal goods. (NOTE: One expat textile executive
explained that some of these fakes are produced, imported,
and sold on the domestic market before the Ghanaian originals
can be registered and marketed. END NOTE)

-- Have U.S. and EU safeguards limiting Chinese imports
affected the export prospects of host country manufacturers?

Industry contacts report that U.S. and EU safeguards have had
a positive impact on their volume of business.

-- Has increased global competition affected local labor
conditions?

Ghana's labor laws leave companies operating on the formal
market little flexibility to react to competition by
adjusting wages or the size of their labor force, and even
less if they become unionized. "Big Box" customers in the
U.S. routinely avoid doing business with unionized suppliers
to avoid delays in delivery, relying on certification
processes to ensure work environments are safe and workers
are treated according to international standards. Unions in
Ghana tend to focus on maximizing wages and benefits for
workers employed in firms operating on the formal market,
placing workers' interests above the health of the firm.

With regular inflation in the 20 to 30% range from 2000 -
2003, workers came to expect 30 to 40% annual wage increases.
These expectations remain, despite the decline in inflation
to 12 to 16 percent over the last two years. The GoG has
little to gain politically by liberalizing labor laws, and
will often intervene in disputes on behalf of the workers.
(Note: The new Labor Law of 2003 has, however, created the
independent National Labor Commission to mediate labor
disputes. The commission has begun to mediate several key
disputes in other sectors of the economy With USAID
assistance. Therefore, direct GoG intervention in labor
disputes should diminish over time.)

-- Has the government or private industry taken action to
increase the host country's competitiveness?

The GoG is taking action to increase competitiveness by
improving services and facilities at the ports, proposed
legislative reforms, and through Presidential Special
Initiatives (PSI). Port improvements and legislative reforms
will take time, and Emboffs have heard from government and
private sector sources that PSI funds are sometimes directed
to politically connected companies. The GoG has used PSI to
send company representatives to trade shows in the U.S. and
to promote marketing companies. The private sector has had
some notable success, particularly firms working with the
USAID-sponsored West Africa Trade Hub (ref b).

-- Is your host government a partner in a free trade
agreement or the beneficiary of a preference program?

Ghana is an AGOA eligible country, and has a Trade and
Investment Framework Agreement with the U.S. Ghana is in the
process of implementing the Economic Community of West
African States (ECOWAS) Common External Tariff (CET),which
should lead to the implementation of a Free Trade Zone
comprised of the member states. Once the CET and Free Trade
Zone have been implemented, member countries intend to form a
Customs Union. Progress, however, has been slow, and
implementation of the CET has been haphazard. Ghana is also
participating as an ECOWAS member country with other ACP
countries in negotiating a trade agreement (Economic
Partnership Agreement) with the EU.

-- Does post think the host country can be competitive in
textiles and apparel exports with the end of global textiles
and apparel quotas?

Ghana's industry needs to modernize and expand quickly if
wants to handle the volume, quality levels, and prices buyers
demand and also compete with other countries that wish to
establish themselves as alternative sources. Ghana could be
even more competitive for the long term by focusing on its
wide array of unique textile designs. To do both the GoG
should focus on protecting the intellectual property rights
of its producers domestically and abroad, while working to
improve the business climate and alleviate congestion at the
ports.
BRIDGEWATER