SENEGAL'S TEXTILES AND APPAREL PRODUCTION

UNCLAS SECTION 01 OF 02 DAKAR 001957 SIPDIS SIPDIS SENSITIVE DEPT FOR EEB/TPP/ABT-GARY A. CLEMENTS, AF/EPS, AF/W DEPT PLEASE PASS TO USTR - CAROYL MILLER DEPT ALSO PLS PASS TO EXIMBANK USDOC FOR ITA/OTEXA MARIA D'ANDREA E.O. 12958: N/A TAGS: ETRD KTEX ECON EINV AGOA SG SUBJECT: SENEGAL'S TEXTILES AND APPAREL PRODUCTION REF: STATE 114799 DAKAR 00001957 001.2 OF 002 SUMMARY AND OVERVIEW -------------- ¶1. (U) Per reftel request, post provides the following information on Senegal's textile and apparel industry. ¶2. (U) Senegal is not a significant global producer of textile and apparel products. In 2006, total textile/apparel exports were USD 33.9 million, with exports to the U.S. at less than USD 700,000. In 2007 there are 15 or fewer companies involved in formal textile or apparel production. Employment in the formal sector is estimated at less than 2,000. Senegal has an estimated 15,000 small tailor shops producing garments for local consumers, and approximately 5,200 informal enterprises producing traditional woven fabric. These sectors employ an estimated 120,000 people. (Additional sector data is presented in para 12.) ¶3. (SBU) Senegal has very limited domestic production of cloth and finished apparel. Despite being touted by senior GOS officials as a strategic sector for the country's "Accelerated Growth Strategy," Senegal's apparel and textile producers are inefficient and potential growth is hampered by a range of obstacles: obsolete equipment, poor management, overstaffing, erratic and expensive electricity supply, difficult access to land, and limited and expensive credit. ANALYSIS OF THE SECTOR -------------- ¶4. (U) According to Senegal's investment promotion agency, APIX, the annual capacity of the Senegalese textile industry is around 8000 tons for spinning, 20 million meters for weaving and 8 million meters for knitting. However, this capacity is not being realized and the majority of Senegal's textile and apparel factories are in dire straights. There are 5 major textile companies in Senegal: NSTS-INDOSEN and ICOTAF (spinning mill, weaving, dyeing, and knitting); SOTIBA and COSETEX (dyeing and printing); and COTOA (specializing in heavy textiles such as towels, bed covers and linens, and curtains). ¶5. (U) Work uniforms, scrubs, t-shirts, sportswear and towels are manufactured at the industrial level. Almost all fabric for these operations is imported from Asia, with higher-end wax fabric imported from Europe and Cote d'Ivoire to be printed and dyed with traditional African designs in Senegal for sale in domestic and regional markets. ¶6. (SBU) In the past year, orders from overseas customers have decreased significantly, and many factories have greatly curtailed their operations. Since the highpoint of Senegal's textile and apparel production in the 1980s, 50 percent of industrial companies have disappeared and employment in the sector has been reduced by more than 60 percent. In the past year, a deal between INDOSEN and Canada's Stafford Textiles for new investment capital with an eye towards exports to the U.S. apparently fell through. GOVERNMENT INTERVENTION -------------- ¶7. (SBU) The GOS has not taken aggressive measures to revive Senegal's existing textile/apparel production potential, or to aid the sector in finding new export markets. Today, Senegal's textile sector represents just three percent of the total production in West Africa. It is one of the lowest-performing manufacturing sectors in Senegal, despite a longstanding industrial culture in cotton fabrication and weaving. A "national strategy study" for the sector was produced in 2006, which included a range of recommendations for revamping local industries, encouraging commercial activities, and attracting foreign direct investment. The report's recommendations have not been implemented. ¶8. (U) Senegal's export promotion agency, ASEPEX, is reportedly developing an incentives strategy for the apparel and garment sub-sector to increase its exports, particularly under AGOA. However, this effort has not yet been launched. THE IMPACT OF GLOBAL COMPETITION -------------- ¶9. (U) Senegal's trade relations with China have grown in the past few years, and the GOS is not implementing any measures to stem the growth of imports of Chinese textile and apparel products. As a result, the local market has been hit hard by these imports, and those of other Asian countries, which are free from import DAKAR 00001957 002.2 OF 002 restrictions. In 2005 (the most recent data available),imported second-hand clothes accounted for 70 percent of total clothing sales in Senegal. The sale of imported clothing on the local market has undoubtedly increased over the past two years. ¶10. (SBU) Despite increased global competition, Senegal has not responded with improvements to its labor market, which remains relatively expensive, legally rigid, and with low productivity rates. Factories do not have effective management or job training. In addition, there are no policies or programs in place to deal with dislocated workers. Many former employees from the formal sector are moving into small tailor shops and attempting to sell locally produced clothing overseas through informal networks of Senegalese traders. IMPACT OF TRADE PREFERENCES -------------- ¶11. (SBU) Any revival of Senegal's textile and production sector will require producers to take full advantage of AGOA and European trade preferences. Currently, some small-scale producers of traditional or "designer" fabric and clothing have found market opportunities in the U.S., which is reflected in the nominal increase in value for Senegal's exports to the U.S. However, larger Senegalese producers, or smaller producers collectively, are not currently able to meet the potential demand for large quantities of exports due to financial and production constraints. TRADE DATA -------------- ¶12. (U) The following data were provided by the Senegalese department of External Trade, the National Agency of Statistics at the Ministry of Finance, the U.S. Census Bureau and other sources: -- 2006 Total textile and apparel imports: USD 57.5 million compared to 60 million in 2005, a 4 percent decrease; -- 2007 (mid-year) estimates (not available). -- 2006 Total textile and apparel exports: USD 33.9 million, compared to USD 29 million in 2005, an increase of 17 percent; -- 2007 Total mid-year (not available). -- 2006 Total textile/apparel imports from the U.S.: USD 5.63 millions compared to USD 4.81 million in 2005, a 17 percent increase. -- 2006 Total textile exports/apparel to the U.S.: USD 683,000 compared to USD 459,000 in 2005, a 49 percent increase; -- 2007 (mid-year) estimates (not available). -- 2006-2007 number of companies in textile industry: 15 formal textile/apparel companies. -- 2006-2007 estimated employment in the formal sector: less than 2,000. -- In 2007 there are an estimated 15,000 small tailor shops in garment making and approximately 5,200 informal enterprises in the artisan textile sector. -- In 2007 the estimated total employment for tailors and artisans in clothing and weaving is 120,000. PIAZZA