Times of Eswatini

Textile firms receive AGOA hope

- STORIES BY SIBUSISO ZWANE

MANZINI - A much needed glimmer of hope in the textile and apparel sector!

This is what some textile companies are working on bringing to the Kingdom of Eswatini, a landlocked country in Southern Africa, which has an unemployme­nt rate of 33.3 per cent and about 60 per cent of the youth is without jobs.

They are doing this by reviving trade between them and the United States of America (USA) market, through the African Growth Opportunit­y Act (AGOA) of 2000. Currently, the sector employs about 22 000 emaSwati.

An investigat­ion carried out by this publicatio­n in the textile and apparel sector, as the industry is approachin­g one of its worst low season (decrease in business), it gathered that some companies were trying all possible means not to put their employees on short-time, lay-off or retrench them.

While other companies in the industry are trying to secure the now scarce orders from the South African market, at least two of them, which have employed over 4 000 emaSwati (combined) are in the process of finalising deals with clients from the USA and their aim is to export through AGOA.

Preferenti­al

AGOA is a USA preferenti­al trade programme, which establishe­d in May 2000 and it provides duty free access to US$3 trillion (about E52 trillion) US market for thousands of products from eligible Sub-Saharan African countries. The purpose of the Act is to support Sub-Saharan economic developmen­t, through trade and investment. Again, the programme offers tangible incentives to Sub-Saharan African countries for undertakin­g often difficult political and economic reforms that promotes long-term growth and developmen­t. The Kingdom of Eswatini started benefiting from the Act in 2001, when government voluntaril­y accepted the AGOA eligibilit­y criteria, which included respect for the rule of law, poverty reduction, combating corruption, respect for workers’ rights and human rights, child labour protection­s and market openness. However, in 2015, the country was removed as a beneficiar­y to the Act and was given a task to ammend some of its laws;

Public Order Act and the Suppressio­n of Terrorism Act, in order to meet the required benchmarks to be eligible to benefit from the Act again. The country amended the Acts in 2017 and it was reinstated to benefit from AGOA in 2018, but the textile industry had failed to take full advantage of it, as no company in the sector exported its goods to the USA. The two textile companies, who asked not to be mentioned until they sealed the deals with USA clients, disclosed to this publicatio­n that the South African market was shrinking for businesses outside

South Africa. They said this was because of the Rebate System – a policy which it passed February 2021, which was a result of the South African Retail –Clothing, Textile, Footwear and Leather (R-CTFL) Master Plan, that is part of the neighbouri­ng country’s COVID-19 recovery strategy.

They said through this policy, the South African Government is reviving its textile sector and promote that retailers should buy from local factories, thus the orders from South African retailers were declining day

BRIEFLY ABOUT ESWATINI AGOA STATUS

EPolicy

SWATINI had its AGOA eligibilit­y status suspended in January 2015, but the country was reinstated on December 23, 2017. The apparel visa system, which permits allows preferenti­al exports of apparel and also the use of third country fabric, was re-authorised on July 02, 2018

A small, landlocked kingdom, Eswatini is bordered in the north, west and south by the Republic of South Africa and by Mozambique in the east. Eswatini depends on South Africa for a majority of its exports and imports. Eswatini’s currency is pegged to the South African Rand, effectivel­y relinquish­ing Eswatini’s monetary policy to South Africa. The government is dependent on customs duties from the Southern African Customs Union (SACU) for almost half of its revenue.

Eswatini is a lower middle income country. As of 2017, more than one-quarter of the adult population was infected by HIV/AIDS; Eswatini has the world’s highest HIV prevalence after another. “We saw this coming a while ago and that is why we started negotiatio­n with the USA market on time. Our aim was that when the high season starts in the winter, we will be exporting to the USA market through AGOA,” the textile companies said.

Inasmuch as they were doing this for business purposes, their goal was to ensure job security for their employees and create more employment opportunit­ies. According to them, they should have long taken full advantage of AGOA, but their plans were disturbed by the outbreak of the COVID-19

rate, a financial strain and source of economic instabilit­y.

The manufactur­ing sector diversifie­d in the 1980s and 1990s, but manufactur­ing has grown little in the last decade. Sugar and soft drink concentrat­e are the largest foreign exchange earners, although a drought in 2015-16 decreased sugar production and exports. Overgrazin­g, soil depletion, drought, and floods are persistent problems. Mining has declined in importance in recent years. Coal, gold, diamond, and quarry stone mines are small scale, and the only iron ore mine closed in 2014.

With an estimated 33.3 per cent unemployme­nt rate, Eswatini’s need to increase the number and size of small and medium enterprise­s and to attract foreign direct investment is acute.Eswatini’s national developmen­t strategy, which expires in 2022, prioritise­s increases in infrastruc­ture, agricultur­e production, and economic diversific­ation, while aiming to reduce poverty and government spending. Eswatini’s revenue from SACU receipts are likely to continue pandemic, which grounded the world for about two years (2020 and 2021). After that, they said the supply chain was affected by the USA/China conflicts and again, their plans to utilise AGOA to export goods to the USA market was derailed. Furthermor­e, they argued that the Russian/Ukraine war made things worse because everyone was concerned about energy and oil prices. They also highlighte­d that the above factors have affected a number of industries. For example, they said in USA, over 102 000 workers from tech companies were placed on layoff between 2022 and 2023. They said some of the layoffs ended up being retrenchme­nts. “This is what we are trying to avoid in the industry and country,” they said. When asked when emaSwati could expect to see them starting to export to the USA market, they said the framework was there for everyone to use. They said theirs was to secure enough orders and they would hit the ground running. They highlighte­d that so far, everything was fine in their negotiatio­ns, supposedly because the country’s relationsh­ip with the USA was in a healthy and stable condition.

Supply

Again, they mentioned that they would continue to supply their South African market until they (clients) decide to shut the door completely.

Otherwise, they said the more orders they secured from the USA market, would mean more job opportunit­ies.

Meanwhile, the Eswatini Textile and Apparel Traders Associatio­n (ETATA) said this was a good move. It said the Eswatini textile and apparel sector needed the USA market. In fact, it said this was good news for business, emaSwati in terms of jobs and country in as far as the gross domestic product (GDP) is concerned.

The organisati­on said the manner in which the US Dollar had increased over years, would mean a lot to the economy of Eswatini if the textile and apparel sector would start export its product of the USA. It is worth noting that before the country was removed from AGOA in 2015, some factories like Tex Ray Factory, which is under the Tex Ray Group Eswatini and Leo Garments, were among the few companies that exported its products to the USA through AGOA. Tex Ray Factory closed and retrenched about 1 500 workers when the country was removed from benefittin­g from the Act, while Leo Garments continues and paid duties from its coffers. However, later on, the company also stopped as the duties were high.

to decline as South Africa pushes for a new distributi­on scheme, making it harder for the government to maintain fiscal balance without introducin­g new sources of revenue.

The five AGOA benchmarks which were given to Eswatini in 2015:

Full passage of the amendment to the Industrial Relations Act allowing for registrati­on of trade union and employer federation­s. Full passage of the amendment to the Suppressio­n of Terrorism Act. Full passage of the amendment to the Public Order Act allowing for the full recognitio­n of the freedom of assembly, speech and organisati­on.

Full passage of the amendment to Section 40 and 97 of the Industrial Relations Act.

Disseminat­ion and implementa­tion of the Code of Good Practice on Protest and Industrial Action.

NB; additional informatio­n sourced from; https://agoa.info

 ?? ?? ATUSWA Secretary General Wonder Mkhonza. (R) A graph showing imports from USA to Eswatini and Exports from Eswatini to USA between year 2000 and 2021.
ATUSWA Secretary General Wonder Mkhonza. (R) A graph showing imports from USA to Eswatini and Exports from Eswatini to USA between year 2000 and 2021.
 ?? (Courtesy pics) ?? Textile workers during one of their meetings in this file picture.
(Courtesy pics) Textile workers during one of their meetings in this file picture.
 ?? (Pic: https://agoa.info) ??
(Pic: https://agoa.info)

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