World Trade Organisation treaties hinder cotton business in Kenya

28 May 2015 | by
World Trade Organisation treaties hinder cotton business in Kenya

Intergovernmental guiding principles and global trade agreements initiated by international policy makers are counterproductive to the development of local cotton and textile industries especially in Kenya and the rest of Africa. Those affected by the challenge in Africa admits that global industry rules and infrastructure supports foreign multinationals that access cheap skilled labor, wider market and enormous subsidies to compete effectively beyond borders overlooking the intended purpose of African nations.

“Companies in the cotton and textile industry in countries in Africa cannot have level playing field against their competitors in the West and East since the physical and legal infrastructure is far ahead supported with institutions to guide their businesses,” says United Nations Conference on Trade and Development (UNCTAD) Economic Affairs Officer Dr Samuel Gaye.

Experts and players add that global intergovernmental agreements are meant to kill local firms since first world states and other developed nations provide unrivaled incentives to Agribusinesses to reduce the costs of production that’s is reflected in market prices. The nations further enjoy an established infrastructural support that makes multinationals stronger to kick out of the market Africa’s local firms by easily accessing markets across the continent.

“Africa should think globally but act regionally to improve her stake on the world markets,” says Gayi adding, “We should link villages with ample infrastructure to improve trade activities among ourselves and fasten local growth.”

Gayi admits that governments in Africa must stop playing Politics and Public Relation gimmicks signing multiple agreements without addressing basic emerging challenges such as researching and providing timely market requirements to cotton and textile traders.

“Regional trade agreements between countries in Africa and the West, plus other global treaties among governments across the world favor the East and other Asian nations. Owing to their investments in the cotton and textile sector, the east has grown their production of value added cotton and textile industries to effectively compete in Africa and other markets in the world,” says Gayi.

On his part while calling on African governments to link villages, Common Market for Eastern and Southern Africa (COMESA) Head of Science and Technology Program Fred Kong’ongo says, “First let’s increase trade among ourselves in our countries and in specific regions across Africa so that we can think of the world.”

In 2013, Africa accounted for one percent of the total trade in cotton and textile business. However, in cotton alone, it accounted for 14 percent.

“We should add value to the raw material to maximize on the returns. For every kilogram of cotton exported, opportunities to increase income, grow economy and create jobs are lost,” says Chief Director for the Textiles, Clothings, Leather and Footwear Business Unit of the Industrial Development Division of the Trade and Industry of South Africa Abisha Tembo.

Tembo says that World Trade Organization (WTO) rules have not helped to improve the fortunes of millions of cotton farmers and cotton manufacturing companies through unbalanced trade practices secretly initiated by the West and Asian nations.

“We need to relook our policies as Africa within our trading blocks, improve our road infrastructure and remove trade barriers so that we can enhance trade activities in the cotton and textile industries to maximize on profits,” says Tembo.

He adds, “The new policies must support Textile firms to trade directly with retailers to reduce costs directed to the consumers, reduce taxes on agribusiness to encourage cotton farming, support modern competent skills to boost production, provide market research statistics and credit facilities to increase capital investments.”

Tembo says that competitors in the cotton and textile business from developed countries have heavily subsidized their products.

“Research done in Africa by all trading blocks and research firms puts blame on our governments. The traders want simple things such as good roads for them to access customers within counties and across the borders,” says Tembo, adding, “African governments are not prepared like West and East states that contacts basic market research and invest in technology, skills and infrastructure to compete effectively.”

East Africa Trade and investment Hub (EATIH) senior policy advisor Bernard Kagira says that the cotton and textile industry demands urgent attention with ample capital and resource investments directed to the sector to encourage cotton farming and textile manufacturing to rapidly increase business activities in the sector and boost returns for farmers, traders and the government. “Local players must invest in adding value and diversify products to meet interests of market segments to overcome market challenges,” says the investment economist Kagira.

Temba adds, “A person who is desperate for an operation does not need average painkillers.  Policy makers who include authorities, consumers, traders and farmers must come together to develop policies that will make them compete effectively or else they will go down.”

United Nations (UN) Economic Commission for Africa David Luke says intra trade of value added products within Africa accounts for 40 percent in the cotton and textile industry.“Develop an SME policy that favours the textile industry, remove non barrier tariffs, create policies to favour Africa,” he says, adding, “The real money is in the brand and retail ….add service value." 

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