1.1 Background of the Textile Industry
Clothing and fabrics contribute to 7 % of entire universe exports. About one tierce of the universe ‘s consumers are in Western Europe, another 3rd in North America and one one-fourth in Asia ( Allwood et al. , 2006 ) . Nowadays, fabricating frequently takes topographic point in developing states that account for half of the universe fabric exports and about three quarters of the universe vesture exports. The sector is dominated by China where more than one one-fourth of the universe ‘s production of vesture and fabrics is located. Among industrialised states, Germany and Italy are still of import exporters of vesture while the United States plays a important function in textile exports. The United States besides remain the largest cotton exporter ( Allwood et al. , 2006 ) .
In add-on, the vesture and fabric sector is shaped by international trading understandings. To protect domestic fabric industries, quotas for exports from developing states ( chiefly China ) to industrial states were antecedently in usage. These limitations, referred as the World Trade OrganizationA?s ( WTO ) Multi-Fibre Arrangement, ( MFA ) have been removed since 1st January 2005. As a effect, there is now a free trade for fabric and vesture merchandises ( Eurostat, 2007 ; Forum for the Future, 2007 ) .
Except for a few states, the fabrication sector has been stagnant in Sub-Saharan Africa ( SSA ) . Its portion in the economic system, peculiarly in exports, is significantly smaller than other low income states, and this shows a crisp contrast to Asiatic states. In East Asiatic states, labor-intensive merchandises such as vesture, places, and wooden merchandises have been the chief beginnings of export growing in the early phase of industrialisation, and this has contributed to the decrease of poorness through proviso of employment to unskilled workers ( World Bank, 1993 ) .
Battalion and Westphal ( 1986 ) province that, the same procedure occurred in other Asiatic and Latin American states in the 1980 ‘s and 1990 ‘s, and late even reached low income states such as Vietnam and Cambodia. The moving ridge eventually came to Africa after 2000, triggered by the free responsibility entree to US markets: Africa Growth Opportunity Act ( AGOA ) . Foreign investings have been made in the garment industry in several African states, specifically Kenya, Madagascar, Lesotho, and Swaziland, and exports of vesture to the US market aggressively increased after 2000.
There are several reserves with respect to retroflexing the Asiatic experience in Africa. First, while the vesture industry provides big employment to unskilled and female workers, it is criticized for its low rewards and hapless on the job conditions. It is argued that the intense competition in the universe, fabric market gives strong force per unit area of cost decrease for garment houses, as called “ immiserising growing ” ( Kaplinsky, 2000 ) . Second, as the public presentation after expiration of the quota system in universe fabric market shows, there is a serious concern about the fight of African vesture within the free market system. Since the rapid growing of exports was initiated by the non-duty and non-quota position given to African merchandises, the expiration of the quota system in the universe fabric market has partially spoiled that advantage, and the growing tendency has been disrupted in some African states.
Harmonizing to Lall ( 1999 ) , Biggs et al. , ( 1995 ) and Collier and Gunning ( 1999 ) , they suggest that an inefficient concern environment and hapless proficient cognition in local houses has hindered development of the fabrication sector in Africa Third, in the procedure of growing, local houses have played an of import function in most garment exporting states, but they are non active in Africa. Local houses non merely are they supported by transnational houses as subcontractors, but they eventually replaced transnational houses. This is besides of import for the transportation of engineering and cognition, which is a beginning of sustained economic growing in theory every bit good as the Asiatic experience. It is reported that local houses gained cognition of engineering, markets, and direction from transnational houses, and such engineering transportation built the industrial base of Asiatic states ( World Bank, 1993 ; United Nations Conference on Trade and Development ( UNCTAD ) , 2002 ) .
In African states, the dress sector has been worsening both in an absolute and a comparative sense. The dress portion of fabrication declined an norm of 5.3 % per twelvemonth in African states over the period from 1981 to 2000. While several accounts have been offered for the overall hapless public presentation of African states, including hapless authorities policies, hapless establishments, high minutess costs, hapless substructure, uncertainness and hapless societal capital ( Collier & A ; Gunning, 1999 ; Easterly & A ; Levine, 1997 ; Fafchamps, 2004 ) , it is non instantly evident that these grounds explain why dress production has been worsening in a comparative sense within these states.
However, a visit to a typical African market does offer a possible account that is deserving proving. Here, one sees big volumes of used vesture that have been sourced as discarded contributions in industrialised states, and so sent to Africa. In fact, there was a dramatic addition in the contributions of used vesture to charities in developed states over the past 20 old ages. Unable to sell even the bulk of this vesture domestically, charities typically sell the used vesture to exporters who send it at a really low cost to developing states, peculiarly in Africa ( Hansen, 2000 ) . The importance of this trade is seen by illustration. For the U.S. , used vesture is systematically one of the top 10 exports to African states ( U.S. Dept. of Commerce, 2003 ; U.S. Trade Representative ( USTR ) , 2001 ; 9 US. International Trade Commission ( USITC ) , 1999 ) . About 16 % of the containers in container ships with U.S. exports edge for Africa in 1995 were filled with used vesture ( Hansen, 2000, p. 120 ) .
Kenya is one of the largest importers of second-hand vesture ( referred to as ‘mitumba ‘ significance ‘onslaught ‘ ) in Sub Saharan Africa ( SSA ) . The trade started in the late 1970s/early 80 ‘s, when it was brought in responsibility free by charities during the wars in Zaire, Rwanda, Somalia and Burundi etc. At this clip, refugees from these states flocked into Kenya and along with them came charitable assistance in the signifier of collapsible shelters, nutrient, medical specialty and vesture. As more vesture came in through charities and churches it was besides given freely to the urban and rural Kenyan hapless who could non afford to buy new garments. But, by the mid-1980 ‘s, following high demand for inexpensive second-hand vesture, givers revised their distribution policy and started to bear down for vesture points. It was at this point that it became commercialised and accessible to the whole population, 1990 was by far the most critical twelvemonth. Trade was liberalized and the attendant relaxation of exchange ordinances meant that second-hand vesture came deluging in. This provided an of import drift for the rapid growing in the graduated table and complexness of the trade.
While assorted documents have explored analytically the relationship between used-clothing contributions and fabric and dress production, the impact of used-clothing imports on fabric fabrication was raised anecdotally by McCormick et al. , ( 1997 ) based on studies of fabric manufacturers in Kenya. They cite the importing of used vesture as the chief cause of weak demand in the sector, which along with recognition restraints and “ deficiency of suited secure premises ” form the cardinal barriers to growing for these houses, based on the house study responses. Surveies that have focused more straight on the importing of donated used-clothing have been limited in figure and descriptive in nature, and include Hansen ( 2000 ) and Haggblade ( 1990 ) . To put the dress sectors in these states in context, overall, the part of the dress sector to employment in Africa is greater than its part to fabrication. As mentioned, the 2nd manus trade in Kenya has extinguished the local fabric industry, which may hold had an impact on fabric fabrication.
Chapter Two: LITERATURE REVIEW
2.1 The Fabric and Clothing Industry
Economic history shows that the vesture and fabric industry played an of import function in the industrialisation of today ‘s developed states. This is because of the industry ‘s alone features of being labour intensive and its links with other sectors of the economic system such as agribusiness. It is even suggested that developing states wishing to industrialise should get down with vesture and fabric industries ( Kinyanjui et al. , 2002 ; Zewdie et al. , 2003 ) . Fabric is one of the fabrication industries that range from little to large-scale production. Fabric is more planetary than any other sector. The taking exporters of textile production alteration as clip goes by ; fledglings replace old 1s. For case, in the 1980s the taking fabric exporters were West Germany and USA, in the 1990s they were replaced by Hong Kong and China ( Dickerson 1999 ) . The motion of fabric industry from developed to developing states has given hope for Africa. However, really few states account for Africa ‘s entire export i.e. Morocco, Tunisia, Egypt, South Africa and Mauritius. EU and USA are the chief receivers of Africa ‘s fabric merchandises.
2.2 Fabrication and the Building of Fabrics Industry in Kenya
The fabrication sector in Kenya in 2004 accounted for over 20 per centum of the state ‘s Gross Domestic Product ( GDP ) , provided employment chances to about 300,000 people in the formal and 3.7 million individuals in the informal sectors of the economic system. The fabric sub-sector constitutes an of import constituent of the fabrication sector in the state. It is one of the cardinal sub-sectors targeted under the state ‘s scheme for economic recovery ( Republic of Kenya, 2003 ) . In the first decennary following the state ‘s independency in 1963, fabricating end product in Kenya increased at the rate of 9-10 per centum per annum on norm, with noteworthy enlargement in the fabric and garments production. At the clip, public policy targeted import replacing industries for publicity ( IPAR, 1996 ) .
The chief policy instruments for such publicity included a combination of duties and import quotas supported by foreign exchange allotment steps. The exchange rate was besides by and large overvalued to incorporate the costs of imported natural stuffs, and recognition and involvement rates were implicitly subsidized for fabrication endeavors. The fabric and vesture industry developed into a prima fabrication activity in Kenya, both in footings of size and employment. It employed about 30 per centum of the labour force in the national fabrication sector. The industry besides supports the supports of over 200,000 small-scale husbandmans by supplying markets for cotton.
The success of the fabric and vesture sub-sector during the import permutation period can be traced to the policy by the authorities that ensured a backward integrating of the fabric Millss. Between the clip of Kenya ‘s independency and the terminal of 1990, the authorities consistently introduced controls in the sector ; it helped co-operative societies buy ginneries from colonial colonists, controlled selling borders, fixed manufacturer monetary values and invested to a great extent in fabric Millss. The authorities besides protected the local industry by enforcing a 100 per centum responsibility on imported goods. This ensured rapid growing of the local fabric industry hitting an mean production capacity of over 70 per centum.
The range of import permutation policy in Kenya was exhausted by the early 1980s. By mid-1980s, the fabric and garment industry started to decline. The inward looking policies pursued as portion of import permutation made it hard for the state ‘s fabric exports to perforate and retain their portion of international markets. In add-on, monolithic dumping of used apparels locally known as mitumba significantly undermined growing chances and fight of the sub-sector. Furthermore, since liberalisation of the Kenyan economic system in 1990, the inflow of textile goods into the state has led to noteworthy decrease in the capacity use of the local fabric Millss to about 50 per centum.
The displacement from an inward to an outward oriented development scheme in Kenya has been accompanied by the outgrowth of Export Processing Zones ( EPZs ) . Kenya started implementing the EPZ programme in 1990. The state ‘s EPZ programme is covered under the Export Processing Zones Act, ( Chapter 517 ) Laws of Kenya. The Act defines EPZs as “ aˆ¦a designated portion of Kenya where any goods introduced are by and large regarded, in so far as import responsibilities are concerned, as being outside the imposts district but are punctually restricted by controlled accessaˆ¦ ” The aim of the programme is to advance exports, foreign exchange net incomes, transportation of engineering and accomplishments, employment creative activity and sweetening of industrialisation ( Republic of Kenya, 2004 ) .
The EPZ inducement government in Kenya provides exporting houses with a 10-year revenue enhancement vacation, unrestricted foreign ownership and employment, and freedom to repatriate limitless sum of net incomes. The houses are besides exempt from detecting some nucleus labor Torahs and ordinances. For illustration, until 2003, trade brotherhoods could non form workers in the EPZ houses. In add-on, the Factories Act ( Chapter 514 ) is non being enforced in the zones. The EPZs have enjoyed from the tremendous market chances presented by the duty and quota advantages granted under the US-led AGOA and the ( ACP-EU ) Cotonou Agreement ( EPZA, 2005 ) .
2.3 Structure and Development of the Textile Industry in Kenya
The fabric and vesture industry in Kenya faces important crises. This emanates from continued impairment in the buying powers of the bulk of the population, thereby cut downing effectual demand for fabric merchandises, inexpensive imports, and the riddance of quotas as a consequence of the termination of the Agreement on Textiles and Clothes ( ATC ) , exposing the state to stiff competition on 3rd markets from more constituted fabrication economic systems such as China. Consequently, a figure of house closings and layoffs have been reported in the state ‘s fabric industry. Preliminary studies indicate that up to 12,000 occupations have been lost due to factory closings and decreased operations ( Kenya Association of Manufacturers ( KAM ) , 2008 ) . Fabric industry in Kenya is comparatively diverse. It can be divided into four wide classs, viz. cotton turning and ginning, narration and thread production, fabric industry and apparel industry.
2.3.1Cotton Turning and Gining
Cotton in Kenya is chiefly grown by small-scale husbandmans in fringy and waterless countries. It is estimated that Kenya has 140,000 small-scale cotton husbandmans down from over 200,000 in the mid-1980s when the industry was at its extremum ( EPZA, 2005 ) . The Cotton Board of Kenya estimations that countrywide, 350,000 hectares of land is suited for rain-fed cotton production with a possible to bring forth about 260,000 bales of lint yearly. In add-on, 34,500 hectares of Kenyan land is suited for irrigated cotton production with an end product potency of 108,000 bales of lint yearly. However, as of 2003 merely about 25,000 hectares were under the harvest with a entire lint production of a blue 20,000 bales.
There were 24 ginneries in Kenya in 2005 with an estimated installed capacity of 140,000 bales per twelvemonth. The entire one-year lint production, nevertheless, presently stands at about 20,000 bales, which is significantly below the state ‘s processing capacity and demand. The deduction is that Kenyan ginneries could still manage production even if cotton end product was to be increased by 600 per centum. Table 2.1 shows the installed ginning capacity in the state per state. The Table shows that Eastern and Central Provinces combined hold higher installed ginning capacity but existent use degrees is less than a one-fourth. Coast Province has markedly high capacity use. There are merely about 10 ginneries that are presently operational. Some of the ginneries ceased operation due to shortage of natural stuffs and general misdirection within the sub-sector.
2.3.2 Yarn, Fabric and Garment Production
Before the diminution of the fabric industry in the early 1990s, there were 52 fabric Millss in Kenya devoted to fabric and yarn production. The Millss had an installed capacity of 115 million square metres of cloth. It is estimated that the entire one-year cloth demand in Kenya presently stands at 225 million square metres. With about a 50 per centum diminution in the figure of fabric Millss in the state, coupled with drastic decrease in cotton production, Kenya ‘s fabric demand greatly outstrips domestic supply. This implies that more additions, in footings of employment and income coevals, can be derived from reviving the fabric sub-sector in the state. Garment fabrication in Kenya has besides experienced downswings over clip. It is estimated that there were 110 large-scale garment makers in the state in the early 1990s.
The garment fabricating sub-sector had a combined installed capacity to treat cloth into garments of 141.3 million square metres. As in the instance of fabric Millss, the figure of garment makers besides went down over clip. Specifically, the large-scale garment fabrication concerns declined by half from 110 in early 1990s to 55 in 2004. Out of this, somewhat more than half ( 29 ) are bring forthing under the Manufacturing under Bond ( MUB ) strategy while the remainder ( 26 ) are registered under the EPZ programme. The existent figure of garment makers that are non covered in the model of the two strategies are non documented.
2.4 Changing Industrial Processes within the Textile Industry in Kenya
The fabric and vesture industry developed into a prima fabrication activity in Kenya, both in footings of size and employment. It employed about 30 per centum of the labour force in the national fabrication sector. The industry besides supports the supports of over 200,000 small-scale husbandmans by supplying markets for cotton. The success of the fabric and vesture sub-sector during the import permutation period can be traced to the policy by the authorities that ensured a backward integrating of the fabric Millss. Between the clip of Kenya ‘s independency and the terminal of 1990, the authorities consistently introduced controls in the sector ; it helped concerted societies buy ginneries from colonial colonists, controlled selling borders, fixed manufacturer monetary values and invested to a great extent in fabric Millss. The authorities besides protected the local industry by enforcing a 100 per centum responsibility on imported goods. This ensured rapid growing of the local fabric industry hitting an mean production capacity of over 70 per centum ( Friedrich-Ebert-Stiftung, 2006 ) . There is unequal investing in the fabric sector ; a major challenge for the industry therefore is to pull investing in whirling, weaving and other cloth completing operations. Technology besides is a job, and the authorities needs to happen a manner of doing available moderately priced engineering to the industry, for case by supplying long-run recognition warrant. There is besides concern that locally produced cloth is hapless in quality and high in monetary value ( KIPPRA, 2003 ) .
The range of import permutation policy in Kenya was exhausted by the early 1980s. By Mid-1980s, the fabric and garment industry started to decline. The inward looking policies pursued as portion of import permutation made it hard for the state ‘s fabric exports to perforate and retain their portion of international markets. Furthermore, since liberalisation of the Kenyan economic system in 1990, the inflow of textile goods into the state has led to noteworthy decrease in the capacity use of the local fabric Millss to about 50 per centum. By the early 1980s, the fabric industry was Kenya ‘s taking fabrication sector in footings of both employment and size, affecting over 200,000 house-holds and 30 % of the fabricating labour force ( EPZ, 2005 ) . In the early 1990s, due to several factors including misdirection, deficiency of investing, and notably, the handiness of 2nd manus vesture, the local fabric industry in Kenya collapsed. Local fabric fabrication supplies merely 45 % of Kenya ‘s fabrics market, while imported new and used apparels account for approximately 37 % . Demand for fabric merchandises in the state is estimated to be turning at 3.8 % yearly.
The garment and fabric industry faced competition from a new signifier of trade in 2nd manus apparels. Major participants in the garment and fabric industries such as Kenya Textile Mills, Rivatex, Raymonds and Kisumu Cotton Mills closed down. Kenya ‘s garment production has declined significantly since the 1980s ( McCormick et al. 2001 ) . Consequently, a figure of house closings and lay-offs have been reported in the state ‘s fabric industry. The huge bulk of fabric and dress houses feel that the industry is characterized b low quality and uncompetitive monetary values, and was earnestly enduring as a effect of uncontrolled importing of 2nd manus merchandises. They felt, however, that the industry had significant possible if the whole concatenation could be good managed ( KIPPRA 2003 ) . Harmonizing to Mr. Chris Kirubi, a Kenyan industrialist who blames 2nd manus apparels for the death of his fabric factory provinces, “ ..when you do your ain apparels, you employ husbandmans to turn cotton, people to work in fabric Millss and more people to work in apparels mills ; when you import 2nd manus apparels, you become a dumping groundaˆ¦ ” ( Mission Safari, March 2005 )
While ordinary Kenyans depend upon mitumba, local fabric makers have protested that the used vesture trade is aching their industry. Other individuals whose occupations are linked to the fabric industry, such as bargainers and cotton husbandmans have lost their agencies of support as a consequence of the closing.
“ Fabric makers in Kenya have gone through a difficult economic times. A figure of them have since been closed, others have changed ownership. The leftovers of them are simply lasting ” ( Peter & A ; Gerrishon, 1991 ) .
For illustration, Raymonds, one time voted the best managed fabric house in the state, was taken over by Heritage Ltd foremost reduced the figure of workers from 3000 to less than 2000 before it changed custodies and eventually closed down in 2001 as the importing of 2nd manus apparels took its toll. Harmonizing to a former fabric worker, laid off from Raymond ‘s Woolen Mills, the 2nd manus apparels encouraged poorness by coercing more than 90 industries to shut down in 10 old ages, go forthing 1000s of people idle.
“ But for mitumba, I would non be here now and many other Kenyans would hold occupations. We would be doing our industries work and even sell the excess to Uganda and Tanzania and other states. All Kenyans would turn to locally produced fabrics if it was all that was available ” ( Daily Nation, June 2002 ) .
Fabric house that have survived have done so by abandoning the mass market to diversify into niche countries like school or mill uniforms, or the stylish local Kikoi, a colorful fabric worn around the waist or shoulders. The governments in Kenya and other East African states have at assorted times blamed the mitumba industry, which employs 10s of 1000s of people, for all mode of ailments. Local fabric makers have long complained that their fight is being undermined. In the face of an inexorably intensifying recession, one of the responses of local industry has been to run smartly against the mitumba civilization.
Poverty decrease and creative activity of productive and sustainable employment chances remain major policy aims in Kenya. Despite several policy intercessions, Kenya is still faced with high incidences of poorness, unemployment and low economic growing rates. Textile sub-sector constitutes an of import constituent of the fabrication sector in Kenya. However, inward looking policies ab initio pursued by the authorities, monolithic dumping of used apparels, illegal importing, termination of the ATC quota government, and general misdirection of the agricultural and co-operatives sectors significantly undermined growing chances and fight of the fabric sub-sector in the state. The industry is besides under terrible emphasis from Asiatic imports, peculiarly China and it is less likely that it can defy the rush. Consequently, a figure of house closings and lay-offs have been reported in the state ‘s fabric industry, thereby worsening the unemployment and poorness state of affairss in the state.
Kenyan trade brotherhoods have been greatly affected by the crises in the fabric industry. The prostration of the industry has seen a bulk of workers being declared redundant. This means important loss of rank by the brotherhoods and the eroding of assurance of workers in the capacity of trade brotherhoods to form, protect and advance the public assistance of workers. The resurgence of the industry, particularly through the EPZs has non helped in bettering the state of affairs either. This is chiefly due to the restrictive nature of the state ‘s ordinances peculiarly on trade brotherhood acknowledgment and corporate bargaining. Most of the EPZ houses have, for illustration, non recognized the relevant trade brotherhood organic structure mandated to form workers within the industry.
Chemical reaction by trade brotherhoods has been bit-by-bit and uncoordinated. While the brotherhoods continuously voiced their reserves about inexpensive imported fabric merchandises, the same was done without any experimental research to demo the magnitude of the job. In add-on, the few protagonism and lobbying activities by the brotherhoods have non focused on the relevant authorities machinery and policy devising variety meats. Such runs have besides failed to command a critical mass of support from other sectoral brotherhoods or civil society organisations to assist act upon alteration of policy discourse.