Which private players are investing in West Africa’s textiles industry?

As governments across West Africa prioritise their textile industries to drive post-pandemic recovery, a number of private sector initiatives are supporting the segment’s growth.

In a region where just 2% of cotton produced is processed locally, much of the investment has focused on developing cotton processing capacity to capitalise on the added value that comes from selling finished goods.

While West Africa is the sixth-largest cotton-growing region in the world – and Benin, Côte d’Ivoire and Burkina Faso the sixth-, seventh- and eighth-largest cotton-exporting countries, respectively – a lack of processing capacity has resulted in dependence on imported goods.

For example, although Benin, Burkina Faso and Mali export 1.8m tonnes of cotton worth $922m per year, they import $2.8bn in cotton textiles and apparel. Indeed, 90% of the region’s cotton is exported to Asia for processing.

One of the most prominent developments to this end was the opening of Togo’s Plateforme Industrielle d’Adetikopé Textile Park in June.

A public-private partnership (PPP) between the government of Togo and Arise Integrated Industrial Platforms – itself a partnership between the Singapore-headquartered agriculture company Olam International and the African Finance Corporation – the textile park aims to transform the textile industry by increasing processing and exports of finished garments.

In a signal of its potential economic impact, the project aims to convert 56,000 tonnes of cotton fibre worth $73m into clothes and apparel worth $1.5bn. The park is expected to create 20,000 direct and 80,000 indirect jobs, and those involved in its development estimate that it could contribute up to 21% to GDP.

Located 15 km north of the capital Lomé, the park is in a 400-ha site that also includes industrial and commercial zones, a container yard with the capacity to hold 12,500 containers, and warehouses and storage units for cotton and other commodities.

A separate special economic zone in Glo-Djigbé – around 45 km from Benin’s economic capital, Cotonou – was announced in February, focused on the processing of cashews, cotton, shea, pineapples and soybeans. Operated as a PPP between Arise and Benin, the facility will have the capacity to process around 100,000 tonnes of cotton fibre a year, and house up to 30 factories for clothing production.

It is estimated that the project – which is currently under construction – will create 300,000-350,000 jobs by 2030, including 200,000-250,000 related to cotton spinning, weaving and clothing manufacturing.

Elsewhere, in 2019 Ghanaian fabric product manufacturer DTRT Apparel, West Africa’s largest apparel manufacturer, received an undisclosed sum from investment firm Verod Capital Management and energy drink maker Red Bull to expand its production to take on work that traditionally goes to cotton and garment processing facilities in Asia.

Given the global textile industry’s emphasis on reducing its carbon footprint, some private investors are prioritising sustainable investment in particular.

The region’s first organic cotton ginning plant was inaugurated in Burkina Faso in January of last year. The $7.1m, 5000-sq-metre facility operated by the Organic Cotton Ginning Company – a joint venture between the National Union of Cotton Producers of Burkina and the Burkinabe Company of Textile Fibres – has a ginning capacity of 125 tonnes per day.

Meanwhile, in a bid to improve social outcomes associated with the textile industry, in February it was announced that the West Africa Trade and Investment Hub, which is funded by the US Agency for International Development, would establish a new model factory in Ghana in cooperation with regional textile companies Ethical Apparel Africa and Maagrace Garment Industries.

The $1.4m project seeks to boost women’s economic empowerment in apparel manufacturing and create 800 fair-wage jobs, with women to make up more than 50% of the factory’s middle-management roles. Once the facility is fully operational, Ethical Apparel Africa estimates exports will reach $19m over the course of three years.

While much of the focus has been placed on value-added cotton processing, a series of other initiatives are also benefitting the region’s textile industry.
For example, Intercoton, an interprofessional association representing cotton growers, crushers, ginners and spinners in Côte d’Ivoire, has helped to increase cotton production through modernisation.

Strategies have included developing new seed varieties and techniques, such as spraying phytosanitary treatments using drone technology. The use of drones has reduced the treatment time of such treatments from more than one hour to less than 15 minutes per ha.

In recent years tech start-ups have similarly sought to provide solutions to logistics challenges such as poor roads and a lack of infrastructure, which have long posed obstacles to the development of cotton production, processing and trade in West Africa.
 

As OBG has previously noted, one such company is Kobo360, a Nigerian start-up that connects truckers and companies to delivery services through its online platforms.

Launched in its home market in 2017, Kobo360 has since expanded to six additional countries: Burkina Faso, Côte d’Ivoire, Ghana, Kenya, Togo and Uganda.

The company has plans to launch in another 10 countries after securing $20m in Series A funding in a financing round led by Goldman Sachs and $10m in working capital financing from Nigerian commercial banks in 2019.

While some private enterprises have taken a central role in developing the textiles industry, governments and regional bodies also have an important enabling part to play.

For example, private efforts to improve logistics and boost inter-regional trade will be supported by the African Free Trade Area (AfCFTA) agreement, which officially launched on January 1.

While a number of cross-border restrictions remain in place due to the Covid-19 pandemic, AfCFTA obliges members to remove 90% of tariffs on goods, facilitate the movement of capital and people, and take steps to create an Africa-wide Customs union – all key facilitators of trade.

Another example of international cooperation is the Accra-headquartered West Africa Competitiveness Programme, created as a partnership between the EU and ECOWAS.

During the body’s September 2020 meeting, the textiles and garment industry was identified as key to the region’s post-pandemic recovery. The programme aims to support value chains at the regional and the national level in order to accelerate transformation, improve competitiveness, create jobs, and facilitate access to local and global markets.

Meanwhile, at the national level, the Nigerian government has long sought to bolster its local textile industry, having set up the N100bn ($243m) Cotton, Textile and Garment Fund in 2009. Last year the Central Bank of Nigeria announced it had invested a further N120bn ($291.6m) in the fund, which has so far benefitted some 320,000 farmers and contributed significantly to the industry’s development.

The government of Côte d’Ivoire, for its part, has supported numerous private enterprises by providing cotton farmers with fertiliser, introducing­ a national pricing scheme and implementing capacity-building programmes to encourage higher productivity. It is also planning to relaunch activities at the Gonfreville factory, which is the oldest textile factory in West Africa, having been built in 1921.