 So good afternoon. It's after lunch. I hope everybody's awake. This is the title of this is actually taken from some of what we saw when this conference was announced and it fit in very nicely with work that we have been doing on the clothing industry in various African countries. Just to give you a little bit of background the work that we've been doing had the motivation that first of all we had been doing work on clothing for quite a number of years in the Institute for Development Studies. We started a African clothing and footwear research network back in 2001 which consists of researchers initially from four countries which was subsequently expanded to six and this particular project which is funded by IDRC came out of that network and came out of work that we had been doing and we were the concern that we that motivated it was that with the end of the MFA in 2005 China and the rise of China as a major producer of clothing we were faced with the question of would the African clothing industry survive and we looked at some data which suggested that as we were preparing the proposal in 2009-10 that in fact the African clothing industry was surviving not at a high level, but it was surviving but we also saw some significant differences and so let me see if I can do this technology we saw that it was surviving at different levels so the this presentation is suggesting that initially if we talk about breaking in and staying in the Africa's post-MFA experience of global apparel trade is that yes, Africa broke in and it broke in a lot as a result of a GOA and also the MFA which allowed foreign investment to come in and use African countries as a platform for exporting to mainly the US but also the European Union in the time of quotas so once those quotas were removed The question was well, what would happen and there were those who were predicting that it would collapse and those who were Saying well, maybe it would go on so we wanted to look at that and This was what we looked at now when we were doing the original of course We were here in 2009 2010 so we didn't see this upturn that has come since then But we looked and we saw that yes, there had been decline in a number of the countries Mauritius being the biggest exporter had also experienced decline Madagascar had experienced a very steep decline Lesotho more gradual Kenya more gradual and then Swaziland down here looking a little bit the same way so What it would account for the differences the the factors that we had talked about were in fact factors for everyone China and the MFA and quota removal and so on that was common And yet their experiences were different. So what would account for that difference and we looked at various theories trade theory global value chains institutional approaches and We came up with five possible Explanations for the differences not mutually exclusive, but we didn't know really which ones would be the ones that would Be most important. So we said yes, maybe some of the countries had more favorable industrialization and trade policies than others Maybe some had better local resources than others We knew for example that Mauritius had fabric They had fabric mills and some of the other countries were importing all their fabric. Maybe that was something that made a difference We saw differences in market destinations Some were exporting totally to the US others were favoring the European Union Some had a mix Maybe it was differences in their industrial and product specialization some countries were very heavily into the clothing industry while others had a more diversified base of exports and where Apparel exports were not so important to them and likewise with products Some were doing basics T-shirts and jeans and others were trying to move into different niches. Did that make a difference and then of course Theory would always suggest if some firms or some countries were more innovative that they might be the more successful ones So we set out to investigate empirically all of these The methodology we collected primary data We have as our network were based in different countries so we had a methodology workshop together and then the researchers went out to investigate in their own countries I Had the privilege as the leader of the thing to visit all of the countries and to visit factories in every one of the Countries that we did we we were in seven countries But this analysis concentrates on the five main Exporters we eliminated from this analysis Ethiopia because when we saw that those graphs Ethiopia was way down and only came up at the in the very end of the time period And so we didn't think that it was quite fair to put Ethiopia into this analysis and Tanzania had very little in the way Of clothing exports We ended up doing some case studies of firms, but not including them in this analysis The unit of analysis was the firm we collected Data using a structured survey, but we also did qualitative work We did some selected case studies and we did a number of key informant interviews and The data analysis was quantitative at the firm level qualitative on the case studies and we also had as part of our work Downloaded comtrade data and that was what was used for example to generate the graphs that I showed you a couple of minutes ago So that was a good benchmark because of course the firms that we selected May not have given us a total picture of the exports of a country, but the comtrade data was much more complete All right looking at the countries we we looked at firm size we looked at the firm establishment and ownership we looked at country and product specialization We looked at markets and competitors and we looked at local resources You can see the ownership Excuse me the employment size varied considerably From firms that were I think I know I didn't do it We left off then this is our various sizes The smallest firm in the sample was quite small. It was in Kenya and it had 23 Employees the largest had 6200 so we had quite a range of sizes, but you can see that the the concentration there Is it between? 503,000 if you look at the numbers across and The with the 1000 to 3000 being a Good number there, but then also we had quite a number in the 100 to 500 range 100 to 499 So the employment sizes were quite varied and you can See Also interesting was the period of firm establishment some of the Countries like Mauritius for example most of their firms were founded before 2001 before a goa Whereas and Madagascar also had a significant proportion of older firms whereas in some of the other countries like Kenya, Lesotho the firm establishment tended to be post a goa the the brown lines being from 2001 to 2004 and then from Interestingly, there are also firms from post 2005 after the MFA ended We had some firms apparel firms being begun So we thought that that was actually rather significant the ownership overall distribution across all of the countries Foreign-owned firms were 62 percent Some joint ownership far in local 10 percent and local earn ownership 28 percent, but local ownership varies considerably across countries with Mauritius being 85 percent locally owned whereas Lesotho at the other end was 5 percent locally earned 95 percent foreign owned and As we will see that makes a difference Industrial specialization Our our data here. We didn't collect firm data for this because this is by country So we relied on information in the reports of the researchers out there and they gave us different kinds of information, but we range from Lesotho, which is heavily in the clothing industry and 70% of their manufacturing employment and 90% of Total employment is in the clothing industry Mauritius a Less but still very significant Madagascar Swaziland and Kenya Kenya considers the clothing sector to be Important and it's in vision 2030 as an important industry, but it only accounts for 9.6 percent of Manufacturing employment, so it's a much less Kenya is much less reliant on this industry than some of the other countries Basics the basics of t-shirts and jeans and such like products we asked people firms how what proportion of your Production is basics. What would you consider to be differentiated products? and what would you consider to be fairly complicated products and Basics for most was the majority Ranging from almost 72 percent in Swaziland Down to 29 percent in Madagascar, which is a very interesting Phenomenon in Madagascar that they tend to do much more differentiated products even though they are one of the In general one of the poorer countries, but their text their clothing industry is at a higher level than some of the others Even Mauritius Has 58 percent of its production in basics Market orientation we looked at we tried to categorize countries according to whether they were us dominant EU dominant Africa dominant or diversified and we did that based on what they told us about their markets for different products and how much went to Each of the different products Each of the different locations so for Kenya Kenya is clearly us dominant and a bit Some of the firms are Africa dominant some of the firms that in our sample were exporting mainly to the region And then they had I think this is only one firm that one could say was really diversified. They spread across Lesotho was likewise US dominant Whereas when you get to Madagascar the US is much less partly because they were disqualified from a goa and Then the EU is higher and they have a bit more one or two firms that are either Africa dominant or Diversified Mauritius is much more in the EU Swaziland who are back to a US dominant, but but they're kind of almost evenly spread with US Africa and Diversified so market destinations are quite different Their competitors China is a competitor in all markets We asked them about their their domestic market their regional markets Their US markets and their EU markets Who did they consider to be their main competitors and we found that in all markets China was a competitor Now very interestingly across these five countries in all markets Mauritius was also a competitor As was Bangladesh and then a sort of lump category of All African countries other African countries India was a competitor in export markets, but not in the domestic market Asia other Asian countries which included Vietnam Cambodia, etc were competitors in Export markets and other countries. There were a few other countries named like Turkey And they were competitors in their export to EU or US All right local resources. There were problems Did they have local resources? They were problems of lack of local fabric almost everywhere But they seem to be able because a goa allows Those with the US market were able to import fabric Then labor some of you may have heard Paul Kamau's Paper yesterday in which we talk about the serious shortage of high-level technical skills that a very high proportion of the technical workers in all of these firms tend to be expatriates which means that on at the technical level the the The skills and the the production it may not be sustainable in the long run All right, what it how what about continuing to export what what? Is actually happening we we developed we're able to divide the five countries and We saw that to Mauritius and Kenya Mauritius and Kenya Seem to be stabilizing Lesotho was a bit unclear and we we looked at this in light of where were they in 2010 because that's when we were cutting off here Where were they in? 2010 compared to where they were in 2005 So were they they may have gone up and down, but where were they relative to? To 2005 no, excuse me. We didn't cut off. We went to 2011 here So Mauritius and Kenya seemed to be stabilizing Lesotho was a bit unclear. It was below where it was in 2005, but it was a bit on an upward trend The ones that were having real difficulty were Madagascar and Swaziland so When we looked at those countries in that way Then what did we see about these issues? What were the factors that seemed to enable those who were continuing who were Stabilizing and doing a bit better what were the factors in enabling them to continue to export now in the paper itself when you see the paper I have quite a complicated table that shows you each of the countries and each of the factors in great detail But I knew that for this presentation That wouldn't be very feasible. I'd be here for another 20 minutes. So just to name the factors the one of the main factors was political stability which both Madagascar and Swaziland have lacked Madagascar has had its continuing troubles And it's still in the newspapers with its political problems. Swaziland is more like a low-level problem Yes, they have a king and yes, the regime is in place, but there's always simmering discontent So we put it in in that realm that For both Madagascar and Swaziland they seem to lack political stability and that was contributing to their situation of lack of stability in the industry The issue of local ownership Mauritius, which is the highest Producer in the area and seems to be holding its own the best has the highest level of local ownership and Kenya has a fair Amount of local ownership as well either local or joint ownership and that seems to contribute to a local embeddedness of the industry and to a Possibility of continuing then the issue of industry support structures. Okay. I'll try to wind up We looked at not just policy policy was what we thought was going to make a difference But in fact what made more of a difference was how that policy was implemented where their practical Practices on the ground where for example export Mauritius that helps the exporters to Make contacts, etc. So industry support structures were important as were human resources these technical skills So what are our conclusions from this? We didn't see spectacular differences We saw that African clothing industry is what one of our resource people said jogging along It needs to do more than that. It's depending on trade preferences on expatriate skills And on imported fabric and that's not really the way to build a sustainable industry some countries are doing better than others but all of them need help in reducing costs and diversifying markets and investing in better skills and local raw materials and new technologies so The industry is jogging along. It's managing But for it to really be any kind of an engine of growth, of course it needs to do more than that We owe thanks to many people and we thank you for listening