Zimbabwe:Textile industry hit by unduly high lint prices

Textile companies of Zimbabwe are facing a near collapse as a result of soaring prices of cotton lint and high duty imposed on imported raw materials and inputs.
The consequences are so threatening that not only will there be a massive loss in jobs but also a failure in tapping valuable export markets.
Unless Government seriously considers a discounted lint price and a relaxation on duty for imported raw material, the situation is unlikely to change.
Lint prices have surged from Z$6 million a kilogram to Z$15 million. Experts believe that considering the industry requirement of 48,000 tons per year, the increase in prices is bound to elevate the cost of production by more than Z$100 billion.
A recommendation has been made to the Government for providing a subsidy to the textile industry through marketing companies like Cottco which will enable spinners to buy lint at affordable prices and remain competitive in the international market.
In an exclusive interview with Fibre2fashion, Mr T Gutu, Chairman of Textiles Manufacturers Association of Zimbabwe stated, “The reason behind rising cost of cotton in Zimbabwe is two-fold. Our exchange rate is fixed by the state, and we have a hyper-inflationary economy. Increasing price is therefore an inevitable trend. In addition, the international price of lint has appreciated with the devaluation of the US dollar, and hence in real terms commodity prices will follow suit.”

Talking about the problems faced by the industry, Mr Gutu said, “The difficulties before companies in this economy are innumerable and a shortage of disposable income can just be one of the many. Inflation is really the result of supply side shortage, and while the cost of products have continued to escalate, the remuneration of workers has gone in the opposite direction. Additionally, insufficiency of foreign currencies is making it difficult for manufacturers to purchase inputs and spares.”
As part of the solution to the existing crisis, Mr Gutu suggests, “We are not sure we want to control the price of cotton but would rather accept a situation where international prices prevail. The only real possibility of managing cotton prices may lie with successes in managing the cost of growing the crop. These may include genetically modified organic (GMO) cotton production methods and a shift away from labour intensive to labour extensive practices.”
Moreover, Mr Gutu also divulged about policies that the Government must undertake to get the industry out of this turmoil. He pointed out that, “The Government can come up with some legislation to protect the domestic manufacturers, but these measures have to be in line with the WTO guidelines. The Government can ensure that cheap imports are not dumped in our markets. There are some financial packages for the industry which can be introduced, but since the country is on the eve of general elections, it will take at least April before strategies can be discussed with the authority.