Greenshoots of recovery in clothing industry

THE clothing industry has managed to buck the down-trend in the manufacturing sector as there are now greenshoots of recovery, with more than 500 new jobs expected to be created by the end of the year.

Although the sector still faces many challenges, a wage agreement forged last year between employers and employees and Government rebate scheme have given a fillip to clothing.

Also, there are expectations that resumption of the Zimbabwe-South Africa bi-lateral trade agreement will enable Zimbabwean clothing to cross the Limpopo duty-free.

While capacity utilisation in the manufacturing sector dropped to 36,3 percent in 2014 from 39,6 percent a year earlier, Government forecasts industry growth of 1,7 percent this year.

Chair of the Zimbabwe Clothing Manufacturers’ Association Mr Jeremy Youmans said in a recent interview that the 2014 wages agreement was a “foundation stone” for recovery.

“Although the full agreement required an arbitration process, most of the fundamental principles were agreed by the parties. There currently is in place a moratorium on wages for existing employees, while new employees will be paid 20 percent less than the current CBA (collective bargaining agreement) rates.

“In addition, the parties agreed to work together for the mutual benefit of the sector and that future wage negotiations would be on the latest rate of inflation, the principle of Section 74(4) of the Labour Act and the (International Labour Organisation) issued bases of negotiation.

“Further, the settlement expects all companies to implement productivity-related bonus schemes. Essentially, this has enabled manufacturers to be better able to forecast costs and plan their production so as to be able to bid for orders more competitively,” said Mr Youmans.

The Clothing Manufacturers’ Rebate, a Government dispensation to allow companies registered by the Zimbabwe Revenue Authority to import specified raw materials duty-free, has now been expanded to cover 52 companies, up from 12.

This effectively cuts costs and allows the industry to price its products competitively, but does not cover textile products.

In addition, President Mugabe and President Jacob Zuma of South Africa recently specifically referred to the Zimbabwe-South Africa bi-lateral trade agreement on the clothing sector at a business forum in Tshwane.

The agreement is key to the sector as it provides a gateway to Africa’s second-biggest economy.

Of late both central and local government, including local companies, have been deliberately trying to buy locally produced products.

Experts, however, say there are still too many goods that are being imported that can ideally be produced competitively in Zimbabwe.

There are good indications of increased investment in the sector, though.

Recently, the long-awaited approval of the takeover of Archer Clothing Manufacturers in Bulawayo by Harare-based Paramount Garment Works has seen 350 workers being re-employed.

Management plans to grow Archer to full capacity by the end of the year, a development that is expected to create 500 new jobs.

Paramount has invested over US$2 million in Archer’s resuscitation and intends to pump in another US$3 million by year-end.

There have also been investments in an underwear factory in Bulawayo and companies such as Security Mills, which is in judicial management, are showing signs of bouncing back.

Various companies in Harare are reported to be recruiting as well as orders start to pick up.

ZCMA insists more still needs to be done to control imports.

“Many retailers are still bringing goods in under false certificates of origin to avoid paying the correct duties. Often labels are cut out of garments to hide the country of origin,” explained Mr Youmans.

ZCMA notes that the Industry and Commerce Ministry’s appointment of a Bureau Veritas to provide compliance certificates for all imports starting next month will be quite helpful.

Under the Zimbabwe Cotton to Clothing Strategy, 2014-2019, the clothing sector is planning to increase employment by more than 400 percent to 35 000 within five years.