Clothing Industry Decline linked to Deteriorating Lifestyle

Trade unions in the clothing and textile industry say high cost of living coupled with deteriorating lifestyle have contributed significantly to the decline of the sector as consumers are now shunning conventional clothing shops in favour of cheap products from boutiques and the informal sector.

The troubled clothing industry has over the past years been rocked by a wave of company closures, retrenchments and bankruptcies, a situation trade unions in the sector blame on economic woes.

According to statistics, the textiles sector shed 9 000 jobs in 2013 to about 2 000 from 11 500 three years ago, while the clothing industry cut about 3 000 to 5 000 from about 8 000 during the same period.

This brought forth about 20 000 people who have lost their jobs since 2011.

Exports to other countries have also declined, while local consumers are now depending largely on imports.

The influx of cheap imports from China as well as second-hand clothes has also negatively impacted the local clothing manufacturing industry, thereby undermining its performance.

Zimbabwe Clothing Manufacturers’ Association president Mr Jeremy Youmans said there are a number of reasons which are suffocating the clothing sector but singled out deteriorating lifestyle for special mention.

“The prevailing economic woes in the country have forced many Zimbabweans to have less disposable income and, therefore, deterioration in lifestyle,” he said.

“This creates a multiple effect on the industry as there is lower demand in quality due to fewer consumers who are also spending less and in order to compete, we have to find ways of reducing our prices.

“The danger is that you sacrifice quality to reduce prices and in the end the consumer actually gets less value, even at the cheaper price.”

Mr Youmans said although the cost of clothing has come down, consumers are still opting for cheaper products.

“As a nation becomes wealthier, they spend more and more on clothing, both in quantity and value.

“The cost of clothing has come down and is only about 80 percent of what it was five years ago.

“Mass produced garments from other countries, which enjoy many support measures and subsidies like incentives, have driven clothing prices down. But there can be little debate that it has been at the sacrifice of quality.”

While the formal clothing sector is experiencing hardships, the informal sector seems to be enjoying huge success as it does not incur the same operating costs as those in the formal sector.

Research shows that the formal sector has diminished to its current level due to the shrinking local market and severe competition from international suppliers, some of whom are legitimate and others illegitimate.

Although there has been no systematic statistics to show how the informal sector is performing, experts say the sector is a significant part of the employment of clothing manufacturers in the country.

Investigations show that most companies in the informal sector are operated with less than 10 people or individual machinists.

As they (informal tailors) are self-employed, they do not have minimum wages to pay, NSSA, WCIF, SDL, MDL, Clothing Industry Pension Fund contributions or NEC contributions.

Research also shows that products from the informal sector have low prices due to low operating costs as they do not charge VAT and, mostly, do not pay PAYE and corporate tax.

Players in the informal sector do not need to pay for factory licences, health and safety licenses or EMA levies.

As a result, informal tailors have a substantial amount of costs that do not need to be recovered in their selling price.

Informal tailor Mrs Petronella Murwira, who rents a small office at Roslin House in Harare, confirmed that business was brisk.

“You know, one can never say I have enough money and because we are in business, we always want more,” she said.

“But I have got to admit that things are pretty good for some of us here. We are making money mainly by doing uniforms for schools, choir groups and even corporate organisations.

“Our prices are very affordable here and the quality is almost the same as that in established shops and that is why we have a lot of customers. For example, we charge $30 for primary school blazers, while other shops sell the same blazer with same quality for $45.”

Murwira said she makes a profit in the region of $700 and $1 500 per month, an amount way above the poverty datum line and which most Zimbabweans are not getting as income.

Asked if she had any prospects to formalise and have a big enterprise, Murwira said if she does so she will become a victim of a system she is currently part of.

According to a 2012 brief on textile and clothing industry compiled by Simile Nkala, ZimTrade’s market advisor, most companies in the country have been operating below capacity since 2008 due to dollarisation.

“There are some companies that are operating between 0-30 percent (capacity). These are the companies that have severely been affected by the dollarisation and the influx of cheap products from abroad,” reads the report.

“There are also some companies that are operating at 30-60 percent. These are mostly those that have been into exports and they have contracts to supply certain companies, especially in South Africa.

“There are also those companies that are in protective clothing that have been doing well because of the mines that are opening up.”