Patel says master plan has improved fortunes of clothing and textile sector

The master plan for the clothing, textile, footwear and leather (CTFL) industry had turned around the industry’s fortunes and created jobs since the plan’s launch five years ago, trade, industry & competition minister Ebrahim Patel said on Thursday.

More than 20,000 jobs had been created in the past five years and major retailers had sourced 371-million more units of clothing items from local manufacturers, a 51% increase on the baseline of units bought locally, Patel told an engagement with stakeholders in Cape Town. 

The sector now employs more than 500,000 workers, including 250,000 manufacturing jobs and more than 280,000 retail jobs. 

“The volume of clothing imported from China has dropped in major clothing categories, and the value of the clothing imported increased, showing success in the fight against under-invoicing,” Patel said in a statement after the report back to the CEOs of large retailers and manufacturers, as well as leaders from labour and the government. 

“Over this period, we’ve been able to take an industry which had been decimated by imports and low investment, and stabilise it through the collaboration and partnership which the master plan has provided. These efforts have built a platform which has led, in just a short time, to increased local procurement; increased manufacturing employment; and better administration of imports at the country’s ports of entry,” Patel said at a media briefing after the meeting. 

The master plan was developed with the consensus of stakeholders in the sector and included undertakings by retailers to increase their procurement of locally manufactured products. In return, manufacturers in the sector committed to increasing investment in productive capacity and technology, while advancing transformation, inclusion, and worker empowerment. 

Workers in the sector committed to efforts to strengthen the industry and promote the “Buy South African” campaign in communities. 

The government committed to an upgrade of customs enforcement to stem illegal imports; a competitiveness enhancement incentive programme; and implementation of appropriate tariffs and rebates for the sector. 

The department of trade, industry & competition has provided R2.5bn to the industry to improve its competitiveness and productivity. In addition, R4.4bn in loan capital has been provided by the Industrial Development Corporation to help increase productivity and help meet increasing local demand. 

“The decrease in imported volumes, accompanied by increasing declared values, is great news for the industry and jobs,” Patel said. “It means that we are making progress to levels where imported clothing and footwear are being declared at their fair prices.

Import fraud

“The industry has faced systematic import fraud through under-invoicing of garments and their illegal import. This has the effect of unfairly pricing imports below their market value and depriving the fiscus of revenue for healthcare, education and crime-prevention. The support of the SA Revenue Service has been important and valuable,” the minister said. 

TFG CEO Anthony Thunstrom told the media that the past five years of collaboration and partnership under the master plan had been “immensely successful. The industry was on its knees, with many suggesting it was in terminal decline. However, since the master plan was implemented, we’ve seen an increase in investment, and today the industry is revitalised, employing more people than it did when we started this journey. 

“Investment and training have meant that we can manufacture as efficiently in SA as anywhere else in the world. We generate our best profitability on SA-made products. Local manufacturing has had a real positive impact on the performance of our business.” 

TCI Apparel Group CEO Herman Pillay added that since 2019 new companies in the sector had been established, many of them black-owned.

Patel said the CTFL industry today was vastly different from that of 1994, which was very inwardly focused and relied heavily on high tariffs and very low wages.

“Immediately following the introduction of democracy in SA, we were faced with two compounding challenges, namely reduction of tariffs agreed to by the previous regime before the end of apartheid; and the impact of China entering the global market. Many countries around the world lost their clothing industries. 

“Looking forward, we have identified a number of things we can do to take advantage of the emerging opportunities which the master plan brings. We need to consolidate and deepen the partnership, and improve the collaboration across the value chain from textiles to garment manufacture to retailers and workers. First, we need to strengthen footwear production in SA.

“Second, we want to identify additional products for localisation in clothing. Third, there needs to be greater visibility of SA-made products in retail stores and to address the challenge of certain non-SA online platforms that uses tariff loopholes. Finally, there is an opportunity to tell the transformation storyline better. We have a large number of black industrialists operating in the space,” he said. 

ensorl@businesslive.co.za