WATCH: Weak rand: help or hindrance for SA’s textile industry?
PRECIOUS Moloi-Motsepe, founder and executive chairperson of African Fashion International, tells Business Day TV that the weak rand can be both a help and a hindrance for the local textile and fashion industry.
The rand is 18% weaker against the dollar than it was at the beginning of 2015 and has lost more value over the last five years.
Moloi-Motsepe says the weak rand puts most designers and manufacturers in a position to export their goods and improve their income.
The industry also experiences what is known as the lipstick effect, whereby consumers shun big-ticket items such as cars but rather opt for luxury fashion and make-up. She says in the short term, consumers look for cheaper items but in the long term, producers and retailers are looking at exporting their goods.
The weak rand has, however, also been a hindrance particularly for designers, whose highest input costs are fabrics — 55% of which are imported. This, in turn, makes it difficult for designers to pass the saving onto consumers.
"There have also been discussions and talks around how we try and do what the Department of Trade and Industry has done so well for the vehicle manufacturing industry in terms of the rebates, and we can look at how we could create some form of rebate for imported fabrics," she said.
The government’s efforts to boost the labour-intensive clothing and textile sector through various support measures, such as incentives and industrial financing is beginning to pay off, with the sector contributing R5bn in annual export revenue.
Small scale producers who previously struggled to compete with international players are now enjoying stronger demand for their local goods.
The Department of Trade and Industry believes the local textile industry is globally competitive.
Abisha Tembo, chief director of textiles in the department, says most of the airbags found throughout the world are produced in Kwa-Zulu Natal. Parachute fabrics are also manufactured locally and exported. "We are exporting not only into Africa, but worldwide". He says there is a constant push by the department to engage international retailers to work with local manufacturers.
The government has, to date, invested R1.2bn into improving the competitiveness of the industry.
Moloi-Motsepe says there is more work to be done to improve jobs in the sector. The goal by 2020 is to create approximately 7,000 more jobs and improve the small,
medium and micro-sized enterprises (SMME) space by establishing more than 400 SMMEs.
• News Leader airs on Business Day TV channel 412