Mushosho raises red flag over economic headwinds

STAFF WRITER

Edgars Stores Limited chief executive officer Sevious Mushosho has raised concerns over various challenges threatening the viability of the textile and clothing industry following the closure of many players over the past years in the sector.

The sector was heavily hit by the informalisation which is perpetuating illegal second hand imports and rampant smuggling.

In a letter addressed to the Industry and Commerce Minister Mangaliso Ndlovu, Mushosho said the sector will continue to dwindle if no action is taken.

“Most formal retailers have closed down while others have downsized and maybe on the brink of collapse.The formal clothing retail has been shrinking at a faster pace over the last decade due to challenges facing our industry, including : declining employment levels, ineffective enforcement of statutory instruments against second-hand product [illegal imports and rampant smuggling], high production costs, taxation and regulations and limited capacity in local textile manufacturing for the fashion business,” Mushosho said.

“These issues need to be tackled systematically and consistently to ensure the continued viability of the cotton to clothing value chain.”

Local producers like David Whitehead, are currently unable to supply essential fabric types such as denim, suiting, chiffons, and blended fabrics.

This comes on the heels of struggle within the sector where some players have gone to the Ministry to have the monopoly of supplying fabric across the whole sector, a move which was quickly shot down as it came.

Edgars and various players were not happy with the proposal resulting in the Ministry backtracking on the issue.

Mushosho urged the Ministry to call all players to find common ground rather than implement a policy based on few players.

“We urge policy makers and stakeholders not to destroy one facet of the value chain as they seek to assist another but Instead, they should find a middle ground which promotes the growth of the whole sector,” Mushosho said.

He said other players were made aware of the representation to the Ministry of Industry and Commerce made by very few players including David Whitehead.

“We are advised that one of the decisions made in this meeting was to request for the imposition of import and export permits or licenses on textiles and clothing. We submit that this request, if granted by the Ministry, has far reaching implications on the conduct and continuance of clothing business in Zimbabwe. We opine that concerted effort should have been made to ensure that all key stakeholders have had an opportunity to impact on this discussion and the decisions thereof to protect the viability of both manufacturers, textile. companies and retailers.

“We suggest that a position paper ought to have been produced following this initial engagement for further discussion by all key stakeholders. We are aware that several key suppliers and retailers were not involved in the May 15 discussions, despite their history of constructive engagement with these bodies on matters of mutual interest,” Mushosho said.

“We are alive to the fact that clothing retailers were not even invited to this engagement and yet a key decision was made which affects the day-to-day running of their businesses.”

Edgars strongly oppose the proposed import permit intervention due to the following anticipated impact: increased costs which will undermine the competitiveness of our products (further distortion of the competitive landscape), contradiction with the Government’s ease of doing business agenda, introduction of a bureaucratic hurdle which does not really promote business, hindrance to operations involving international brands, unfair advantage to informal traders who do not contribute to the fiscus (who will continue to smuggle goods while formal trade is encumbered with another regulation) and prolonged ordering cycles due to the added administrative hurdle of applying for the import license

Edgars boss said the company is in the middle of the retooling exercise at the factory while also revamping its stores to make them more modern but is sensitive to the need to give the end customer the best quality and cost possible as a way of promoting the purchase of locally produced goods.

He said the apparel concern should have multiple options to shop worldwide including online rather than tied to David Whitehead which is still on the recovery path.

“We note that fabric out of David Whitehead is priced higher in comparison to other source markets. Twill fabric from David Whitehead costs $3/m while twill fabric from other source markets is at an FOB cost $2.35/m (and is of higher quality – with spandex) and about $2.10/m for a similar finish (42% more expensive). We would urge the local supply markets to match or better prices from the global market since we are using cotton grown locally (costs associated with overseas beneficiation are excluded). This would assist us with our production cost as we are struggling to compete with the informal markets with smuggled goods,” Mushosho said.

Going forward, Mushosho has called for multi-sectoral engagements, partnerships between clothing and textile industry members to ensure alignment to customer needs and a consolidated response to Zimbabwe’s financial and market dynamics, including the sharing of information on demand and market trends and capacitation of the whole value chain through implementation of fiscal incentives to attract investment and promotion of partnerships between local investors and foreign capital.