Inside Ghana’s collapsing textile industry

The country, according to Ghana’s Revenue Agencies Governing Board (RAGB), is losing about 300 billion Ghanaian old Cedis in potential revenue annually through smuggling of textile materials. Like the situation in Nigeria, Ghana’s once thriving textile market is now flooded with the Chinese sub-standard textile products, thereby surging the country’s unemployment index. A collapsing textile […]

The country, according to Ghana’s Revenue Agencies Governing Board (RAGB), is losing about 300 billion Ghanaian old Cedis in potential revenue annually through smuggling of textile materials. Like the situation in Nigeria, Ghana’s once thriving textile market is now flooded with the Chinese sub-standard textile products, thereby surging the country’s unemployment index.

A collapsing textile industry

According to a report by the Institute of Statistical, Social and Economic Research, Legon on Ghana’s textile and garment industry, the Ghana’s textile industry employed some 25,000 workers which accounted for 27 percent of total manufacturing employment in 1977. By 1995, however, employment within the sub-sector had dwindled to a mere 7,000; declining further to 5,000 by 2000.

Investments within the textile industry are mainly by local firms. Out of the 40 textile and garment industries within Accra-Tema, findings revealed that that only five percent were involved in joint ventures with foreign investors. The remaining 95 percent were locally owned.

The situation seems to further deteriorate as employment index continues to nosedive. As at March 2005, the four major textile companies in Ghana employed a total of 2,961 persons. Whereas, by mid 1970s, findings revealed, about 16 large and four medium sized textile companies had been established in Ghana; while the garment industry also had some 138 medium and large-scale garment manufacturing companies.

Like the industry’s fate in Nigeria, inconsistent government policies over the years, according to experts, have contributed largely to the continuous decline in the sub-sector. Currently, the four major companies that survived the turbulence in the sub-sector are the Ghana Textile Manufacturing Company (GTMC), Akosombo Textile Limited (ATL), Ghana Textile Product (GTP), and Printex; with GTP maintaining the lead in the industry, the report indicated.

Sunday Trust investigations revealed that with the exception of the Akosombo Textiles Limited (ATL), other textile companies have all shut down their spinning and weaving departments due to cheap imports from abroad, particularly China. Consequently, hundreds of workers employed in those sections, which as also the labour force in the industry, were sack.

This complaint was echoed by the General Secretary of Ghana’s Textiles, Garment and Leather Employees Union (TEGLEU), Comrade Abraham Koomson when he spoke to Sunday Trust in Accra.

The union leader said that “GTMC realised that it is better to import the processed cotton from China, which is cheaper than employing people to process the cotton. This made them do away with spinning and weaving departments, thereby sacking more than 3,000 workers.”

The Ghana Textile Printing (GTP), he said, “used to have a spinning and weaving department called Yeboa Textile Limited. But they had to dispose of the spinning and weaving departments in 2005. The GTP is also into printing only. They don’t spin, they don’t weave. They import the processed cotton from Nigeria, China and Holland which is cheaper. They are situated in Tema and it employs about 600 workers against the over 2,700 it used to have.”

The union scribe said that the Printex, which was formerly known as Sprintex, was hitherto, into spinning, weaving and printing. “They are also facing the same challenges and the government was not coming to their aid. So, they had to scrap the spinning and weaving departments. Now they employ about 600 workers and they import all their fabrics from China.”

Comrade Koomson added that the Akosombo Textile Limited (ATL) is the “only fully integrated textile factory in Ghana. They have spinning, weaving and printing departments.  They employ about 1500 workers currently. It is also facing serious challenges.”

He explained that, what the surviving textile companies are doing now “is to simply import the processed cotton, colour it and print it. That is all. And they were making it. The fact is that, as a private person the essence of business is to make profit not to create jobs for people. The responsibility of creating jobs lies with government. If government is not coming to your aid, why would you spend money to create jobs for people that you are not supported to cater for?”

Ghana’s textile products

The Ghanaian textile industry is mainly concerned with the production of fabrics for use by the garment industry and also for the export market. The sub-sector is pre-dominantly cotton-based, though the production of man-made fibres is also undertaken on a small scale. The main cotton-based textile products include: African prints (wax, java, fancy, bed sheets, school uniforms) and household fabrics (curtain materials, kitchen napkins, diapers and towels). These products form the thrust of the industry.

On the other hand, the main products of the man-made fibres (synthetics) and their blends include uniforms, knitted blouses, socks, among others. These products are mainly made from polyester, acryl and other synthetics. There are also a number of small firms which hand-print their own designs onto bleached cotton fabrics, also known as tie and dye or batik cloth.

Not only that, the sub-sector is famous for the production of the traditional textiles such as Kente cloth (traditional woven fabric), Adinkra cloth (traditional hand printed fabric) and other types of woven fabrics used for various purposes such as smock making etc.

According to official statistics, the country’s total industry output peaked at 129 million yards in 1977 with a capacity utilisation rate of about 60 percent. GTP maintained the lead in the industry with an annual production of 30.7 million yards.

This was followed by GTMC, ATL, and Printex with production levels of 15 million, 13 million and 6 million yards, respectively. Unfortunately, total industry output declined from its 1970 level to 46 million yards in 1995 but recovered to 65 million yards in 2005.

As at March 2005; GTP was producing nine million yards, ATL 18 million yards, GTMC 2.24 million yards and Printex 9.84 million yards. A total annual output of 39.04 million yards was produced by the industry as at March 2005, which translated to an average of 49.4 percent of initially installed capacity of the four firms. Thus, output had declined from 65 million yards; in 2000 to 39 million yards in 2005.

Unwholesome textile imports

Ghana’s textile industry imports a lot of its raw materials for its operations and also finished goods. These imports of raw materials are mainly from the Netherlands, China, India, the US, the EU, Nigeria, Thailand, among others. The country’s textile imports includes dye stuffs and chemicals, calico, khaki fabric, prints and finished textiles and garments of various kind like new dresses, bed sheets. It also used textile goods like blankets, clothing, curtains, accessories, like zippers, fasteners etc.

Machinery, equipment and spare parts are also imported for use in the sub-sector. Whereas, raw material imports such as cotton are complementary to local production, imported African prints from Nigeria, Côte d’Ivoire and South-East Asia seems to crowd out local production. These finished products often bear the patent designs, logo and trademarks of local textile industries, which are sold on the local market at a very cheap price.

Comrade Koomson told Sunday Trust that the Chinese “imitate our original designs. There are certain designs that are very dear to the people of Ghana which the local industries depend on, which the Chinese imitate.”

“Also, the Chinese pirates even the names of the indigenous companies in their products. For instance, you can easily come across a China fabric with a GTP, Printex or ATL name and logo.  They have gone to the extent of even destroying the market for the local textile firms by mass producing of inferior goods. They don’t use the appropriate chemicals on the fabric; that is why after washing it once it fades,” Koomson said.   

Statistics from the Ghana’s Ministry of Trade and Industry indicated that in 1992, the country imported 35 million US dollars worth of fabrics and garments. This figure rose to 57 million US dollars in 1998. By the first half of 1999, 42 million US dollars worth of fabrics and garments were imported. It was estimated also that at the end of the first quarter of 2005, imported textile prints accounted for 48 percent of total textile prints in the Ghanaian market.

Sunday Trust findings revealed that the local market is facing stiff competition from finished imported textile prints such as calico, grey baft, furnishing materials usually from Côte d’Ivoire, Nigeria, China, and most recently from India and Pakistan.

The Managing Director of Ade Heritage Enterprise, Mr Shina Addy told Sunday Trust in Accra that strong security measures should be put in place to checkmate the influx of the Chinese textile products into Ghanaian market. “It is killing the local industry. Everyone is now going for the Chinese products because they are cheaper. The locally produced fabrics are being abandoned,” Addy said.

Though consumers argued that the locally produced Ghanaian fabrics are relatively better in terms of quality, the market for imported products keeps on increasing by the day due to the products’ attractive colours, new designs, softer and glossier finish.

Even when the government limited the importation of textiles to a single entry point at Takoradi Port and instructed officials to conduct strict physical inspections of imports and to confiscate textiles brought into Ghana through unauthorized land routes, the situation didn’t adequately improved.

This development, according to Bernard Mfodwo, Director of Research, Information and Statistics at the Ghana’s Ministry of Trade and Industry, is very worrisome because even “when we make it hard for importers, there is more room for corruption. They don’t want to travel all that way, so they smuggle their goods under fishing boats or pay off officials.”

Comrade Koomson said that some of the major problems facing the textile industry is the evasion of duty on imported African textile prints. “Most of the importers evade taxes. So, if they import these textile materials from China, instead of bringing them through the Ghanaian ports, they stop at Lome, Togo Republic, discharge the goods there and hire trucks for onward delivery through some illegal routes to Accra. They only give some tips to the custom officials and avoid paying all the statutory duties they are expected to pay,” he said. 

Dwindling textile exports

The country’s textile export is a major source of foreign exchange and revenue to textile manufacturing firms. Textile exports generated 27.2 million US dollars in 1992 and this increased to 179.7 million US dollars in 1994. Thereafter, revenue from exports declined consistently, and by 1998, the figure decreased to 3.173 million US dollars, according to the Ministry of Trade and Industry’s record.

It also revealed that in 2000, the country’s exports of Ghanaian textile and apparel to the US market amounted to 550,000 US dollars in 2002; 4.5 million US dollars in 2003 and 7.4 million US dollars in 2004. Also, imports of US textile and apparel were pegged at 8.87 million US dollars, 12.73 million US dollars and 11.48 million US dollars, respectively, over the same period.

The decline in textile exports from 1992 to 1998, the report indicated, can be attributed to internal and external bottlenecks, particularly within the ECOWAS sub-region due to trade barriers. Some of the trade barriers include, among others, imposition of 20 percent duty by Côte d’Ivoire (contrary to ECOWAS regulations), transit tax collected at Benin, extortion by Nigerian authorities, and the risk of currency devaluation.

Poor packaging of some manufacturers also serves as a barrier to exports to markets such as the EU and the US. Also, poor finishing of products (quality and conformity to standards), technical barriers, inability of some manufacturers to meet export orders on schedule, high tariffs charged in some export destinations of Ghanaian textile, to mention but a few.

The main export destination for made-in-Ghana textiles as at 2004; included the EU countries, 55 percent; the US, 25 percent; and ECOWAS, 15 percent. The remaining five percent is exported to other countries, mostly Southern and East African states; that included South Africa, Zimbabwe, Namibia, Ethiopia, among others.

The exported textile products comprises of fancy prints, wax prints, Java prints, calico smock, ladies dresses and men’s wear. The indigenous textile products like Kente, Adinkra, Fugu are also exported. Others are batik or tie and dye fabrics, which is also used to produce all kinds of products for the exports market. These products include a unique brand of carefully crafted handbags, casual wear for ladies and gents, shirts, dresses, napkins, cushion covers, bedspreads, chair backs, curtains, toys and many others.

Ghanaian traders count losses

The Ghanaian textile and garment traders, who are the most affected victims of this development, are currently recording financial losses as a result of the floodgate of substandard Chinese fabrics into the country’s market.

This was revealed by some of the traders interviewed by Sunday Trust in Makola Market, Accra. Madam Comfort Aacas, a trader, said that Chinese imitation of the local fabrics is really causing them huge financial loss.

“I spent a lot of money to engage the services of artists to design my fabric. I also paid the textile factory the roller fee to print my fabrics all in the interest of my customers. But surprisingly, the same fabric I paid for its design and printing, end up being imitated and mass- produced by the Chinese,” the trader said.

“How could a Chinese print a design in my local language? This is fraudulent and is causing us serious financial loss,” Aacas said. This development, according to her, is also a boost to the unemployment rate in the country.

Kwaku Anane, another trader, blamed the Ghanaians patronage of the substandard fabrics to their “low purchasing power. Also, the situation is aggravated by the corrupt acts perpetrated by some officers of the law enforcement agencies managing our various borders.”

He said that the task force should concentrate on preventing the smuggling of the fabrics at the borders rather than confiscating them from the retailers at the markets. Another trader, Esther Glover, said that the Chinese substandard fabrics which are usually cheaper are mostly bought by farmers.

Madam Joyce Mensah of Allders Enterprises said that both the Chinese and Ghanaian products are of the same quality. “When I first start selling textile products, I was selling Ghana products but it is very expensive.  In some instances, I incurred heavy loss in the process,” she said. She explained that “the poor Ghanaian farmer lacks the economic might to buy Ghana products. That is why they settled for the cheap one which is the Chinese product.”

A customer, Veronica Aguze, told Sunday Trust that aggressive marketing of the smuggled fabrics is responsible for its patronage. “The distributors of the Chinese fabrics go house-to-house marketing the products, offering mouth-watering discounts. Also, the prices of the fabrics are cheaper compared to the made-in-Ghana fabrics,” she said.

She said that due to the economic realities in the country, “Ghanaians don’t really bother about quality. Their concern is what their money can buy without hassles. The situation is all about doing the right things by the relevant authorities.”

Not all consumers are bothered by this. Messie Teteh told this reporter that “look at this cloth I am wearing, I have been using it for more than two years and its colour has not faded. But if it were a Chinese product, by now it would have faded.”   

Despite their grievances, the traders still believed that, a synergy among stakeholders in the industry is capable of addressing the situation. “The politicians and captains of the industry,” according to Mensah, “should be blamed for refusing to import new machines that will strengthen the industry’s productivity to withstand foreign products.”

“It is not late for the government, the textile and garment manufacturers, traders, among other relevant stakeholders to put hands on deck with a view to reverse the menacing trend,” Anane said.

confiscate and destroy solution

The government, according to Mr Appiah Donyina, Acting Director, Import and Export in the Ghana’s Ministry of Trade and Industry; is currently working out modalities aimed at checkmating the current trend by providing conducive interest rates regime, adequate and subsidized energy, among other manufacturing- friendly incentives.

Since 2005, he said, the government took steps to address the issues and directed that “imported African prints, real super wax, block prints, super real wax, imitation wax, java and fancy prints-were being regarded as ‘high risk goods’ and should be subjected to 100 percent physical examination jointly to be conducted by Customs, Excise and Preventive Service (CEPS) and the Ghana Standards Board (GSB) at the entry points.”

“The new measures formed part of the guidelines to control the numerous unfair trading practices as evasion of import duties and other taxes, under invoicing, poor quality prints, pirating of patents and trademarks,” the government declared.

The apparent inefficiency of these measures brought about the industry’s stakeholders adoption of an immediate solution aimed at halting the Chinese invasion of the country’s textile markets, thereby saving the jobs of many Ghanaians.

Comrade Koomson said that they had to appeal to government to set up a taskforce, comprising representatives of the security agencies, Ghana Standard Board, the local manufacturers and the trades unions to conduct periodic checks at the point of sales of smuggled products, with a view to arresting culprits and confiscating goods smuggled into the country.       

“With the establishment of the task force by government, we were empowered to undertake and monitor movement of the pirated and smuggled fabrics, target warehouses situated in the towns and cities and make arrests. We also sensitize the public about the necessity for the seizure and destruction of these textile prints,” he said.

He said even with this, there are still some challenges. He said “we have to arrest the goods and take them to the police station. The police also don’t know how to handle it; because they asked me whether I have the law that allows them to handle the case. We had to mobilise some workers to upload the trucks because the police don’t have ware houses.

“At a point, we met with some market women, the union leaders and the manufacturers and decided we have to take the bull by the by deciding our fate. This is because even if you arrest the smugglers and take them to court, the judges more often than not, behave funnily. The judge will seat there asking you (the complainant) to quote the law he can use to deal with them. Eventually, they will say there is lack of sufficient evidence and the suspects will be set free,” the labour leader said.

“Eventually”, he said, “we met on April 8, 2010 and decided to take the law into our own hands and deal with the smugglers. It was then that the government called us and we sat in a round table. It was thereafter agreed that the task force comprising of the customs, officials of the Ministry of Trade and Industry, the police, the manufacturers, the labour unions, will monitor, arrest and get the smuggled goods destroyed.”  

With this development, several smuggled textile fabrics were arrested and destroyed. It is not clear whether the arrest and destruction of smuggled textile materials will help in reviving the ailing Ghanaian textile industry. This solution, has so far, proved inefficient in Nigeria, as the textile sector remain comatose despite the confiscation and destruction of textile contrabands by the authorities.