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09Africa.docxTWO ARTICLES THIS WEEK. READ BOTH.
From shrub to shirt to shelf; A cotton boll's journey
The Economist. 423.9039 (May 6, 2017): p44(US).
Copyright: COPYRIGHT 2017 Economist Intelligence Unit N.A. Incorporated
What the tale of a T-shirt reveals about Africa's manufacturing potential
HUNDREDS of bright blue T-shirts with the slogan "smile" pass down a row of tables where they are inspected, folded, bagged and tagged. From here they will embark on an arduous journey of more than 1,000km (600 miles). A lorry will haul them from Kampala, Uganda's capital, across Kenya to the port of Mombasa. A week later they will be loaded onto a ship for Hamburg, Germany. There they will be sold for [euro]10 ($11) each by Bonprix, part of a family-owned mail-order firm with sales of $13bn a year.
These shirts began as cotton bolls in fields on the equator in the far west of Uganda, where the red-earth plains turn upwards into the Rwenzori mountains. Their odyssey reveals much about Africa's manufacturing potential. By following in the footsteps of China and Bangladesh, which began their industrial revolutions with textiles, Africa could in theory create millions of jobs. But as the T-shirts' travels also illustrate, it will not be easy.
Several African countries have tried in the past to become tailors and cloth-makers to the world. Nigeria's northern cities of Kaduna and Kano were once home to textile mills that employed 350,000 people. Yet these factories are now rusting, and employ perhaps a tenth of that number.
This mirrors a wider trend. In 1990 African countries accounted for about 9% of the developing world's manufacturing output. By 2014 that share had slumped to 4%. As the world's labour-intensive jobs left the rich world for countries with lower wages, Africa lost out to Asia because of bad governance, political instability and poor infrastructure. Another shift of similar proportions now seems in the offing as China grows richer. But there are some signs that, this time, Africa might catch the wave of industrialisation.
In the shade of a large tree just a few kilometres from Uganda's border with the Democratic Republic of Congo, a group of farmers have gathered to discuss their bumper cotton crop and the obstacles they had to overcome to grow it. Elephants sometimes rampage out of a nearby game reserve and trample the neat rows of cotton, they complain. They plant barriers of chili peppers and keep beehives to keep the jumbos out.
Markets are even less predictable than pachyderms. All the farmers at this meeting are tenants who rent small plots. "When the price of cotton goes up, so does the rent we pay," says one woman bitterly. African farmers, who use ox-drawn ploughs and pick cotton by hand, are competing against vast mechanised farms in Texas that still receive subsidies. About 80% of Uganda's cotton is exported, but because its fields are far inland and the cotton has to travel over rutted roads past rapacious officials, the price these farmers receive is only 60-70% of the international benchmark for delivery to Asia, a lower share than goes to American farmers.
Yet the Ugandan farmers' income is rising because of two changes further along the chain between shrub and shirt. One occurs at the ginnery, where huge clumps of seed-studded fluff are shovelled into gigantic machines that clean and comb them. At the entrance, two officials of the government's Cotton Development Organisation diligently record each sale in order to tax it. The money goes back into buying good seeds and pesticides that are then given to farmers. New seeds introduced from Zimbabwe last year produce bolls that yield about a third more usable cotton than the old variety.
Better farming techniques also help. Western Uganda Cotton Company (WUCC), a ginnery with British shareholders, is trying to get more of the fluffy stuff by training farmers about when to weed and how to space out the seeds as they plant. Those who follow these instructions have seen their yields double to about 600kg an acre (twice as much as farmers in America manage--a testament to Uganda's fertile soil). "I will double my cotton planting next year," says Joshua, a middle-aged man. But farmers face huge hurdles in doing so, even though there is plenty of land available. One says that after setting aside money for her children's school fees she will have enough left to rent only a single acre again next year. Borrowing is not an option. Bank loans are too expensive and cheap ones from government agencies are wrapped in red tape.
Although Uganda still exports most of its cotton, the bags of lint emerging from WUCC's ginnery are trucked to Fine Spinners Uganda, a factory in Kampala that turns them into clothing. Because the factory is so close to the fields, the cotton it buys costs much less than it would in Asia, giving it a small advantage over competitors from places such as Bangladesh, the world's second-largest clothing exporter.
In this plant employees gingerly open the bales of lint and feed the cotton into an assortment of machines that first spin it into yarn, then knit it into cloth and dye it. Then the fabric follows an orderly procession past long lines of work stations where it is cut and then stitched back together. Colourful designs are printed onto the finished shirts. Some will be flown out to California to be sold by EDUN, a clothing brand started by Ali Hewson, an Irish businesswoman, and Bono, her rock-star husband. Others are for sale in a local market that has been squeezed by imports of second-hand clothing. The rest are destined for Europe, where they will have to compete on price with imports from Asia.
Uganda's main advantages, for the moment, are cheap cotton and labour, and preferential access to American and European markets. When exporting to the rich world "Africa has an 18-35% duty advantage over any other continent", says Nick Earlham, a shareholder in WUCC and in Fine Spinners. "It's very competitive."
Textile workers in Kampala earn about $85 a month, compared with $150 in Kenya and $108 in Vietnam, never mind up to $700 in China. But these savings are offset by problems in almost every other sphere. Power cuts keep plunging the factory into darkness, and an erratic supply of steam to the dyeing machines makes it hard to ensure that each batch of fabric looks alike.
In a cramped meeting room alongside the factory, executives of Bonprix visiting from Europe make their unhappiness clear. Their inspectors in Hamburg are discovering more defects than they would like, and one big shipment of T-shirts will be unexpectedly late. "What would happen if this item was on the cover of our catalogues?" one asks.
Yet for all the tough talk, Bonprix is placing orders at higher prices than it might pay elsewhere and offering technical help to nurture an industry which it hopes will, in time, become competitive. As its rivals look to countries such as Vietnam and Bangladesh, which are starting to replace China as big suppliers of clothing, Bonprix is already seeking out the countries that will, in turn, replace them. "East Africa has a lot of potential to develop a strong textile and garment industry," says Rien Jansen of Bonprix. As Asia grows richer, its pool of cheap labour will eventually run dry--and Africa is next in line.
In turning to Africa, the company is helping to generate what may become a huge wave of exports. After years of stagnation, east Africa's clothing industry has more than doubled its exports since 2009 (see first chart). Dirk Willem te Velde of the Overseas Development Institute, a British think-tank, reckons that this is not only because of rising wages in Asia and preferential access to markets. As important, he argues, are investor-friendly government policies, as well as improvements in infrastructure that have cut transport costs.
These are starting to reverse the factors that held Africa back during the previous big shift in the global economy. But unless Africa's leaders keep improving governance, investing in skills and developing infrastructure, as well as opening up to foreign investment, they may miss out on the next wave of industrialisation, too. Robots are not yet much good at fiddly sewing jobs on floppy fabric; less than 0.1% of the world's industrial robots are in the clothing trade. But they will improve.
Source Citation (MLA 8th Edition)
"From shrub to shirt to shelf; A cotton boll's journey." The Economist, 6 May 2017, p. 44(US). Academic OneFile, libproxy.clemson.edu/login?url=http://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=clemsonu_main&v=2.1&id=GALE%7CA491106386&it=r&asid=e299edd4f8492f84d19907e27d224a8c. Accessed 9 Aug. 2017.
Gale Document Number: GALE|A491106386
A thousand golden stars; China in Africa
The Economist. 424.9050 (July 22, 2017): p36(US).
Copyright: COPYRIGHT 2017 Economist Intelligence Unit N.A. Incorporated
Full Text:
China is making its presence felt across the continent in ways big and small
IN CRISP white uniforms and standing to attention beneath a fluttering red flag with five golden stars, the sailors on board the People's Liberation Army ships setting sail for Djibouti on July 11th represent a significant step for China. When they arrive they will open the Middle Kingdom's first military base abroad since the Korean war.
It is a canny first foray. China has prepared the ground with low-key deployments of blue-helmeted troops to UN operations in places such as South Sudan. And it has placed the base in a country that is likely to cause the least offence.
America already has a large airfield and naval station in Djibouti. From there it conducts counter-terrorism operations, and watches the Gulf of Aden and the Red Sea, both much used by smugglers trafficking drugs, weapons and people. And China's main regional rival, India, cannot argue that the installation represents a significant projection of power into an ocean it regards as its own. The base will mostly be a logistics hub for a naval squadron China has long sailed in these waters, escorting commercial vessels. Still, the hoisting of a red flag over African soil will be the most visible sign yet of China's growing assertiveness on a continent that was once the playground of Soviet and Western powers.
The base represents but the tip of a fast-growing bamboo shoot. The next segment down is a vast effort aimed at enhancing China's soft power in Africa and at promoting the so-called "China model" of authoritarian, state-driven development as a counter to Western efforts to spread liberal democratic capitalism. Much of this is done through political training programmes whereby members of ruling parties, labour unions and ministries are taken to China to meet the members of the Chinese Communist Party. Its best student is Ethiopia, where the ruling EPRDF party has copied much of what it has seen in China, tightly controlling business and investment, and imitating China's Central Party School and party cadre system.
China's attempts at spreading its view of the world go far beyond Ethiopia, albeit with varying degrees of success. In South Africa, for instance, more than half of the members of the executive committee of the ruling African National Congress have attended such schools in China, a country the party calls its "guiding lodestar".
China is, like the West, strategic about the ways in which it doles out aid. A study by AidData, a project based at the College of William and Mary in Virginia, found that countries that vote with China in the UN General Assembly get considerably more money than those that do not.
China has also spread its influence in less visible ways. Victoria Breeze and Nathan Moore at Michigan State University reckon that in 2014 the number of African students in China surpassed the number studying in either Britain or America, the traditional destinations for English-speakers (France still beats all three, however). Much of the growth is because China has given tens of thousands of scholarships to African students, the academics say. If efforts such as these are aimed at burnishing China's image, then they are working. Afrobarometer, a polling firm, found that 63% of people in 36 African countries consider China to be a positive influence. Nevertheless, it also found that African people still think China's development model ranks second after America's.
That may change in time, since by far the main part of China's involvement in Africa is in business. In the past decade, Chinese loans and contractors have, quite literally, reshaped much of the continent's infrastructure, paying for and building new ports, roads and railways. In many cases, this has been matched by investments in mines and manufacturing plants, shopping centres and corner stores. The scale and extent of China's business interests are easily visible, whether in a hotel in Rwanda, where the writing on all the fittings, from elevators to shampoo dispensers, is Chinese; or at a roundabout in central Accra, where a crew of Chinese labourers are repairing the road.
This flow of Chinese money and workers has prompted some to gush that China is becoming Africa's most important economic partner, and others to fret that it is the new colonial master. In a recent report McKinsey, a consulting firm, looked at five measures of Africa's economic connection with the world: trade, investment stock, investment growth, infrastructure financing and aid. It found that China is among the top four partners in each of these. "No other country matches this depth and breadth of engagement," it enthused.
Yet others are more sceptical, arguing that many overestimate the sums that China is investing in or lending to Africa, because they add up pledges rather than actual flows. A close parsing of the data by David Dollar, an economist, finds that China accounts for only about 5% of all existing investment in Africa, and a similar share of new investments. America's investment stock is twice as much.
"The notion that China has provided an overwhelming amount of finance and is buying up the whole continent is inaccurate," he argues. That matches with work by Deborah Brautigam, who leads the China Africa Research Initiative at Johns Hopkins University. She found that little more than half of announced Chinese loans to Africa actually materialised.
Yet look beyond official loans or the work of big Chinese state-owned companies, and there are signs of a deeper Chinese involvement. McKinsey's work suggests that there are as many as 10,000 Chinese companies operating in Africa, 90% of them privately owned. Many also reported earning juicy returns, in some cases enough to pay back their investments in less than a year. Many said they planned to keep investing because of the plentiful opportunities to make money.
Yet even as those small firms make money, it is far less certain that Chinese investments in big infrastructure such as the railway line linking Mombasa's port and Nairobi in Kenya will ever show a return; there is even less chance of recovering the cash sunk by Chinese state-owned firms into poorly governed places such as Angola and the Democratic Republic of Congo. In this China seems to be repeating many of the mistakes made by Western donors and investors in the 1970s, when money flowed into big African infrastructure projects that never produced the expected economic gains. In a decade or so China may find itself in the position the West once did, of having to write off many of their loans to African governments. Unless of course those sleek navy ships in Djibouti are ever put to use collecting overdue debts.
Source Citation (MLA 8th Edition)
"A thousand golden stars; China in Africa." The Economist, 22 July 2017, p. 36(US). Academic OneFile, libproxy.clemson.edu/login?url=http://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=clemsonu_main&v=2.1&id=GALE%7CA498888337&it=r&asid=6015799a4c642f4dbd903b57e11ef0df. Accessed 9 Aug. 2017.
Gale Document Number: GALE|A498888337
