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Author Name: Diwa
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Lack of government infrastructure, an energy crisis and a growing terror threat in Pakistan all contribute... (0) Comment

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Will the chaos in the Pakistani Textile Industry be Beneficial to Nigerian Manufacturing?
Author: Diwa | February 17, 2015

Lack of government infrastructure, an energy crisis and a growing terror threat in Pakistan all contribute to turning away foreign investment. Increased down-times, loss of communication for up to weeks at a time and a higher cost of doing business is causing substantial losses to the Pakistani textile industry. Economic experts predict the energy crisis to continue in 2015 and they are predicting a severe water shortage this year which will create further issues and a problem in the flow of business in Pakistan. Instability drives costs and many companies are no longer willing to do business until the country stabilizes In a country where many are without power for up to 13 hours a day and oil and gas are as hard to come by as diamonds and gold, there is really no point in a foreign company trusting its manufacturing there at this current time in Pakistan. The ease of doing business has dropped significantly. Violent clashes, mass protests and government corruption play key roles in turning away foreign business who is not used to these kinds of issues in the countries that they are from. It is a completely unstable area of the world for many to trust. Many also find the country of Pakistan as a "safe haven" for terrorists and whether this is the case or not the perception is there. Textiles are a major export for Pakistan and many rely on the industry to make a living but the exports are decreasing.In 2014, Pakistan textile exports dropped 6.38%. The good news is the government seems to be stepping in to help this and the is signs of hope for the Pakistan market. However some key players have left and aren't looking back. Walt Disney pulled $200 Million dollars worth of yearly textile production from Pakistan and put the country on a banned list of approved supplier countries. The company labeled Pakistan as a risk to their flow of business. "After much thought and discussion, we felt this was the most responsible way to manage the challenges associated with our supply chain," said Bob Chapek, president of Disney Consumer Products in a statement. He added that the decision is based on a recent report from the World Bank, which assesses how countries are governed, using metrics like accountability, corruption and violence, among others. Canadian menswear label and retailer Kanati Clothing Co. also recently announced major losses in Pakistan due to corruption, down-times and supply chain issues. “As an organization that serves clients globally, we just can't afford the disruption and down time in Pakistan. Our clients depend on a fast and reliable service. We can no longer wait and hope for improvements in Pakistan" said company co-founder Liam Massaubi in a press release. He continued to say "We recognize when it is time to cut losses and move on. There are added benefits of a domestic manufacturing approach where we are able to control all of the variables, which we cannot do in Pakistan" Kanati Co. followed Walt Disney in placing Pakistan on a banned list of approved countries it will accept as a supplier. How can Nigeria benefit? The Nigerian textile market was once a prosperous industry. The market collapsed a few years ago and the entire industry felt the losses. Many factories were left abandoned to decay and many were left without jobs. The resurrection of African textiles is happening and the industry is seeing substantial growth. Many foreign entities are now focusing on Africa with its large untapped workforce and vast amounts of resources. African countries are now seeing a surge of foreigners looking to produce and the industry is set to boom once again. Costs have increased in China, Vietnam and Pakistan, more companies are shifting their focus to Africa's textile manufacturing. Close to 10% of the worlds cotton comes from Africa. However it is mostly exported to Asia. By 2040, Africa will have 1.2 billion people of working age which will be bigger than India, China and Pakistan. Swedish label H&M built a factory in Ethiopia and the US company PVH which produces for labels like Calvin Klein and Tommy Hilfiger plan to produce in Kenya. In Nigeria, the textile industry collapsed years ago and many factories are in the late stages of decay. There are however signs things are improving and the Nigerian textile market is gaining some traction. The managing director of the Nigerian Export Council, Mr. Olusegun Awolowo, recently urged Nigerian textile manufacturers to tap into the $850bn global market. Awolowo, who was represented by the Acting Zonal Controller, NEPC Lagos, Mrs. Evelyn Obidike, said at a stakeholders' forum of garments textile and apparel producers that of recent, the present administration had launched the Nigeria cotton, textiles and garment policy to boost the sector. According to him, future global market for textiles and apparel is expected to expand drastically. “It is going to be a challenging market, full of risks and unbelievable opportunities. Therefore it is important for the stakeholders to take cognizance of skills, competences and key trends to avoid pitfalls,” he said. The Nigerian textile market is on its way back and will soon be a global competitor as more business comes to Nigeria and Africa as a whole. African countries are more likely to trade with each other as costs are far better than sourcing elsewhere. With Pakistan's economy pushing companies away and Africa's industry coming back with arms wide open; we are sure to see a further increase in African production. A willing labor force, stability and good price points are available in Africa's growing marketplace.

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