TEXTILE AND CLOTHING VALUE CHAIN ROADMAP - ITC

1 K ENYATEXTILE AND CLOTHING VALUE CHAIN ROADMAP2016-2020 TEXTILE & CLOTHING VALUE CHAIN ROADMAP OF KENYATEXTILE & CLOTHING VALUE CHAIN ROADMAP OF KENYAThis VALUE CHAIN ROADMAP was developed on the basis of the process, methodology and technical assistance of the International Trade Centre ( ITC ). The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products and product brands does not imply the endorsement of ITC. This document has not been formally edited by VALUE CHAIN ROADMAP was elaborated within the framework of ITC s SITA project, a South-South trade and investment initiative that aims to improve the competitiveness of select VALUE chains through the provisions of partnerships from institutions and business from India.

2 SITA is funded by the Department of International Development ( DFID ).ITC is the joint agency of the World Trade Organization and the United Nations. As part of ITC s mandate of fostering sustainable development through increased trade opportunities, the Export Strategy section offers a suite of trade-related strategy solutions to maximize the development payoffs from trade. ITC-facilitated trade development strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors, allowing policymakers to choose their preferred level of International Trade Centre ( ITC )Street address : ITC, 54-56, rue de Montbrillant, 1202 Geneva, SwitzerlandPostal address : ITC Palais des Nations 1211 Geneva, SwitzerlandTelephone : + 41- 22 730 0111 Postal address : ITC, Palais des Nations, 1211 Geneva, SwitzerlandEmail : : http ://.

3 Jes s Al s VALUE CHAIN ROADMAP was elaborated as a component of the ITC Supporting Indian Trade and Investment in Africa ( SITA ) project, a south-south trade and in-vestment initiative that aims to improve the competitiveness of select VALUE chains through the provision of partnerships by institutions and businesses from India. SITA is funded by the United Kingdom Department for International Development ( DFID ).The formulation of the VALUE CHAIN ROADMAP was led by the Ministry of Industrialization and Enterprise Development ( MoIED ) with the technical assistance of ITC. This document represents the ambitions of the private and public sector stakeholders for the development of the sector.

4 Stakeholders commitment and comprehensive collaboration have helped build consensus around a common vision that reflects the realities and limitations of the private sector, as well as of policymakers and trade-related institutions. The document benefited particularly from the inputs and guidance provided by the members of the sector team. Name Organization Mr. Rajeev Arora Ministry of Industrialisation and Enterprise Development Mr. Joseph Nyagari African Cotton & TEXTILE Industries Federation Prof. Githiri Mwangi Jomo Kenyatta University of Agriculture & Technology Ms. Alice Waithaka Kenya Industrial Research and Development Institute Mr.

5 Thomas Puthoor Kapric Apparels EPZ Ltd Prof. Dorothy McCormick University of Nairobi Ms. Lucie Njoroge Association of Fashion Designers ( AFAD ) Mr. Joseph Wairiuko Kenya Association of Manufacturers Ms. Mary Nyayieka Technical University of Kenya Ms. Lucy Wambugu Technology Development Centre Mr. Sargar Alpha Knits Limited Ms. Margaret Waithaka Export Processing Zones Authority Mr. Herman Bigham Tosheka Textiles Mr. Thomas Puthoor ( Mombasa ) Kapric Apparels Ltd Amb. Dr. Joseph K. Kiplagat Ministry of Industrialization and Enterprise Development Ms. Rose Mwathi Handloom Weavers Marketing Cooperative Society Prof Josphat Igadwa Mwasiagi ( Eldoret ) Moi UniversityTechnical support and guidance from ITC was rendered through Eric Buchot, Alexandra Golovko, Olivier Marty, Hanna Bucher, Varun Vaid, Robert Kafafian, Carla Vaca and Carlos Griffin.

6 Nzuki Waita provided valuable support as the national SITA vCONTENTS viEXECUTIVE SUMMARY XIIVALUE CHAIN ROADMAP ILLUSTRATION XIVGLOBAL TRENDS 2025 LIVING THROUGH A TRANSFORMATIVE PERIOD 1 KENYA S T&C SECTOR IS AT A CROSSROADS 7 THE VALUE CHAIN IS STUNTED BY LIMITED INTEGRATION AND SUBOPTIMAL VALUE ADDITION 11 STRATEGIC ISSUES AND COMPETITIVE CONSTRAINTS 21 Supply side issues 23 Business environment issues 28 Market entry issues 32 Socio-economic and environment issues 33 STRATEGIC IMPLICATIONS FOR THE VALUE CHAIN ROADMAP 34 THE WAY FORWARD 35 THE STRATEGIC OBJECTIVES 35 LEVERAGING MARKET OPPORTUNITIES 39 FDI IS THE KEY TO USHERING IN A NEW ERA OF GROWTH 40 FUTURE VALUE CHAIN 43I.

7 Development of the TEXTILE production segment 45II. Further development of EPZs and establishment of TEXTILE cities to facilitate access to utilities 45 III. Development of the garment production segment and integration with the TEXTILE segment 46IV. Enhanced support services, particularly in the areas of TVET, sector coordination, finance, Customs and logistics 46 MOVING TO ACTION 47 VALUE CHAIN ROADMAP PLAN OF ACTION 49 APPENDICES 69 REFERENCES 79viiFIGURESF igure 1 : Trend towards greater VALUE addition 2 Figure 2 : Production trends in the garment sector 9 Figure 3 : Kenya s T&C VALUE CHAIN 10 Figure 4 : Kenyan cotton production 1940 / 41-2010 / 11 11 Figure 5 : Investment and exports in the EPZ garment sector ( 2008-2014 ) ( US $ millions ) 16 Figure 6 : Kenya s T&C export trends, by segment, 2004-2013 ( US $ thousands ) 18 Figure 7.

8 Kenyan exports of CLOTHING to selected markets, 2003-2013 ( US $ thousands ) 19 Figure 8 : Kenyan textiles exports by region 2004-2013 ( US $ thousands ) 19 Figure 9 : Kenya s apparel export growth ambitions 38 Figure 10 : Kenya s T&C future VALUE CHAIN diagram 44 APPENDICESF igure 1: Decomposition of Kenya s T&C export growth, 2004 2013 71 Figure 2 : Kenya T&C, Normalized Revealed Comparative Advantage ( NRCA ) ANNEX 72viiiTABLEST able 1 : Top exporters of CLOTHING , 2003-2013 4 Table 2 : Top exporters of textiles, 2003-2013 4 Table 3 : Comparison of costs and competitive factors between Kenya and major T&C competitors 8 APPENDICEST able 1: International business rankings of Kenya and its competitors 70 Table 2 : Kenya s exported garments with VALUE equal to or above US $ 10 million in 2013 ( US $ thousands ) 72 Table 3 : Kenya s textiles exports >= US $ million in at least two years between 2004 and 2013 73 Table 4: Time and cost to trade across borders in Kenya, Ethiopia and the United Republic of Tanzania 74ixACRONYMSThe following abbreviations are used.

9 ACTIF African Cotton and Textiles Industries FederationAGOA African Growth and Opportunity ActCAGR Compound Annual Growth RateCMT Cut, Make & TrimCOMESA Common Market for Eastern and Southern AfricaCSR Corporate Social ResponsibilityEAC East African CommunityEBAP Export Business Accelerator ProgrammeEPC Export Promotion CouncilEPZ Export Processing ZoneEPZA Export Processing Zones AuthorityEU European UnionFDI Foreign Direct InvestmentFOB Free on BoardGDS Global Development SolutionsHS Harmonized SystemICAC International Cotton Advisory CommitteeIIHT Indian Institute of Hardware TechnologyIL&FS Infrastructure Leasing and Financial Services ( India )ISO International Organization for StandardizationITC International Trade CentreKAM Kenya Association of ManufacturersKAMEA Kenya Apparel Manufacturers and Exporters AssociationKEBS Kenya Bureau of StandardsKenInvest Kenya Investment AuthorityKNCCI Kenya National Chamber of Commerce and IndustryKRA Kenya Revenue AuthorityKTTI Kenya TEXTILE Training InstitutekWh Kilowatt-hourMFA Multi-Fibre ArrangementMLS-SCM Modular Learning System Supply CHAIN ManagementMoEST Ministry of Education, Science and TechnologyMoIED Ministry of Industrialization and Enterprise DevelopmentMoU Memorandum of UnderstandingMSEA Micro and Small Enterprise AuthorityMSME Micro.

10 Small and Medium-Sized EnterpriseNRCA Normalized Revealed Comparative AdvantageNID National Institute of Design ( India )NIFT National Institute of Fashion Technology ( India )NITA National Industrial Training AuthorityPoA Plan of ActionREACH Registration, Evaluation, Authorization and Restriction of ChemicalsSADC Southern African Development CommunitySITA Supporting Indian Trade and Investment in AfricaSME Small and Medium-Sized EnterpriseT&C TEXTILE & ClothingTISI Trade and Investment Support InstitutionTMEA TradeMark East AfricaTNC Transnational CorporationTVET Technical and Vocational Education and TrainingTVETA Technical and Vocational Education and Training AuthorityUAE United Arab EmiratesUNIDO United Nations Industrial Development OrganizationVAT VALUE Added TaxWEAMACO Handloom Weavers Marketing Cooperative SocietyWTO World Trade OrganizationxFOREWORDSHON.