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Cablegate: Senegal's Textiles and Apparel Production

VZCZCXRO3439
PP RUEHMA RUEHPA
DE RUEHDK #1957/01 2741503
ZNR UUUUU ZZH
P 011503Z OCT 07
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 9289
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEHZK/ECOWAS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0116
RUEHOT/AMEMBASSY OTTAWA 0126
RUEHLMC/MCC WASHDC

UNCLAS SECTION 01 OF 02 DAKAR 001957

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR EEB/TPP/ABT-GARY A. CLEMENTS, AF/EPS, AF/W
DEPT PLEASE PASS TO USTR - CAROYL MILLER
DEPT ALSO PLS PASS TO EXIMBANK
USDOC FOR ITA/OTEXA MARIA D'ANDREA

E.O. 12958: N/A
TAGS: ETRD KTEX ECON EINV AGOA SG
SUBJECT: SENEGAL'S TEXTILES AND APPAREL PRODUCTION

REF: STATE 114799

DAKAR 00001957 001.2 OF 002


SUMMARY AND OVERVIEW
--------------------
1. (U) Per reftel request, post provides the following information
on Senegal's textile and apparel industry.

2. (U) Senegal is not a significant global producer of textile and
apparel products. In 2006, total textile/apparel exports were USD
33.9 million, with exports to the U.S. at less than USD 700,000. In
2007 there are 15 or fewer companies involved in formal textile or
apparel production. Employment in the formal sector is estimated at
less than 2,000. Senegal has an estimated 15,000 small tailor shops
producing garments for local consumers, and approximately 5,200
informal enterprises producing traditional woven fabric. These
sectors employ an estimated 120,000 people. (Additional sector data
is presented in para 12.)

3. (SBU) Senegal has very limited domestic production of cloth and
finished apparel. Despite being touted by senior GOS officials as a
strategic sector for the country's "Accelerated Growth Strategy,"
Senegal's apparel and textile producers are inefficient and
potential growth is hampered by a range of obstacles: obsolete
equipment, poor management, overstaffing, erratic and expensive
electricity supply, difficult access to land, and limited and
expensive credit.

ANALYSIS OF THE SECTOR
----------------------
4. (U) According to Senegal's investment promotion agency, APIX, the
annual capacity of the Senegalese textile industry is around 8000
tons for spinning, 20 million meters for weaving and 8 million
meters for knitting. However, this capacity is not being realized
and the majority of Senegal's textile and apparel factories are in
dire straights. There are 5 major textile companies in Senegal:
NSTS-INDOSEN and ICOTAF (spinning mill, weaving, dyeing, and
knitting); SOTIBA and COSETEX (dyeing and printing); and COTOA
(specializing in heavy textiles such as towels, bed covers and
linens, and curtains).

5. (U) Work uniforms, scrubs, t-shirts, sportswear and towels are
manufactured at the industrial level. Almost all fabric for these
operations is imported from Asia, with higher-end wax fabric
imported from Europe and Cote d'Ivoire to be printed and dyed with
traditional African designs in Senegal for sale in domestic and
regional markets.

6. (SBU) In the past year, orders from overseas customers have
decreased significantly, and many factories have greatly curtailed
their operations. Since the highpoint of Senegal's textile and
apparel production in the 1980s, 50 percent of industrial companies
have disappeared and employment in the sector has been reduced by
more than 60 percent. In the past year, a deal between INDOSEN and
Canada's Stafford Textiles for new investment capital with an eye
towards exports to the U.S. apparently fell through.

GOVERNMENT INTERVENTION
-----------------------
7. (SBU) The GOS has not taken aggressive measures to revive
Senegal's existing textile/apparel production potential, or to aid
the sector in finding new export markets. Today, Senegal's textile
sector represents just three percent of the total production in West
Africa. It is one of the lowest-performing manufacturing sectors in
Senegal, despite a longstanding industrial culture in cotton
fabrication and weaving. A "national strategy study" for the sector
was produced in 2006, which included a range of recommendations for
revamping local industries, encouraging commercial activities, and
attracting foreign direct investment. The report's recommendations
have not been implemented.

8. (U) Senegal's export promotion agency, ASEPEX, is reportedly
developing an incentives strategy for the apparel and garment
sub-sector to increase its exports, particularly under AGOA.
However, this effort has not yet been launched.

THE IMPACT OF GLOBAL COMPETITION
--------------------------------

9. (U) Senegal's trade relations with China have grown in the past
few years, and the GOS is not implementing any measures to stem the
growth of imports of Chinese textile and apparel products. As a
result, the local market has been hit hard by these imports, and
those of other Asian countries, which are free from import

DAKAR 00001957 002.2 OF 002


restrictions. In 2005 (the most recent data available), imported
second-hand clothes accounted for 70 percent of total clothing sales
in Senegal. The sale of imported clothing on the local market has
undoubtedly increased over the past two years.

10. (SBU) Despite increased global competition, Senegal has not
responded with improvements to its labor market, which remains
relatively expensive, legally rigid, and with low productivity
rates. Factories do not have effective management or job training.
In addition, there are no policies or programs in place to deal with
dislocated workers. Many former employees from the formal sector
are moving into small tailor shops and attempting to sell locally
produced clothing overseas through informal networks of Senegalese
traders.

IMPACT OF TRADE PREFERENCES
---------------------------
11. (SBU) Any revival of Senegal's textile and production sector
will require producers to take full advantage of AGOA and European
trade preferences. Currently, some small-scale producers of
traditional or "designer" fabric and clothing have found market
opportunities in the U.S., which is reflected in the nominal
increase in value for Senegal's exports to the U.S. However, larger
Senegalese producers, or smaller producers collectively, are not
currently able to meet the potential demand for large quantities of
exports due to financial and production constraints.

TRADE DATA
----------

12. (U) The following data were provided by the Senegalese
department of External Trade, the National Agency of Statistics at
the Ministry of Finance, the U.S. Census Bureau and other sources:

-- 2006 Total textile and apparel imports: USD 57.5 million
compared to 60 million in 2005, a 4 percent decrease;
-- 2007 (mid-year) estimates (not available).

-- 2006 Total textile and apparel exports: USD 33.9 million,
compared to USD 29 million in 2005, an increase of 17 percent;
-- 2007 Total mid-year (not available).

-- 2006 Total textile/apparel imports from the U.S.: USD 5.63
millions compared to USD 4.81 million in 2005, a 17 percent
increase.

-- 2006 Total textile exports/apparel to the U.S.: USD 683,000
compared to USD 459,000 in 2005, a 49 percent increase;
-- 2007 (mid-year) estimates (not available).

-- 2006-2007 number of companies in textile industry: 15 formal
textile/apparel companies.

-- 2006-2007 estimated employment in the formal sector: less than
2,000.

-- In 2007 there are an estimated 15,000 small tailor shops in
garment making and approximately 5,200 informal enterprises in the
artisan textile sector.

-- In 2007 the estimated total employment for tailors and artisans
in clothing and weaving is 120,000.

PIAZZA

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