WP 01/056 - Regional supply chain development: A case study of the clothing and textile industry in SADC

Martine Visser

Date of Publication: 
November 2001

The textile, clothing production, sugar, and agro-processing largely account for intra-regional cross-border supply chains, and drives trade within the region. These industries hold potential for strengthening ties throughout the region by integrating value-added supply chains and intra-industry trade (IIT) across borders. Moreover the Southern African Development Community (SADC) world market share is changing for these sectors, indicating a competitive dynamic that should be exploited. The clothing and textile industry is used here as a case study to analyse the presence of such value-added supply chains in the region. The potential for more integrated trade within the region is explored, in view of the SADC Trade Protocol, which provides a mandate for a Free Trade Area in Southern Africa. A sectoral approach is taken to assess the level of IIT and also geographical presence of cross-border supply value chains for clothing and textile industries within the region. While SITC 2 digit level IIT is high, SITC 3 digit level analysis shows that IIT is concentrated in specific product categories. We argue that increased IIT and supply chain development, specifically in these categories, provide a feasible distributive mechanism for lower cost relocation of investment from the Southern African Customs Union (SACU) to the rest of SADC. Various countries in SADC also have a comparative advantage in these industries and significant potential exists for sourcing of raw materials from the region and producing low value-added and higher value-added goods within SADC. The working paper also examines the scope for redirection of investment in the region (and specifically from SACU to SADC) along differentials in labour market flexibility and productivity. The changing nature of skills requirements in various industries is expressly evident in the clothing and textile industries with rapidly changing demand dynamics. Flexibility to changes in demand for quality or delivery conditions translates to significant costs at a firm level. Policy measures aimed at increasing regional production and strengthening commodity chains should therefore consider the changing face of industrial activity at a firm level that is increasingly dependant on flexible arrangements.

Download Working Paper: DPRU WP 01/056