Nostalgic memories of great names like Rivatex, Raymonds and Kicomi are embedded in the hearts of many Kenyans. High end products like blankets, towels, clothes and fabrics to name but a few, were belongings of high regard in the society and an envy of many. Unfortunately, until recently, the Kenyan cotton textile industries had been close to dormant for over two decades since the 1970s and 1980’s. Then, the cotton-to-garment value chain was once a key contributor to Kenya’s rural livelihoods and foreign exchange earnings. The government supported the industry through the Cotton Board of Kenya which had invested in the fore mentioned factories. The wiles of the cotton board however started when it was rendered ineffective following the liberalization of markets in 1991. This marked a downward swoop that saw the cotton textile industry almost come to a halt. Further, the entry of second hand clothes into the value chain is quoted as being a serious blow to the fabric and apparel industry. Like a domino effect, as these iconic factories closed doors, cotton ginning factories lay idle, equally affecting demand and therefore cotton production. Cotton producers switched to production of more profitable crops. Resultant to this, raw textile from Uganda and Tanzania and as far as the east, (mainly Taiwan and Singapore), made its way into the Kenyan market to meet the increasing deficit of the nation’s annual demand.
In its growth and development policies and strategies, including the big 4 agenda and vision 2030, the Government of Kenya recognizes the need to revitalize cotton as a key sub-sector benefiting over 8 million people and as a crop that anchors to industrialization. Moreover, cotton is also considered as one of the key sectors that could attract international investment. In place of the defunct Cotton Board of Kenya, the Cotton Development Authority (CODA), was therefore revived in 2006 as an independent agency to “promote, co-ordinate, monitor, regulate and direct the cotton industry in Kenya. However, it was later, put under the Fibre Crops Directorate (FiCD). The subsector also operates under a regulated environment through the Fibre Crop Regulations, 2016. To revamp the sub-sector, the government introduced a number of incentives and started projects, some of which are underway. These includes support to the development of the Athi River Textile Hub and the modernization of factories like Rivatex. Other interventions include the development of the SEZ Textile park in Naivasha, the cotton development –subsidy and extension support (SES) as well as harmonizing taxes between EPZ, SEZ and local manufacturers to promote trade. Manufacturers benefit from a corporate income tax holiday, exemption from import duties on inputs, streamlined license processing, and subsidized electricity. Through the buy Kenya, Build Kenya Initiative, EPZ firms also sell to local markets 2o% of their annual clothing production without being taxed on sales and import duties on raw materials and equipment. Attributed to such incentives and the through the African Growth and Opportunity Act (AGOA), Kenya’s apparel exports have been on the increase from $8.6 million to $368 million between 2000 – 2015.
At the production level, primary interventions include distribution of high quality seed to increase yields, increasing the domestic cotton-seed and the total area in cotton production, as well as revitalizing irrigation schemes, (Bura and Hola). A lot of hope is in the introduction of high-yielding cotton and commercialization of bt-cotton (Bacillus thuringiensis), currently being tested in various cotton growing areas in the country. In the past, farmers have been losing upto 100% of their crop to pest and disease, particularly to the indomitable African ballworm. The success of bt – cotton as a profitable and environment friendly technology is no longer a fable for those who have chartered these waters. For example, China raised its farm income from Bt-cotton by Sh1.9trillion between 1997 and 2015, and to Sh100billion in 2015 alone, while in Argentina, Bt-cotton accounted for revenue of up to 313billion. As a fact domestic cotton production has been on the verge of vanishing from the heights of producing 100,000 bales p.a in the 1980’s to a mere 25-28,000 bales p.a today, a bare 6% of the nation’s annual demand. Regardless, Kenya’s potential to produce cotton is immense with possibilities of cultivating the crop in over 400,000 hectares against the current 29,000 and achieving a potential over 260,000 cotton bales annually. Moreover, only 39,000 farmers are engaged in production, yet the sector can support over 200,000 farmers and in extension the same number of farm families. Sadly, the currently Kenya’s cotton productivity averages 572 kilogrammes per hectare, compared to an achievable 2,500 kilogrammes per hectare. Kenya, therefore, has barely scratched the surface of its capacity for production and productivity more so if producers were supported to adopt better practices and technologies to ensure volumes and quality.
One cannot overlook the fact that incentives to revamp the industry seem to favour the end level of the cotton-textile-apparel value chain as opposed to the start of the value chain (i.e production). While the end of the value chain is making leaps and bounds, revival of the sub sector at the start of the value chain is actually at slow motion. Some of the factors exacerbating the situation include challenges already crunching at the aforementioned interventions targeting local cotton production. For one, achieving quality and volumes through high quality seed has not been possible due to insufficient funding to produce and distribute certified Bt seed to farmers. Moreover, Bt-cotton is more expensive than the high yielding varieties currently being used, which farmers already find expensive. Another challenge is that cotton producers are poorly organized and therefore unable to access affordable credit for input, acquire economies of scale and bargaining power, allowing for exploitation by middlemen. Before the downturn of the subsector, ginneries were actually cooperatives whose members were producers. However this formation lost structure when producers pulled out to venture into more profitable crops. Further cotton associations remain week and unable to perform at optimal. Additionally and also detriment to local cotton production, extension services are inadequate hence, producers are yet to adopt climate smart and good land management practices as well as proper pest and disease management. To note with a lot of concern too, is the fact that Kenya’s inputs for the textile industries are still heavily reliant on imports as opposed to sourcing from local production. On the other hand cotton producers also consider some provisions like the price-setting system at the farm gate in the Fibre Crop Regulations, 2016, as somewhat unfavorable. Although FiCD sets a minimum price, buyers and sellers still negotiate at the point of sale, where, owing to irregular distribution of power along the value chain, actors at the beginning of the value chain (producers) are disadvantaged. Kenya is keen on achieving universal cotton classification at the ginnery or spinner level, however, this effort is not extended as much at the production level, yet this could be an imperative to acquire improved cotton quality.
As mentioned above, so unreliable are the interventions at the production level that some ginneries have found it necessary to plough back into the value chain, by investing in the farmers directly to ensure supply. Further still along the value chain, textile and apparel manufacturers are heavily export oriented and less inclined to grow the local market. As a fact, Kenya targeted to grow the cotton-textile exports to $1 billion by 2019. It could be argued that the local fabric and apparel market is heavily challenged by import of second hand apparel and cheap imports from china, but then, the same should be said of the leather industry. Yet, local shoes manufacturers like Bata have been subjected and have survived a similar environment by investing in strategies and a market niche’ that have been sustainable this far. Hence, the fabric and apparel industries have potential to thrive in the local market just as well.
Breaking a cycle of events and factors that brought an entire sub-sector to its knees would call for holistic interventions along the entire value chain probably with more emphasis on production to ensure value generated along the chain benefits those at farm levels. In 2015, farmers in Argentina got a remarkable 95% of the cotton sectors revenue earnings (approximately 298 billion shillings). As much as Kenyan is set to improve foreign exchange through the cotton sub-sector, so should the sector improve rural livelihoods to achieve other development goals like alleviating poverty and hunger. Currently, a balance along the value chain is lacking and the gap between seemingly widening, a detrimental and bankable risk to revamping the industry at the production level.
A revamped cotton sub-sector or not? Well, it may depend on what part of the cotton-textile-apparel value chain you are in reference of. share your view/feedback with us.
By Nancy N. Wangombe