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Is Sustainability the key to Unlocking Togo’s Textile Industry Potential?

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Textile - Investors King

With Togo moving to position itself as a regional leader in terms of textile production, the country is increasing its focus on sustainability and digitalisation as it seeks to maximise value across the supply chain.

As OBG has recently explored, the global textiles industry is one of the major contributors to climate change: with pre-pandemic annual emissions of 1.2bn tonnes, it is the second-largest industrial polluter, second only to the oil and gas industry.

This situation has led many textile industry players to increase their focus on sustainability and other environmental, social and governance principles.

Opened in June this year, the Plateforme Industrielle d’Adetikopé Textile Park aims to transform the country’s apparel industry value chain, as well as boost exports of cotton textiles and finished garments.

The park’s commitment to sustainability is evident in a range of measures: among others, it will process 100% sustainably sourced cotton, under Cotton Made in Africa standards; use 100% renewable electricity, offsetting 20 tonnes of carbon emissions per day; recycle 90-95% of the water used during processing; and comply with independent international certifications regarding dyeing and finishing fabrics.

Furthermore, the project will also create considerable economic benefits, as it is expected to generate an estimated 20,000 direct and 80,000 indirect jobs, and contribute up to 21% to national GDP.

“Sustainability is at the core of Togo’s development plans, particularly for the textile industry,” Cynthia E. Gnassingbe-Essonam, secretary-general of Togo Invest, told OBG. “If Togo is to compete on a global stage, it must be prudent with the usage of its resources, and ensure that energy sources are reliable and have a good mix of renewables.”

Another public-private partnership that demonstrates Togo’s commitment to sustainability is the 50-MW Mohamed Bin Zayed solar plant in the country’s Centrale Region. Opened on June 24, it is the largest such plant in Western Africa, and will provide electricity to 158,333 households.

The plant was built by Dubai-based AMEA Power, which was drawn to Togo’s “renewable friendly” regulations. The project received $8bn in pre-funding from Togo’s National Development Plan, while 80% of the construction workforce was recruited locally.

A history of textiles production

While these new developments are providing the domestic clothing industry with new impetus, Togo has an established track record as a textiles powerhouse.

In the 1970s the country was considered the centre of commerce in West Africa, with the textiles industry its primary source of revenue.

Female entrepreneurs known as Nana Benz (with “Nana” meaning mother in Togolese, and “Benz” being a reference to their preferred mode of transport) positioned the capital, Lomé, as a regional centre of textile distribution.

By the early 2000s, however, the Nana Benz’s fabrics faced strong competition from the Chinese market, whose textiles sold at one-tenth of the price of those produced in Togo.

This prompted efforts to boost the sector, and between 2011 and 2015 cotton exports more than doubled in volume, from 19m kg to 44m kg. In 2017 Togo’s top import markets for textiles and clothing were China, accounting for almost 50% of the total, followed by Japan (18.9%), Vietnam (4.38%), India (4.04%) and Germany (3.26%).

Such efforts have continued, but the textile industry is still widely seen as having untapped potential, both to consolidate its centrality to Togo’s GDP, and to increase the country’s interconnectivity with regional and global markets.

“The cotton industry already carries its own economic weight but, with more value-added, the industry could become a development axis not only for Togo but for the whole of West Africa,” Gnassingbe-Essonam told OBG.

This is a sentiment shared by Jesse Damsky, the president of Plateforme Industrielle d’Adetikopé. “Despite Togo’s small size, the country offers huge potential for growth and international connections. In addition, the government’s support for building out natural resources and creating value for the industry sector is unwavering,” he told OBG. “Togo already has burgeoning cotton, cacao, phosphates and coffee exports, while the immediate transformation opportunity is in the garment and textile industry.”

Improving logistics, leveraging digitalisation

While there is much optimism surrounding the Togolese textile industry, there are nevertheless various hurdles still to be overcome if the sector is to realise its full potential.

Many of these are related to infrastructure, and in particular to energy supply – a gap which projects such as the Mohamed Bin Zayed solar plant aim to fill.

“The cost of energy is the tipping point for the viability and longevity of a thriving textile industry in Togo,” Damsky told OBG. “Reliable energy is hard to come by in West Africa, and the textiles industry is heavy on both water usage and electricity usage. Balancing these two resources is a key challenge that Togo faces over the next decade.”

Poor-quality roads and a lack of transport infrastructure constitute a further obstacle to trade in the region. However, as OBG has extensively detailed, it is expected that the African Continental Free Trade Area will serve to drive infrastructural improvements, unlocking market potential and creating more integrated supply chains.

Another key issue is related to maximising the potential of the latest technological developments, and in particular those associated with the so-called Fourth Industrial Revolution (4IR).

New digital technologies have already begun to impact Togolese society.

For example, the BBC recently reported that the Togolese Ministry of Posts, Digital Economy and Technological Innovations had worked with a team at the University of California, Berkeley, to produce a “poverty map” of Togo.

This process involved filtering satellite imagery through a computer algorithm in order to establish which were the poorest regions of the country. The map was then used as a basis to distribute emergency cash via mobile phones to those people hardest hit by the Covid-19 pandemic.

Elsewhere, Togolese farmers have begun using drones to spray pesticides on rice crops. A Lomé-based school called e-AgriSky is teaching local farmers how to fly the devices, which in addition to increasing yields and reducing costs, is also much safer than manual crop spraying. By 2025, the school hopes to have trained 8000 certified drone pilots.

Going forwards, digital technologies will likewise be key to boosting value in the Togolese textile industry.

“Working with seed cotton is hard and labour-intensive, especially when compared to other crops in similar areas. Fortunately, there are increasing levels of mechanisation in seed cotton cultivation that are slowly eroding the laborious nature of cotton growing,” Jacky Riviere, country head for agri-business multinational Olam in Chad, told OBG.

But while the industry is poised to embrace 4IR, this will require a sufficiently well-trained workforce.

“Training and digitalisation go hand in hand. Without the necessary people to take new technologies and run with them, few businesses or sectors of the economy will benefit,” Gnassingbe-Essonam told OBG. “Because of this, stakeholders and policymakers in Togo have been proactive in creating centres for study and education.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Nigeria’s Economy to Close 2021 at 2.5% Growth Rate

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The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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