Due to a plethora of advantages in terms of low-cost labour, availability of raw material, proximity to core markets, as well as extremely lucrative government policies, various countries in Africa have attracted apparel manufacturers across the globe. Time and again, Apparel Resources (AR) has conducted a thorough study and analysis of such destinations which offer lucrative opportunities for apparel manufacturing. Some of such interesting and most recent reads are Madagascar (off the coast of East Africa) and Togo (a West African nation on the Gulf of Guinea) etc.
Also Read: Country of Origin: Madagascar
The popularity of African destinations is continuously growing as Togo’s PIA Textile Park (Phase-1) is almost fully occupied and now Benin, another country in West Africa, is also geared up for its GDIZ Textile Park. Overall, Benin had attracted FDI of US $ 230 million in 2019 (pre-Covid phase), and with regard to apparel manufacturing, as per the claims of Arise Integrated Industrial Platforms (IIP), the upcoming plants in GDIZ are eyeing the factories that are building capacities for round neck and polo T-shirts (both with 18.9 million pieces per annum), leggings and nightwear (each with capacity 8.4 million pieces per annum), and undergarments (with capacity of 8.4 million pieces per annum).
Also Read: How Togo’s PIA Park is geared up to fetch investment of US $ 1 billion in apparel manufacturing
Why Benin is believed to be a go-to location for garment factories, Apparel Resources explores…
Along with the known advantages regarding labour, trade agreements, proximity, what sets Benin apart as an emerging manufacturing destination is the establishment of the Glo-Djigbé Industrial Zone (GDIZ), a major initiative for textile and apparel industry which is a public-private partnership between the Government and Arise IIP and is located 45 kms from the port city of Cotonou.
A major investment in this zone was announced recently in October 2021 when the Tunisian Aigle Group of Tunisia became an investor in the endeavour. Aigle Group is investing CF A11 billion (US $ 18.31 million) to transform cotton into textiles, which will create an estimated 2,000 direct jobs. Its operations at GDIZ are set to begin by the end of 2022 and will take place in a 40,000 sq. metre industrial unit. As production ramps up, the number of direct and indirect jobs is projected to increase to 60,000 by 2027.
Also Read: Tirupur’s ITCRmg to set up 750 flat knitting machines in Togo
Abundance of cotton goes in favour of Benin…
Cotton shortage has become a major issue in recent months . Such a shortage on Xinjiang Cotton’s part has created a cascading effect on the global textile and apparel industry. As a matter of fact, India is expected to have a staggering cotton shortage. However, with Benin as an active player, one can notice a rapid shift as it is the largest producer of cotton seeds in Africa with volumes exceeding 700,000 MT annually (ranked 9th globally in 2020 /2021). There are already 19 cotton ginning plants installed across different regions,production areas to support local processing. Approximately 728,000 tonnes of seed cotton are produced annually in Benin (FY 2020-21).
Also Read: India to face cotton shortage; industry urges to allow duty-free import of 4 million bales
At the same time, there is a system in place to assure traceable and competitive access to cotton as GDIZ sources cotton from Interprofessional Association of Cotton (AIC). Additionally, cotton shall be labelled ‘Made in Africa’ or CMiA, underlining the fact that it is sustainable, Non-GMO, rain-fed and 100 per cent traceable. GDIZ also sources cotton from local aggregators ensuring socially responsible cotton, with crop rotation practices which will provide a fair income to farmers and local populations.
Connectivity is superb…
For over one year, container shortage and high freight rates have been persistent issues apparel exporters are facing, especially the ones located in Asia. However, Benin has interesting advantages here. Its geographical proximity with the EU and USA as well as shorter shipment lead time are a considerable advantage. It takes less than 20 days for a ship to reach the EU, while the lead time is in between 20-25 days in the case of the USA. Benin ensures seamless connectivity with Cotonou seaport and international airport. A new international airport of Cotonou is also planned near GDIZ. Furthermore, the GDIZ to Cotonou seaport distance is >30 kilometres. There is also a container Yard (Dry Port) capacity for 2000 +containers at GDIZ.
Tax relaxation for exporters…
Majority of exporters worldwide face the issue of liquidity crunch and allied challenges like duty on few imported products, tax complication etc. However, Benin has interesting policies in this regard as it has exemptions from all customs duties and taxes while importing machinery equipment, raw material, office supplies and other capital goods. There is the freedom to repatriate income, distribute dividends, sell in domestic tariff area (DTA) up to 35 per cent, transfer funds through approved financial institutions. It also has exemptions from corporate tax, VAT, Capital gain tax, contribution on built and underdeveloped building/properties.
Along with all these benefits, there is 100 per cent exemption of tax on all payments (local and international). Similarly, there is 100 per cent exemption on contract registration/transfer and levis. Not only this, the country also offers to refund VAT Credits within 30 days.
Trade agreement advantage…
Benin has trade agreements like AGOA and GSP with US while EBA and GSP with EU. This is rare as none of the other leading apparel manufacturing countries have similar agreements be it Bangladesh or Vietnam. Similarly, it also has free flow and single market for goods and services facilitated under African Continental Free Trade Area (AfCFTA).
Labour laws and low cost labour…
In Benin, the labour cost benchmark is also ‘reasonable’ with a US $ 105 monthly wage, much lower than its Asian counterparts. In addition to such cost-effectiveness, one finds flexible labour laws for hiring workers, access to cost-competitiveness and a large pool of workforce. There is also a worker hostel with dormitories in the immediate vicinity of GDIZ with basic amenities. Along with the above-mentioned facilities related to workers, it also enables easy facilitation of work visas and resident cards for expats.
GDIZ Textile Park assure ecosystem for textile establishments…
GDIZ Textile Park covers a total of 1,640 hectares and will be developed in 3 phases. There is a complete ecosystem for textile, covering important aspects like traceable sustainability to shorter lead time and skilled workforce (presence of a vocational training centre).
Arise IIP is dedicated to supporting the GDIZ Textile park, especially at the infrastructure level. The GDIZ has a readymade factory shed, competitive land lease rates and subsidised power at US $ 0.08 per kWh. In terms of smooth processes, there is a single-window clearance facility.
Another unique factor is that 90 per cent of water is reused with a water treatment facility (ZLD). Overall this park addresses Environmental, Social and Governance (ESG) concerns with cost competitiveness at the core. GDIZ also provides flexible investment options either in integrated plants or standalone facilities, from spinning to garments.
Benin,a French-speaking West African nation, is one of the most stable democracies in Africa and it was ranked 149th worldwide and 2nd best in Doing Business ranking in West Africa.
Companies coming forward to invest
Aigle group from Tunisia has signed up already to setup a Spinning and Knitting mill at GDIZ park. Aigle is aiming to integrate the facility with Garment manufacturing as a next step. Few more companies have also plan in pipeline to invest here.
