Africa-Press – Eswatini. Textile companies are gravely concerned about the successive annual increases in rental fees for textile factories, amid ongoing challenges within the industry.
Over the past five years, rent for factory premises, primarily managed by the Eswatini Investment Promotion Authority (EIPA), has surged by more than 94 per cent.
This steep escalation, in the midst of a slowdown in orders which has led to the closure of two factories that employed 800 workers and several others teetering on the brink of layoffs, putting over 3 000 people in jeopardy, has raised significant apprehensions among textile owners.
Over the five-year period, textile companies have experienced a significant increase in rental payments, with a noticeable surge of about 94 per cent from 2019 – 2023.
This overall increase was not uniform, as the companies faced fluctuating rental hikes over the years.
From July 2019 to March 2020, there was an initial rise of around 1.7 per cent.
This trend persisted, with rental payments increasing by approximately 3.9 per cent from March 2020 to July 2021.
The most significant uptick occurred from July 2021 to June 2022, with rental payments soaring by 69 per cent, at a time when companies were still battling from the impacts of the COVID-19 pandemic, which disrupted supply chains globally.
Subsequently, the companies encountered further escalations in rental costs, with a notable increase of 9.5 per cent from July 2022 to June 2023.
This final surge of 10.1 per cent in July 2023, cemented the substantial overall increase in rental costs over the specified five-year period, taking it to 94 per cent in the past five years.
Eswatini Textile and Apparel Traders Association (ETATA) Chairperson, Tokky Hou, said she found it quite puzzling for EIPA to still hike rent annually given the sector’s challenges, which have compounded the effects of the disruptions of supply chains caused by the pandemic.
Hou owns Far East Textiles, which she founded in 2002, employing over 600 and 90 per cent of whom are women.
Exporting over two million garments every year, her factory is the only major textile factory owned by a local in the country.
It operates as a Cut-Make-and-Trim (CMT) factory, making garments for different brands under The Foschini Group (TFG), which includes Fix, Exact, Sportscene and Total Sports.
“The current challenges in the sector demand serious, decisive action,” said Hou, putting emphasis on her point on the need to freeze the impending rental hike slated for July, citing its adverse impact on the country’s business costs and investor confidence.
She questioned the rationale behind hiking rentals, particularly when government owns the factory shells, calling attention to the expectation for government support in cushioning the sector against economic strains.
She said textile companies previously made appeals for rental freezes to EIPA during the height of the pandemic, but their requests were met with resistance.
“One would really expect government to do all it can to cushion the sector right now, and what we have been recommending is not to slash rent for textile companies, but to just freeze the hike.
How hard can that be?” she asked.
Expressing dismay over the impending annual rental hike in light of the current challenges, Hou lamented the lack of consultation with the sector before significant decisions were made, noting that such unilateral actions exacerbate the plight of employees in the industry.
“It is disheartening that the sector is facing such challenges without government support, and what makes it even more disappointing for me, as one of the few locals owning a textile factory, is how the sector often face criticism from all sectors for paying low salaries without a full understanding of what leads to that,” complained Hou, emphasising the need for informed dialogue among stakeholders.
discussions
“There are numerous reasons that eventually lead to the low remuneration for employees in the sector,” she said. As per the gazette, the lowest paid textile worker earns E1 690.29 and the highest E3 935.72 without overtime.
“The layoffs and the closing of factories call for comprehensive discussions to address them and other issues plaguing the industry, and on that account, I believe the dialogue on the constant rental hikes would be a good start,” she said.
She shone light on the fact that such decisions have disastrous trickle effects, making a point of how the workers will be the ones on the losing end if operating costs keep on shooting up for the companies.
“Another aspect of it is the scarcity of skilled labor in the textile sector,” said Hou, advocating for the establishment of a dedicated textile and apparel school to nurture local talent for technical roles, such as factory managers, to reduce reliance on foreign workers.
“Let us learn from what other countries are doing to bolster their textile sector and also put in place strategic interventions to safeguard the 22 000 jobs at stake amidst these formidable challenges,” she said.
A recent academic investigation conducted by University of Cape Town Director and Senior Researcher at the Labor, Development, and Governance (LDG) department, Shane Godfrey, alongside Giovanni Pasquali, a consultant with the global management firm Bain & Company, criticised government’s response to the pandemic’s impact on the sector.
Titled ‘Governance of Eswatini Apparel Regional Value Chains and the Implications of COVID-19,’ the study found government’s response to be ineffective, particularly in addressing the needs of workers.
“While workers in compliant apparel plants in neighboring South Africa received full pay for the initial six-week lockdown period through the Unemployment Insurance Fund (UIF), this was not the case in Eswatini,” reads a part of the study, further critisising government’s autocratic nature for being a huge part of the sector’s challenges as well.
The textile industry is a cornerstone of the nation’s economy, as it not only drives export revenue, but also serves as a significant employer, providing opportunities for approximately 22 000 people.
The sector, however, has faced turbulence recently, with a primary catalyst being the slowdown in orders, particularly from South Africa; the main market for roughly 95 per cent of the country’s clothing output, mainly because of the Southern African Customs Union (SACU) preferential trade arrangement. The remaining five per cent is destined for other countries in the Southern African Development Community (SADC) region.
Exclusion from the African Growth and Opportunity Act (AGOA) in 2014–15 further propelled the sector’s reliance on the South African market, and despite regaining AGOA status in 2018, exports to the United States have not resumed in the sector.
Source: observer
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