Faced with unending cash bailouts, the government appears to have decided to lease the company to Fine Spinners which looks like a more established name in the Africa textile garments arena.
“Investors of fine spinners are expected to augment the government’s efforts aimed at achieving increased production of textiles using Ugandan’s organic cotton to promote and increase exports of textiles to our regional and international markets,” said Haruna Kyeyune Kasolo, the state minister for Micro-Finance during the handover ceremony mid last month.
He said Phenix Logistics was running at a sub optimal level and needed to improve its production.
Fine Spinners started US$40million garment factory in Kampala in 2014 and says it is producing 450,000 T-shirts a month from locally sourced cotton. It has not asked the government for a bail-out or been involved in any scandal similar to the Tristar Textiles and Apparels factory which occupied the same premises in the Bugolobi suburb of Kampala city.
Fine Spinners plan
Jaswinder says the Phenix Logistics acquisition will help Fine Spinners meet the demand of various customer segments abroad.
He said the Fine Spinners machines cannot produce the mélange fabrics, which are made with more than one color of fabrics, either by using different colored fabrics or made with different fabrics that are then individually dyed.
“If the rest of the world‘s leading textile producers including Bangladesh and India are offering it (mélange) and we are not offering, it means that our products are not competitive. With phoenix we will be able to offer customers full diversified products that we are not currently offering,” he said. He added that the company is looking at producing and exporting 75% of clothes made of pure cotton fabrics and the rest mélange.
He also revealed that the company is eyeing the local market ahead of the East African Community’s plan to ban importation of second hand clothes in 2018 as well as export to the U.S. market under African Growth Opportunity Act (AGOA).
“We are currently exporting our products to 17 European countries and we are also looking at exporting to the United States under AGOA to benefit from tax- relief,” he said.
The EAC countries are also working to revamp the domestic garment market by banning secondhand clothes imports at the end of 2018 to stir the growth of local textile industries, aimed at creating employment opportunities, reduce poverty, and advance in technological capability.
But a study conducted by Rebecca Tusubira on the challenges faced by ugandan textile industries in accessing duty free trade to the USA markets under AGOA shows that Uganda has got to attract new investments into its weakened cotton-textile sub-sector if revival of any kind is to be achieved in a sector that was once vibrant.
“The government has got to wake up!” she said. “There is a need to develop the whole value chain of the textile industry from the fibre to the garment. This should include a total ban on second hands clothes, removal of duty and other tax on textile machinery and raw material.”
Second hand clothes in Uganda accounts for 81% of the total clothes and shoes imports, according to Andrew Brook, in his book `Clothing Poverty: The Hidden World of Fashion and Second Hand Clothes’.
This is higher than what the entire Sub-Saharan Africa, where second hand clothes and shoes account for over 50% of the clothing market.
Tusubira says the development of a strong and competitive local textile and clothing industry will take long to be realised as long as the government remains complacent to the dangers second-hand clothes dumped into the country pose to the development and investment in the local industry.
As such, she suggest that government supports the local textile industries through the purchase of textile products for all government departments such as the armed forces and the police forces, prisons, government schools, Uganda Wild life Authority, and the government hospitals.