South-South trade is no longer an aspiration, but a reality for many emerging economies that have begun to diversify their exports towards other emerging countries. Sustainable growth of South-South trade will require investments in new capabilities, trade facilitation measures, infrastructure and trade finance. ITC assists trade support institutions (TSIs) and enterprises in developing countries to expand trade with other developing countries through a number of initiatives.
International Organisation of La Francophonie (OIF)-ITC initiative on South-South Cooperation
In collaboration with the International Organisation of La Francophonie (OIF) ITC works to expand intra- and interregional (South-South) trade between Central and West Africa and the Mekong region in South-East Asia. In 2012 alone business transactions worth more than US$ 5 million were concluded on wood and wood products between Cameroon, Congo, Gabon and Vietnam as a result of the initiative. The initiative also enables businesses to improve their ability to formulate international contractual agreements and assists TSIs in broadening their services to clients by offering high-quality management support for SMEs. In order to ensure sustainable South-South business relations, ITC’s partner organizations in Africa and South East Asia have signed partnership agreements to continue their collaboration beyond the duration of this ITC-OIF initiative.
ITC also promotes South-South cooperation through its large, multi-year programmes. For example, South-South business linkages are promoted through the organization’s programme to promote regional integration in Africa (PACT II) through cooperation with emerging markets in Asia and the Middle East.
Africa’s Cotton Initiative
In order for Africa’s cotton sector to realize its potential, it is necessary to attend to all of the complementary facets along the entire value chain. ITC’s programme is designed to address those multiple facets and to bring a regional approach, along with capacity building, into the mix.The results have been positive. Regional strategies have been developed. The African Cotton Association is developing a new business plan to help overcome the tainted reputation of African cotton. Cotton experts from China, India and Turkey have shared their expertise with individuals and businesses in the African cotton sector. Direct sales of African cotton to Asia have increased, with orders of up to US$10 million.
A next step in the programme could be to include the retail sector. Close linkages can be forged between the retail sector in the West, the textile industry in Asia and African cotton stakeholders. Such an approach of directly linking the growers to the retailers would secure higher prices for ginners and seed-cotton farmers, while also benefitting the textile and retail enterprises.
ITC’s Cotton Development Initiative therefore aims to make Africa a stronger competitor in the international cotton trade by boosting competitiveness and establishing stronger links with cotton importers, especially in Asia. Closer linkages with cotton consuming spinning mills will lead to closer partnerships between spinner, ginner and farmer groups. These partnerships in turn will lead to major improvements along the value chain, including the quality of cotton, especially cotton contamination, and ensuring long-term stable markets for cotton produced by small farmers in Africa.
Global trends mean African countries now need to think regionally when it comes to strategies for the cotton to clothing sector. While some countries have difficulty establishing an entire value chain from cotton to textiles and clothing, this can often be achieved at the regional level. Regional economies of scale and expertise can improve the sector’s performance and in turn allow African countries to tap into international markets for clothing and fashion, and add value to the cotton.
At the regional level ITC is supporting the African Cotton Association (ACA) to develop a new business plan to cover the years 2011 – 2016. ITC is collaborating with ACA to develop a systematic approach for the promotion of African cotton. In Eastern and Southern Africa, ITC collaborates closely with the African Cotton Textile Industries Federation and is working with the African Cotton Producers Association to increase the ability of cotton farmers to understand markets and clients.At the national level ITC is working in Tanzania, Uganda and Zambia to build local capacities.
ITC is facilitating cooperation among developing countries, with a special focus on links within Africa and between Africa and Asia. Africa can best learn from the cotton success of other developing countries all along the cotton to clothing value chain, including cotton production and fibre transformation. The approach involves four main themes:
- Learning from success. Training programmes organized by ITC allow successful cotton producers in China, Turkey and India, for example, to share their knowledge with cotton professionals from Africa.
- Developing capacity to transform cotton. Successful textile and clothing producers in China, Bangladesh India, Thailand, Turkey and Vietnam are relaying their experiences to African countries through ITC training.
- Sourcing from other developing countries. African producers are encouraged to search out suppliers in the developing world for savings on items ranging from seeds and fertilizer to technology.