Eastern Cape textiles factory to boost wool farmers
- Author: Andile Ntingi
- Published: Friday, 10 March 2017 09:51
For nearly 20 years traditional beer maker United National Breweries has cut a forlorn figure as the only industrial investor in Butterworth after the Eastern Cape town was deserted by more than 40 large-scale manufacturers in the mid-1990s.
The town’s two-decade long investment drought came to an end in February when the once-thriving industrial town welcomed a textiles manufacturer, raising hopes that the investment could help Butterworth reclaim its former glory.
The wool processing factory, known as Ivili Loboya, is seen as a boon for thousands of wool sheep and goat farmers in the province, who will now have a new, reliable customer to sell their produce to.
The plant will be the first-ever cashmere (goat wool) commercial processing enterprise in South Africa and will also source mohair, silk and cotton from farmers.
It will then turn these either into scoured wool or high-end fabrics for the décor, upholstery, and fashion apparel markets in SA and Europe. There are 3 million sheep in the Eastern Cape with 19 000 small-scale wool farmers, who generate income that supports 100 000 family members.
Former chairperson of the South African Post Office (Sapo), Dr Vuyo Mahlati, is behind the wool processing factory in Ibika, one of Butterworth’s three apartheid-era industrial estates that were built in the 1970s when the town was chosen as the manufacturing hub of the former Transkei homeland.
Mahlati and other investors have invested R30 million in the venture, which is 100% black-owned. The majority of the shares in Ivili are held by women. The textiles manufacturer has a collaboration agreement with the Council for Scientific and Industrial Research (CSIR), which acts as the factory’s research and incubation partner that provides expertise in natural-fibre processing for new and innovative products.
The factory offers wool sorting and scouring, fibre manufacturing and handspun yarns, and it supplies insulation and inner soles for safety shoes. Despite its strong developmental impact, the plant has not yet received funding from government’s Black Industrialists Programme (BIP), although government stated in 2015 that it would set aside R23 billion to support black industrialists like Mahlati and many others with ambitions to enter the manufacturing sector.
“We applied immediately after the announcement (of the BIP) and we hope our application will be favourably considered. It seems the process for evaluating applications is very long, but we will remain patient,” says Mahlati, who is currently president of the African Farmers’ Association of South Africa.
Government is applauded for formulating progressive policies, but its implementation leaves a lot to be desired due to poor execution and governance. Emerging entrepreneurs have been clamouring for government to strengthen its capacity to implement policies that are aimed at propping up black-owned businesses, particularly start-ups and women-owned companies.
“I am happy to be part of the revival of the textiles sector that is a big contributor to jobs, women empowerment and rural income generation”
Mahlati points out that capacity-building should be prioritised at all levels of the public sector, particularly municipalities and development finance institutions that are supposed to be at the forefront of service delivery.
Regulatory headaches aside, she is excited about the prospects of playing a role in the current attempts to revive the South African clothing and textiles industry, which was annihilated by an influx of cheap imports, notably from China, that led to the closure of factories and thousands of job losses.
Butterworth was not spared the carnage as it too lost its clothing and textiles factories. The industry’s workforce declined to 80 000 workers in 2013 from around 181 000 in 2002.
However, the introduction of the Clothing and Textiles Competitiveness Programme (CTCP), an incentive scheme of the department of trade and industry, in 2010 significantly reduced the haemorrhage to a point that 25% to 30% of locally sold clothing is manufactured domestically, according to industry sources.
“I am happy to be part of the revival of the textiles sector that is a big contributor to jobs, women empowerment and rural income generation,” says Mahlati. Ivili’s luxury fabrics will be sold under the Dedani Collection brand.
“We believe this is the right product at the right time. Our research shows that Africa’s growing middle class is discerning in its fabric choices and is looking for natural fibres (instead of synthetic fibres) where possible,” explains Mahlati.
In the next five to 10 years, the investors of Ivili plan to aggressively expand the business while pushing product innovation and contributing positively to boosting the incomes of farmers. “We intend to make it [Ivili] a public company on the stock exchange where ownership is broadened to be truly inclusive.
We are now building value for everyone,” promises Mahlati. The factory will not only create jobs in the rural Eastern Cape, but will also help SA earn foreign currency as some of the processed wool and luxury fabrics are going to be exported overseas. Ivili has already signed an agreement with an Italian agency and retailer that will distribute its fabrics in Europe.
Jeff Radebe, minister in the Presidency, who delivered a keynote address at Ivili’s launch, said manufacturing ventures such as Ivili are ideal models for sustainable entrepreneurship.
“You do not need to win a tender in order to be successful in this industry. The growth of your business is dependent on your productivity”
“You do not need to win a tender in order to be successful in this industry. The growth of your business is dependent on your productivity. These are the kinds of initiatives that add meaningful value in changing the current socio-economic conditions of the people of South Africa,” said Radebe.
The revival of the local textiles sector has reduced the quantity of South African wool that is being exported to overseas markets. At one point, when the local textiles industry was on its back foot and very little wool value-addition was taking place in SA, the country exported 98% of its wool, compared with 90% currently.
Mahlati says Butterworth was chosen as the site for the factory because it is close to wool farmers and the logistics infrastructure in the area is capable of supporting the plant, which is about 100km from East London’s airport and harbour.
“The size of supply is determined by the market and goes beyond the Eastern Cape, with some wool sourced through agents. There are also diverse breeds of wool that we source. Black and coloured Merino wool and Karakul are in demand for the non-woven products. We also use white wool for our blends in textile products,” says Mahlati.
Ivili Loboya has developed an app that sources wool from farmers and over 500 goat farmers are using the app to supply the factory. Ivili plans to train farmers from Butterworth to Graaff-Reinet in flock management and combing of goats.
Communal farmers with no bank accounts are being assisted to open bank accounts to enable them to transact with Ivili and other businesses.
“Access to wool from sheep and goat farmers is easier in the former Transkei because it has many communal farmers who are central to supplying the factory. The roads are [in good condition] for the trucks and hopefully government will invest in bringing back the rail in the area,” says Mahlati.