SOUTH AFRICA: Randís Volatility Presenting Challenges To Clothing Exporters

DURBAN: According to chairman of the Export Council for the Clothing Industry, Jack Kipling, the volatility of rand is presenting more challenges to the clothing exporters than the strength or weakness of currency.

Kipling said that the decline in clothing exports had to be viewed in the context of the compounded 35 percent increase a year since the African Growth and Opportunity Act was introduced in 2000.

While the sector's exports have been badly hit by the stronger rand and could show a decline for the year, apparel exports still grew 3 percent from January to June.

Kipling said exports should recover in due course.

"Accepting the challenges of becoming a global player requires companies to have strategies that are focused on the medium and longer term," he said.

"Boom and bust mentality has no place in developing globally competitive manufacturing companies as they tend to negatively impact on the investment decisions required to maintain international competitiveness," he said.

"Because South Africa is still ... becoming an export-driven economy, we may not have yet reached the level of sophistication needed to ensure that the currency remains fairly stable - a prerequisite for successfully retaining and building market share in the global economy."

All export-driven industries would pay the price for currency volatility in the short term, although those based mainly on assembling foreign imported components would be less affected than the clothing industry, which is largely based on local input.

The clothing industry worldwide is characterised by cyclical fluctuations caused by shifts in consumer confidence and international competitiveness because of currency swings and input costs.

Randís volatility issue would hopefully be addressed at the department of trade and industry's meeting this week, which is focusing on a strategy to ensure the industry's future.

The Export Council for the Clothing Industry has proposed that the level of the incentive provided by the duty credit certification scheme be increased in line with the strengthening rand to enable exporters to continue quoting prices for forward contracts by removing some of the risk of rand volatility.

Source: Agencies

October 15, 2003

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Added: October 15, 2003
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