VZCZCXRO7217
PP RUEHMA RUEHPA
DE RUEHDK #2571/01 2961133
ZNR UUUUU ZZH
P 231133Z OCT 06
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 6695
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0095
RUEHLM/AMEMBASSY COLOMBO PRIORITY 0028
RUEHRB/AMEMBASSY RABAT PRIORITY 0791
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0117
RUEHON/AMCONSUL TORONTO PRIORITY 0007
RUEHLMC/MCC WASHDC PRIORITY

UNCLAS SECTION 01 OF 04 DAKAR 002571 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EB/TPP/ABT - THOMAS LERSTEN, AF/EPS AND AF/W 
STATE PLEASE PASS TO USTR - EYLIGER 
STATE ALSO PLS PASS TO EXIMBANK 
USDOC FOR ITA/OTEXA MARIA D'ANDREA 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KTEX EINV AGOA SG
SUBJECT: SENEGAL: TEXTILES AND APPAREL SECTOR: UPDATED STATISTICS 
AND PROJECTION OF FUTURE COMPETITIVENESS 
 
REF: A. STATE 138090 
 
¶B. DAKAR 01970 
¶C. STATE 131825 
 
DAKAR 00002571  001.2 OF 004 
 
 
Sensitive but unclassified; contains proprietary information from a 
non-U.S., but Mission-valuable company which is not public. 
 
SUMMARY AND OVERVIEW 
-------------------- 
¶1.  (U) In response to Ref A request, post provides the following 
information on Senegal's textile and apparel industry.  This expands 
upon information provided in Ref B. 
 
¶2.  (SBU) Senegal's textile industry produces limited volumes of 
domestic cloth and finished apparel.  Despite being highlighted by 
senior GOS officials as a strategic sector for the country's 
Accelerated Growth Strategy, Senegal's apparel and textile producers 
are inefficient and potential growth is hampered by a range of 
obstacles: obsolete equipment, poor management, overstaffing, 
erratic and expensive electricity supply, limited and expensive 
credit, uncertain commercial real-estate laws and rigid labor laws. 
The GOS views the sector as a vital component of its accelerated 
growth policy.  Senegal's Agency for Investment and Export Promotion 
(APIX) is pursuing incentives and strategies to attract foreign 
direct investment in the sector and to organize the apparel 
sub-sector.  AGOA preferences remain key to current and future 
textile/apparel exports from Senegal.  A recent, significant 
Canadian investment in a Senegalese firm is designed to take 
advantage of AGOA access to the U.S. market.  Senegal's 
textile/apparel sector would likely be uncompetitive for the 
foreseeable future should AGOA's third-country fabric provisions end 
in 2007. 
 
¶3.  (U) Many of Senegal textile and apparel factories are in 
financial difficulty and in need of investment for new equipment. 
In recent months, five factories have suspended their operations, at 
least temporarily, while they search for additional financing.  A 
few, more competitive operators are in the process of expanding 
their productions lines.  Work uniforms, medical "scrubs," t-shirts, 
sportswear and towels are the most prominent products for Senegal's 
industrial apparel and textile sector.  Almost all fabrics for mass 
production are imported from Asia.  The majority of higher end wax 
cotton fabric is imported from Europe and Cote d'Ivoire.  Much of 
this fabric is transformed locally with dye and print in traditional 
African designs for sale in domestic and regional markets.  END 
SUMMARY AND OVERVIEW. 
 
NEW INVESTMENT TARGETING AGOA 
----------------------------- 
¶4.  (U) Dakar-based INDOSEN, a Senegalese-Indian-Moroccan joint 
venture (40 percent owned by Nouvelle Societe Textile du Senegal - 
NSTS), has long been one of Senegal's largest apparel manufacturers. 
 The company's main factory is located in Louga, approximately 100 
miles north of Dakar.  The company spins, weaves, knits, dyes, 
finishes, prints and manufactures work wear.  Its equipment includes 
18,000 spindles, 160 rapier looms, 12 circular and 2 flat knitting 
machines, 190 sewing machines, 140 specialized sewing machines 
(non-digital) and 120 cut sewing machines.  INDOSEN's current 
production capacity is 5 million pieces per year. 
 
¶5.  (SBU) On September 28, Stafford Textiles, Ltd, a Toronto-based 
company, announced its formal partnership with INDOSEN, with the 
goal of exporting apparel to the U.S. under AGOA, and also to 
Canada.  According to the company's owner, Mick Stafford, his firm 
is the "front end" partner who will provide fabric, mostly 
poly-cotton blends, to INDOSEN, secure large volume buyers in Canada 
and the U.S. (including Cabela's, Dick's, Nike, Billabong, etc,) and 
provide technical assistance in the beginning of the production. 
Providing technical expertise is not a usual practice of Stafford, 
but the company's Director of Operations plans on spending 4-5 
months helping update the Louga factory.  In addition, three 
technicians from a Stafford factory in Sri Lanka will be permanently 
relocated to Louga to control quality. 
¶6.  (SBU) INDOSEN is the "back end" partner who will use Stafford 
fabric to produce a weekly volume of 10,000 units of medicals 
"scrubs," 5,000 polo shirts, 20,000 factory work shirts, and 15,000 
pairs of work pants.  The first container of fabric is expected to 
arrive in Dakar by the end of October.  In outlining his company's 
 
DAKAR 00002571  002.2 OF 004 
 
 
plans, Stafford expressed his confidence in INDOSEN's production 
capacity and technical competency.  Stafford has invested USD 3 
million to increase INDOSEN's production capacity by providing 200 
new sewing machines from the U.S. as well as CAM/CAD design 
equipment.  Stafford foresees transferring more textile 
manufacturing equipment in the future including a "vat-dye" line to 
manufacture the highly specialized poly-cotton fabric. 
¶7.  (SBU) With this added investment, INDOSEN plans to employ 448 
sewers in 2007, 805 in 2008 and 963 in 2009.  Estimated sales 
projections for the next three next years are USD 8 million in 2007, 
USD 15 million in 2008 and USD 20 million in 2009.  (COMMENT: While 
INDOSEN represents the "high-end" of Senegal's apparel/textile 
production, it has a mixed record of meeting its supply deadlines, 
and is currently in default on an ExImBank-guaranteed loan estimated 
at USD 3 million.  END COMMENT.) 
IMPORTANCE OF THIRD-COUNTRY FABRIC PROVISION 
-------------------------------------------- 
¶8.  (SBU) Senegalese textile and apparel producers and investors 
remained deeply concerned about the negative impacts that would 
result if AGOA's third-country fabric provision isn't extended. 
Stafford's leadership stated that its partnership with INDOSEN would 
collapse, and its new investment in Senegal likely fail if they are 
unable to import specialized Asian fabrics while maintaining AGOA 
preferences.  According to Stafford, "the most dangerous and 
frightening" part of the venture is the possible loss of the third 
country provision.  In Stafford's case, it takes the Chinese factory 
18 months to produce this special fabric - a poly-cotton blend that 
can be industrially washed 50 times per year with steel balls in a 2 
percent chlorine bath without changing color.  Stafford's projected 
garment sales from INDOSEN are based on utilizing this particular 
fabric. 
 
¶9.  (SBU) INDOSEN, and probably all Senegalese apparel 
manufacturers, rely on the duty differential from AGOA preferences 
to remain even marginally competitive with Asian producers. 
According to Stafford, not only does Senegal, and most of Africa, 
remain weak on productivity, but Asian governments' subsidies for 
their domestic industries (he claims at 15 percent), make African 
producers uncompetitive on price.  Citing textile industry lobbyists 
in the U.S., Stafford expects congressional action on the third 
country fabric provision by April 2007. 
 
¶10.  (SBU) On the positive side for Senegal, Dakar is only 10 days 
from NY via maritime transit and only 8 hours from NY via direct, 
non-stop commercial flights.   Maritime transit from Asia to NY is 
30 days and flights can take 20 hours.  (NOTE: In early December, 
Delta Airlines is planning to begin new daily non-stop return 
service between Atlanta and Dakar, with continuing service to 
Johannesburg.  END NOTE.)  Acknowledging that Senegal needs to 
become a fabric producer, Stafford said that in the future his 
company hopes to import specialized fabric weaving machines from 
China to enhance INDOSEN's production, but would need additional 
financial support to do so. 
TRENDS IN 2006 
-------------- 
¶11.  (SBU) Many local producers have lowered their price due to 
heightened international competition, and, in general, manufacturers 
have received fewer orders than in years past.  There have been 
lay-offs in the sector and some smaller factories have closed in the 
past year.  (COMMENT: 1996-1998 was a high-point for textile-related 
employment in Senegal with more than 7,000 workers in the sector. 
END COMMENT.)  Export prospects for local manufacturers are not 
affected by U.S. and E.U restrictions on certain exports of textiles 
and apparel from China.  Senegal is not implementing any measure to 
reduce growth of imports of Chinese textile and apparel products. 
Increased global competition has not affected local labor conditions 
which remain rigid and constraining.  Though Senegalese companies 
continue to make efforts to modernize in order to enter the U.S. 
market under AGOA, Senegal has yet to create a significant new 
export textile/apparel market via the U.S.  High production costs 
and rigid labor laws will continue to hinder Senegalese 
competitiveness for the coming year and likely much longer. 
 
OTHER SIGNIFICANT PRODUCERS 
--------------------------- 
¶12.  (U) Senegal's other important textile and apparel producers 
include: 
 
 
DAKAR 00002571  003.2 OF 004 
 
 
-- "La Nouvelle Societe Textile Senegalaise" (NSTS/FTT): Partial 
owner of INDOSEN.  It produces large-gauge thread and unbleached 
fabric; has 148 Sulzer looms (110 to 130 inch), 12,000 spindles and 
648 open-end spinning RU 14 rotors. 
 
-- EGA CONFECTION: a manufacturer of uniforms, "scrubs" and men's 
wear.  It has modern, digital equipment with a production capacity 
of 1,200 pieces per day.  The company imports fabric from Morocco 
and Asia, and has 22 full-time and 89 part-time employees. 
 
-- ETS SOLU: manufactures sportswear using 75 non-digital machines 
and one electric embroidery machine.  Its monthly production 
capacity is 30,000 pieces, and its fabric originates in Asia.  The 
company has 48 full-time and 15 part-time employees. 
 
-- Nouvelle Sotiba: a printing company that uses non-digital, 
printing and dying equipment to produce a monthly output of 
approximately one million meters of "fancy cloth," which is mostly 
sold in the local market.  It imports cotton from India and has 300 
full-time employees. 
 
-- COSETEX: a printing and dying company with two lines of 
non-digital machinery.  The company produces one million meters of 
"fancy cloth" per month.  It imports cloth from India, Benin, 
Nigeria, and Mali for domestic sales and for exports to West Africa, 
Europe, and the U.S (in 2001 and 2002).  The company employs 80. 
 
-- "Societe de Developpement des Fibres Textiles" (SODEFITEX): a 
ginning/cotton fiber company with ISO 9001 certification.  The 
company has five factories in eastern Senegal, and produces annually 
a total of 56,000 tons of cotton fiber.  It sells in Senegal and 
exports to Asia, South America and Europe.  It sources raw cotton 
mostly from Senegal and employs 460 full-time and 4,000 part-time 
persons. 
 
-- "Cotonnier du Cap Vert" (CCV): Merged with the former SOSEFIL. 
Activities including ginning, spinning, weaving, knitting, dying, 
and manufacturing to produce approximately 1,200 tons total of 
thread, dishtowels, and t-shirts per year; equipment includes 28 
non-digital sewing machines; 5 knitting machines; and 3 cotton 
spinning machines.  It sources cotton in Senegal, uses its own cloth 
for t-shirts and dishtowels, sells in Senegal, exports to the 
sub-region, and has 250-300 staff. 
 
TRADE DATA 
---------- 
¶13.  (U) Senegal's Department of External Trade and the National 
Agency of Statistics at the Ministry of Finance provided the 
following data: 
 
-- 2005 Total textile and apparel imports: USD 60 million, a 7 
percent increase from 2004 (USD 56 million); 
 
-- 2006 Total (mid-year) imports of textile: 
USD 22 million, a 3 percent decrease from the 2005 midyear figures 
of USD 32 million; 
 
-- 2005 Total textile exports: USD 29 million; 
 
-- 2006 Total mid-year textile exports: USD 1.5 million, a slight 
decrease of 0.6 percent from the midyear 2005; 
 
-- 2005 Total textile imports from the U.S.:  USD 13 million, 
compared to USD 7.5 million in 2004, an increase of 7 percent; 
 
-- 2005 Total textile exports to the U.S.: USD 3 million, compared 
to USD 2.2 million in 2004, an increase of 3 percent (midyear 2006 
figures are not available); 
 
-- 2006 number of companies in textile industry: 24; 
 
-- 2006 approximate number of employees in textile industry: 2,000; 
 
-- 2006 estimated number of tailors and artisans in the clothing 
sector: 100,000. 
 
COMMENT 
------- 
 
DAKAR 00002571  004.2 OF 004 
 
 
¶14.  (SBU) It is widely recognized, by industry insiders, investors 
and GOS officials that Senegal needs to move quickly towards 
producing its own fabric.  Senegalese trade and investment officials 
routinely present a vision of a vertically-integrated supply chain 
that includes Senegal's cotton fields, enhanced ginning capacity, 
fabric production, and transformation.  To date, there has been 
little actual movement in policy or improved business climate to 
encourage a private-sector-driven realization of this vision. 
 
¶15.  (SBU) We are hopeful that the confluence of Stafford's timely 
partnership with INDOSEN, and enhanced transport linkages to the 
U.S. as a result of the Delta Airlines' new route, will create a new 
momentum for Senegal's potential as a textile and apparel exporter. 
However, we are still waiting for the convening of the first meeting 
Senegal's AGOA Steering Committee, announced by the Minister of 
Commerce in August.  END COMMENT. 
 
JACOBS