Campus News

Gold mine

UGA experts help Uganda find a niche in cotton market

Cotton is known across Africa as “white gold.” In Uganda, it is a cash crop that puts money in the pockets of small-scale farmers. And when turned into textiles and apparel, it holds the promise of fueling an economic revival in the East African nation.

That’s at least as long as special U.S. legislation—the African Growth and Opportunity Act—is in effect. Under the act, eligible products from 37 sub-Saharan nations have preferential access to U.S. markets duty-free and quota-free.

“But having access to the U.S. market is not enough,” said Glenn Ames, director of international public service and outreach at UGA. “You have to know how to enter the U.S. market and how to build linkages with U.S. companies if you’re going to succeed.”

Ames, an agricultural economist, has helped lead UGA efforts to develop trade relationships between East African entrepreneurs and U.S. businesses, first in Kenya and now in Uganda.

When Uganda was under British colonial rule, cotton accounted for a quarter of the nation’s exports, but political unrest during the 1970s and 1980s disrupted cotton production and nearly wiped out the textile and apparel industries. Now that is changing.

For the past decade, Uganda’s annual economic growth has averaged more than 6.5 percent. That growth has largely benefited the south and the capital, Kampala. An expanded cotton market promises to extend that growth to the small farmers of the north.

“In September 2003, I interviewed directors of some recently reestablished Ugandan textile companies,” Ames said. “I asked what their interests were in furthering trade, especially in apparel and textiles. They said they wanted to develop access to the U.S. market.”

So, Ames and UGA colleagues, in partnership with the Ugandan Investment Authority and the East Africa-America Business Council in Atlanta, hosted training workshops to begin preparing Ugandan textile and apparel companies to enter the U.S. market.

Job Dieleman, a UGA international trade consultant, and Robin Pearson, CEO of Lord & Robin Apparel Co., went to Kampala and presented a workshop on U.S. business practices for Uganda’s apparel industry. They also assessed companies’ export readiness.

“To determine if a company was export ready, we thought about a number of factors,” said Dieleman, who works for UGA’s Small Business Development Center. “Do they make a quality product? Can they respond to large orders? Are they financially healthy? Do they have a good track record?”

The workshop offered sessions on American culture, how to deal with U.S. businesses and how to build partnerships with distributors, agents and other companies. Finally, the team helped six export-ready companies prepare exhibits for one of the most influential trade shows in the apparel industry—the Sourcing at MAGIC Marketplace held at the Las Vegas Convention Center. In February 2006, representatives from the companies and from the Ugandan Investment Authority headed for Vegas.

“They had no concept how big and diverse the U.S. market is, and they had no idea prices were so low in the U.S.,” Dieleman said. “In fact, several looked for fabric suppliers for their own businesses.”

But the trade show also made it clear that Ugandan companies cannot compete head-on with the low prices that China’s apparel industry offers. As a landlocked country, transportation alone adds to the cost of Ugandan goods. Luckily, the companies are in an excellent position to compete in a niche market: organic cotton apparel, such as baby clothes. Those products created the most interest at the Las Vegas trade show and may put Uganda on the radar screen of U.S. investors.
“Northern Uganda has a cottage industry of organic cotton growers,” Dieleman said. “The organic cotton market is less price sensitive, is not a commodity and is a small niche but a fast-growing one.”

Uganda began growing organic cotton in 1994 and has the potential to be a large producer. Rich soils require little or no fertilizer; natural predators and intercropping eliminate the need for pesticides. And from a marketing perspective, American consumers are likely to welcome the opportunity to buy environmentally friendly products that also help better the lives of small producers and their families.

“Now we’re in the next stage of the project—taking U.S. companies to Kampala to build on the business relationships that were developed at MAGIC in February,” Ames said.

Led by Ames and Dieleman in October 2006, representatives from five U.S. companies toured Ugandan textile and apparel plants and participated in a conference on the U.S. organic apparel market. During the trade mission, Ames and Dieleman visited farmers in northern Uganda where cotton production is undergoing a revival.

Ames expected that orders for Ugandan goods would result from the trade mission. So far one company has placed an order and other U.S. firms have requested samples. Increased sales resulting from this project will help develop sustainable business relationships with U.S. companies.