Tuesday, 2 December 2014

Bringing the ghost factory back to life

For almost three decades, Mulungushi Textiles was at the core of Kabwe town, providing a livelihood for thousands of the town’s residents. But in January 2007, the factory, co-owned by the governments of Zambia and China, collapsed. Jack Zimba looks at the prospects of the factory as government plans to resuscitate it.

“Let me show you the pigs; they’re very big,” said the caretaker, breaking off from his monotonous moaning about his poor salary. He then led me out of the dingy, fetid room adjoining the poultry he uses as his office, to the pig pens. Above his table hangs a brightly-coloured Chinese ornament, a relic of the relationship that once existed between the government of Zambia and the Chinese government at this factory.
At the gate leading to the huge complex of buildings, uncompromising military guards from the Zambia National Service do not allow people to enter, but they will usually let in anyone intending to visit the poultry behind the factory to buy chickens or pigs if they don’t raise any suspicion.
Walking between the long columns of buildings which now lie deathly silent without a ding or hum of the spinning mills, gives one an eerie feeling of abandonment; it is almost hard to imagine that five years ago, these buildings were teeming with hundreds of workers spinning out 17 million metres of cloth every year plus over 100,000 pieces of clothing.
At the time of its closure, Mulungushi Textiles employed 1,005 workers. About 2,000 cotton farmers were also directly linked to the factory, supplying the raw material to its ginnery.
But in January 2007, the wheels of production at the huge factory ground to a halt, with devastating impact on Kabwe’s economy.
Now, however, there is talk from the Patriotic Front (PF) government of bringing this ghost factory back to life.
President Michael Sata had made the reopening of the factory one of his campaign promises to the people of Kabwe. Once on a campaign trail in the run-up to the 2011 elections, he had made a stop-over at the factory and tried to gain entry, but was stopped by the guards manning the gates. He is now the President and no-one can stop him.
“The PF government is re-opening Mulungushi Textiles in Kabwe this year and we shall work hard to ensure that we stump out corruption to give jobs to our people,” President Sata declared.
And following the President’s pronouncement, minister of Defence Geofrey Mwamba announced that three companies – one from Tanzania and two from China - had expressed interest in investing in Mulungushi Textiles.
But while many residents of Kabwe welcome the new government’s plan to reopen the defunct factory, those that once worked at the textile mills of the factory are less optimistic about the prospects of Mulungushi Textiles or the textile industry in general.
Mr Dickson Chirwa was union president for the textile workers at the factory until the day it was shut down.
His major concern is the state of the machinery that lies in the factory buildings. He says the poor state of the machinery was one of the major reasons the company collapsed.
“The machines we had in weaving were constantly breaking down and often time requiring replacement of spare parts which were bought from China and took too long to arrive,” he says.
Mr Chirwa says that the obsolete machinery in the weaving department had highly compromised the quality of the company’s finished product, thus making it inferior to imported fabric.
He thinks if there had been enough investment in new machinery at the factory, the company could probably have survived.
The company was still viable at the time it went under, he says.
The former union leader doubts the sincerity of the Chinese, who had 66 per cent stake in Mulungushi Textiles.
He, like some other former workers I talked to, accuses the Chinese partners of deliberately mismanaging the company so as to promote their own country’s textile exports to Zambia.
A plausible argument considering the huge volumes of Chinese-made cloths that find their way onto the Zambian market.
According to a report submitted by the union to the government on why the company failed, the problems at the factory begun in 2001 when the Chinese shareholders decided to change their management team.
The new management decided to turn five departments of the factory into subsidiary companies to operate alongside the main factory.
The five subsidiaries were: Mulungushi Textiles Development Company Limited, Mulungushi Cotton and Cooking Oil Company Limited, Mulungushi Garment Company Limited and Flamingo Bedding Company. The fifth company was called International Trade Centre, which dealt with exports, including to the US market through the AGOA (African Growth Opportunity Act).
The report states that the five companies, while making their own profits through exports, were heavily dependent on the main factory, thereby over-burdening it.
It further states that the new management team at the factory preferred exporting the high grade cotton instead of supplying it to the main factory for processing.
“Their idea was to export this cotton at the expense of supplying it to the Joint Venture having realized that the export market was more profitable than supplying to the Joint Venture,” reads the report.
So what would it take to revive Mulungushi Textiles?
Mr Chirwa says the government should first deal with the problems that led to the collapse of the factory, including regulation of imported second-hand cloths popularly known as salaula.
The government has not stated how it plans to protect the textile industry from salaula and other cheap imports from China.
In most parts of Africa, the textile industry seems to have been choked to death by much cheaper imports from China, as well as second-hand cloths from Europe and the US.
The story of African textiles across the continent is pretty much the same: countries liberalized their economies and their markets got flooded with cheap imports from Asia, Europe and the US, subsequently leading to the loss of thousands of jobs in the sector.
According to Neil Kearney, General Secretary of the International Textile Garment and Leather Workers Federation in Zimbabwe, the country has lost about 20,000 jobs on account of cheap imports from Asia that have flooded the country. The trend has been the same in South Africa where a similar number of jobs have disappeared in the sector.
Economics Association of Zambia president Isaac Ngoma says the future of the textile industry in Zambia is uncertain and so far there are no policies and incentives that are tailored to attract investment to the sector.
“Mulungushi Textiles has been earmarked for reopening, but the pronouncements have not borne any fruit,” he says. “It will be interesting to see how it can survive the competition in these dynamic times of fashion consciousness and ever changing preferences of the consumers.”
What the government has not explained clearly, however, is how it plans to protect the textile industry in future.
Mr Chirwa fears Mulungushi Textiles, if it reopens, will still have a short lifespan unless the problems that caused its closure in the past are fully addressed.
Mr Ngoma suggests that the most viable route is for the factory to produce uniforms for the security wings as well as school uniforms and chitenges for political parties. Both the MMD and PF relied heavily on China imports to dress their campaigns in the general elections last year.
Mr Ngoma also notes that what has contributed much to the collapse of the textile industry in Zambia is the high production cost for textile products, the poor value addition to locally grown cotton, the influx of substitute products like synthetic materials and polyester which are available at much lower.
“China has dominated the global market such that they produce for all notable global brands from the western world. Even the USA team at the 2012 London Olympics was clothed in Chinese made sports apparel,” he says.
A couple of decades ago, Zambia had a thriving textile industry with the likes of Mulungushi, Kafue, Mebro Garments in Kabwe, Vimal in Ndola, Serioes in Luanshya, but these are now shells with the factories used as warehouses only.
The spinning and weaving sub-sector has also not been spared. Zambia’s Swap Spinning Mills have been battling even in the era of the AGOA initiative.
And according to Mr Ngoma, there is evidence that partakers in this initiative are now importing from China and then sewing their labels and tags only to show that they are manufacturing the garments yet not. This, he says, is done to access the US market.
And with what happened in the cotton sector last season where the cash crop lost half of its value on the local market, causing uproar from farmers, cotton has become an accursed crop whose production is most likely going to decrease drastically.
William Chama is a small-scale farmer from Nyimba District in Eastern Province. In the last planting season, lured by the good market price for cotton the previous year, Mr Chama cultivated about three acres of the cash crop expecting to gain about K7 million. But he only realised about K3 million following the sudden slump in the price of the commodity.
He is now planning to cut his cotton production by half, and instead plant more groundnuts and sunflower, which he says have higher market value.
“We can’t grow a lot [of cotton] now because we fear the price won’t be good,” he says.
Mr Sampa blames the government for the impasse between the cotton farmers and the buyers. He thinks the government should be buying cotton from farmers the same way it buys maize.
“Farmers are complaining all over,” he says.
So, how then will the future owners of Mulungushi Textiles feed the mills at this factory if and when it reopens?
But perhaps that is not government’s major worry at the moment.
One of the major huddles in the privatization of Mulungushi Textiles has been its ownership. From the time it was established in 1983, the factory has been under the ministry of defence.
And because the factory was seen as a “military installation”, it could not be privatized like any other company back in the 1990s when most state-owned companies were sold off.
Instead the government sought a partner to recapitalize the factory and hence the formation of the Zambia-China Mulungushi Joint Venture.
Commerce and trade minister Bob Sichinga says before any talks of privatization can be held, the factory has to be transferred from the Ministry of Defence to his ministry.
And yet there is another even bigger huddle: the concession deal for the Zambia-China Mulungushi Textiles Joint Venture Ltd was meant to last 30 years. The company only operated for 10 years.
Defence minister Geofrey Mwamba has acknowledged the complexity of the deal. He told journalists that negotiations over the contract had not gone smoothly because the major shareholders were the ones calling the shots.
Given this scenario, it seems very unlikely that the factory will reopen this year as directed by President Sata. And this raises the question as to whether or not political will and the pressure to fulfill a campaign promise did override the reality facing the defunct Zambia-China Mulungushi Textiles. Or is the government really trying to revive a dead horse?

This article was published in 2012

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