Cotton Textiles Sector

SECTOR OVERVIEW
Textile manufacturing in Ghana is an industry consisting of ginneries and textile mills producing batik, wax cloth, fancy printed cloth and Kente cloth. Firms have located in Ghana to serve local and regional markets with printed African patterned fabrics. The industry has shown signs of significant growth in recent years, promoting high-quality traditionally designed fabrics as “Made in Ghana” to niche markets, especially the US.


Ghanaian textile companies prefer to locate within designated industrial areas to take advantage of Ghana’s free zone regime and stable operating environment.
Today, Ghana’s textiles industry include vertically integrated mills, horizontal weaving factories and the traditional textile manufacturing firms involved in spinning, hand-weaving and fabric-processing.

Textile exports include:
• Cotton yarn
• Cotton fabric
• Printed fabric
• Polyester fabric
• Blankets
• Bed sheets

The dry, savannah climate in the northern regions of the country is ideal for the cultivation of cotton, which is the primary material used by mills, weavers, batik, and tie-dye manufacturers in Ghana.


The industry is supported by National Vocational Training Institutes throughout the country. These institutes provide basic practical and theoretical training in tailoring and dressmaking. There are also a growing number of private fashion design institutes and internationally acclaimed designers that teach latest techniques to aspiring textile designers.
The government has initiated various policies aimed at restructuring and improving the textiles industry. The objectives include:
• Increase of employment opportunities for the growing population
• Expansion and diversification of the economy
• Promotion of both domestic and foreign investment

THE MARKET
The main markets for textile and textile products are mainly the US and EU. Over the last five years, exports of cotton textiles and textile products have shown consistent upward increases. However, in 2009 cotton textile exported accounted for US$ 15,467,136. Although current 2010 figure is estimated to be US$ 7,611,053, this purported a decrease of 50.8% in value.


INVESTMENT OPPORTUNITIES
Ghana has a reputation for producing high quality, traditionally designed printed cloth. The widely celebrated Kente cloth of theAshanti and Ewe people are hand-woven and brightly colored with traditional symbols and design. African textiles have gained an international reputation for their patterns, but national branding had not been promoted heavily in the past. Promoting high quality, traditionally designed fabrics as “Made in Ghana” appeal to the niche USA markets that manufacturers are beginning to serve.

The following investment opportunities are available:
1. Production
• Textile companies to set up factories in Ghana to produce for the US market.
2. Marketing and Distribution
• Buyers and sellers to make exploratory visits to Ghana and request trial orders.
• Textile manufacturers to set up factories in Ghana to supply fabrics.
3. Raw Materials
• Fabric suppliers to supply raw material requirements for Ghanaian textile manufacturers.
4. Technological and Supporting Services
• Suppliers of textile manufacturing equipment to supply the Ghanaian market on a sustainable basis.
• Need for suppliers and financiers of factory building technology.


INVESTMENT INCENTIVES
The following are Investment Incentives thatexist in the country for manufacturers in the textiles industry:
1. Quota-free and tariff access to the US market based on approved African
Growth and Opportunity Act (AGOA) visa
2. Favoured industry status for textile exporting companies
3. Fast track support and facilitation of investments in the textile industry by government and a private-public sector development consortium4. Fast track access to sites and premises for factory building
5. Facilitated co-operation and active support of labour unions
6. Shipping ports with modern facilities
7. Exemption from customs import duties on plant and machinery, equipment and accessories imported exclusively and especially for establishing enterprises
8. Depreciation or capital allowance of
a. 50% in the year of investment b. 25% in subsequent years for plant and machinery
c. 20% in the first year
d. 10% in subsequent years for building
9. Corporate tax rebates of between 40 and 75%
10. Investment allowance of 7.5% per annum
11. Full repatriation of earnings in the currency of investment
12. Complete exemption from payment of direct/indirect duties and levies on all imports for production purposes and exports from the Free Zones
13. Complete exemption from payment of income tax on profits for a period of 10 years. (The income tax rate after 10 years shall not exceed 8%).
14. Complete exemption from payment of dividend taxes arising out of Free Zone investments
15. No import licensing requirements
16. 100% ownership of shares in the business entity by any investor
17. No conditions or restrictions on the repatriation of dividends or net profits