After a period of severe hardship, South African textile and clothing exports are set for growth, according to Prospects for the Textile and Clothing Industry in South Africa, a comprehensive new report from Textiles Intelligence.

Textiles and clothing are of major importance to South Africa's economy. But like so much of South Africa's industrial base, this sector has been living for years in a comfortable but unreal world, sheltered from overseas competition by high import tariffs. As a result, few textile firms have felt the need to invest or deal with problems of over-manning. In addition, thanks to its stable and protected home market, the industry has had little need to seek out export markets.

However, the situation has changed dramatically. Tariffs have been progressively reduced, the market has opened up to outsiders and, for the first time, the industry has had to face foreign competition, particularly in finished garments. To make matters worse, the economic downturn which accompanied the Asian financial crisis has led to a flood of imports from low cost countries, notably from China, India and Pakistan. Since 1995, South Africa's garment imports have gone up by as much as 225%.

Not surprisingly the consequences for South African producers have been severe. Some have consolidated their operations by merging with competitors or acquiring other firms. Other companies have gone out of business altogether. The effect on local employment has been devastating.

But the more enterprising firms are reacting positively. Some producers have already moved out of traditional high volume areas and into more specialised activities such as furniture fabrics and industrial applications. The most exciting development, however, is the fact that a number of manufacturers are grasping new export opportunities. Many companies have invested in new capital equipment and reduced their labour forces in order to become more competitive.

Exports are now growing rapidly. In 2000 alone, South Africa's fabric exports increased in value by 13%, and clothing by a remarkable 38%. Knitted garments grew by a colossal 58%.

Moreover, the textile and clothing industry in South Africa is poised to benefit from a number of new trade agreements. One is the Southern African Development Community (SADC) Free Trade Agreement, which allows textiles to be traded duty-free among a number of countries within Southern Africa.

Another is the EU-South Africa Trade, Development and Cooperation Agreement (TDCA), which came into effect in January 2000. Under the TDCA, tariffs on all EU textile and clothing imports from South Africa will be reduced to zero by 2006.

But the most significant development is the US African Growth and Opportunity Act (AGOA). AGOA, enacted in October 2000, enables African-made clothing assembled from African or US fabric to enter the US market duty-free, subject to certain conditions.

These trade agreements place South Africa in a unique position as the "economic giant of the African continent".