Investment Opportunities in the Cotton, Textiles, and Garments Industry in Tanzania

The country is a major cotton producer in the East African Community (EAC) region, with a 74% increase in cotton harvest in 2019. Tanzania's cotton production is primarily driven by smallholder farmers, with the majority of the cotton lint produced being exported to countries such as Bangladesh, India, and Indonesia. The local market for cotton and textiles is dominated by traditional fabrics and garments, with a significant portion of the cotton lint being used to produce these products. However, the industry faces several challenges, including low-quality cotton, inadequate ginning and processing facilities, and a lack of standalone fabric mills and garment factories. The Tanzanian government has prioritized the development of the cotton industry, with a long-term target of attaining one million tonnes of cotton production by 2023. To achieve this goal, the government plans to increase domestic cotton processing, facilitate investments along the value chain, and expand value addition at the Agricultural Marketing Cooperative Organizations (AMCOs) level. The Cotton-to-Clothing Strategy 2016-2020 has been successful in increasing production, but it will now need to focus on improving quality to meet the demands of the global market. Several barriers to investing in high-quality cotton exist, including harvesting tools, poor ginning equipment, and the availability of high-quality cotton for blending. To overcome these barriers, Tanzania can take a three-step approach to create a fully integrated cotton-textiles-garments industry over 10 years. In the short term (0-3 years), the focus will be on regional and local markets, with manufacturers relying on imported fabric. In the medium term (3-5 years), manufacturers will begin to integrate into the local value chain by sourcing fabric and/or yarn made from local Tanzanian cotton. In the long term (5-10 years), investors will set up garment manufacturing in Tanzania to access global markets, and manufacturers will fully integrate into the local value chain. The industry also faces challenges from Chinese imports, which have saturated the local market. To overcome this, Tanzania can focus on improving the quality of its cotton and textiles to meet the demands of higher-end buyers in regions such as the Middle East and North Africa. Additionally, the industry can tap into the US and EU markets by importing fabric and yarn, and then manufacturing garments in Tanzania. Overall, the cotton, textiles, and garments industry in Tanzania has significant investment opportunities, with a focus on improving quality, increasing domestic processing, and expanding value addition. With a three-step approach, Tanzania can create a fully integrated industry over 10 years, with a strong base for vertical integration and access to global markets.