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Zimbabwe's 'Look East Policy' effects country's textile units

After Zimbabwe controversially deposed former white commercial farmers off their land and on the back of frigid relations with the western world, the country declared its ‘Look East Policy’ in 2003. The Zimbabwe government shifted its economic relations from the West to the East facing an embargo from the US by way of Zimbabwe Democracy and Economic Recovery Act (ZIDERA) of 2001 and European Union (EU) article 96 of 2002. This lead to disastrous consequences and the textile industry suffered the most from this policy.

Before the ‘Look East Policy’, Zimbabwe had a big and thriving textile industry, which at its peak used to employ over 24,000 employees. With the policy, many Chinese textile players would trade all kinds of textile materials. The Far East nations and China have advanced production methods and can afford to offer their products at better prices. Therefore, local textile companies started to face challenges. For example, where a locally made face towel would be sold at $5 in Zimbabwe, Chinese dealers would sell the same at $1. The downward spiral soon started affecting an estimated 20,000 employees (83 per cent of the workforce) employed by textile firms lost their jobs in the twelve years that this policy has been in place. Production capacity utilisation, for these players has dipped below 10 per cent.

The downside of the policy spread to Cotton Production Industry too. The final straw was when the Cotton Company of Zimbabwe (COTTCO) applied for Judicial Management in November last year citing increasing debt burden, poor capacity utilisation and other viability challenges.

 
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