Why Angola's Textile Industry Just Received a $1 Billion Investment

Posted by Ryan Robinson on Jun 27, 2013

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The Japanese Bank for International Cooperation issued Angola a $1 billion line of credit to revamp three major textile factories and boost export levels for the nation.

Marubeni Corportion, Japan's largest commodities trader, is leading the reconstruction and renovation efforts on the three textile factories with hopes of revolutionizing the country's fledgling textile industry and diversifying their sourcing efforts.

In the latest bid from a major global commodities broker to diversify their sourcing channels, the Japanese Marubeni Corporation has seen an opportunity to strengthen their supply chain in Angola. This follows the increasingly popular trend in the textile & apparel industries of companies seeking alternative sourcing options to China and other oversaturated markets.

Marubeni is making a strategic play at a time when Angola is striving to diversify its economy and employ more of its people. The Angolan economy currently depends on oil exports for more than 40% of its annual output. 

The three textile plants will employ an estimated 2,700 people by 2015, and the first of the three locations is set to be operational within a few months. The Textang II facility that will be completed first will be able to produce 9 million meters of fabric annually, while the other two plants will be ready to begin production in early 2015.

Africa Textil in the Benguela province will be able to produce about 2 million bed sets and 12 million towels each year beginning in 2015. The Satec factory in Kwanza Norte will have the capacity to make 4 million shirts and 6 million meters of fabric annually beginning in 2015 as well.

While Angola has not been considered much of a player in apparel sourcing until recently, the stage is certianly set for a significant boost in productivity for the industry. Opening up Angola as a more reliable and established sourcing location for the apparel industry will provide brands with more options to diversify away from the traditional sourcing locations of the world. Sub-Saharan Africa is rapidly becoming a more viable option for apparel sourcing.

Sourcing Diversification is a Win-Win

Demand for more alternative sourcing options for global brands is at an all-time high. Textile mills around the world are getting unparalleled access to investment from corporations that are seeking to build their supply chains in emerging markets. All the while, the local economies in these developing nations are creating jobs, building industries, and increasing export levels.

The Marubeni Corporation has seen an opportunity to invest on the ground floor of the Angolan textile supply chain, which could make this a potentially very lucrative deal for them in the long run. Building the inroads of this supply chain now will afford them early access to setting up a more extensive supply chain in other industries later down the road as well.

This is another example of how multinational corporations are now investing heavily into emerging markets to diversify their exposure and develop infrastructure that will help them stay ahead of the curve moving into the future.