W A V T E Q. Global FDI trends in the Textiles sectors: How to attract FDI that will have the biggest sustainable development impact.

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1 1 W A V T E Q Global FDI trends in the Textiles sectors: How to attract FDI that will have the biggest sustainable development impact. 2018

2 WAVTEQ company overview About us 2

3 Recent clients: national and international organizations LEAD GENERATION SERVICES 3

4 Sustainable Development Goals: SDG-target driven FDI About us -SIAS Adapting investment promotion strategies and incentives policies so that they support environmental and social development while still achieving economic development objectives Thought-leadership and results-driven consulting services to help our government clients meet develop and implement SDG target driven FDI strategies

5 5 Market context: FDI trends W A V T E Q

6 Share of global FDI inflows by world region FDI inflows by destination world region (% share) Asia-Pacific = world s leading region for FDI in 2017, overtaking Europe and North America Africa s market share of FDI remains at just below 3% of global FDI flows similar to Africa s share of world GDP but not of population (Africa=16%) = suggests very high FDI growth potential 40% 35% 30% 25% 20% 15% 10% 5% 0% Europe North America Asia Pacific LAC CIS Africa Middle East ,0% 26,6% 26,5% 8,8% 1,5% 2,9% 2,2% ,3% 26,5% 27,1% 7,5% 3,1% 2,8% 2,3% ,3% 20,9% 35,7% 10,6% 2,8% 2,9% 3,1% Source: Based on UNCTAD data 6

7 FDI expansion plans of companies : WAVTEQ survey FDI into Africa Africa very attractive for FDI 7 Asia Pacific 45% Europe North America Africa 39% 37% 41% Latin America & Carib 32% Middle East 23% 0% 10% 20% 30% 40% 50% Source: 7

8 Location motives for Manufacturing FDI into Africa % of companies Domestic Market Growth Potential 47,2 Regulations or business climate 30,5 Proximity to markets or customers 25,9 Skilled workforce availability Lower Costs Infrastructure and logistics 6,4 11,1 11,1 In Africa, FDI is market-seeking, driven by access to both regional and domestic markets Natural Resources IPA or Govt support Technology or Innovation 5,5 3,7 1,8 FDI location is also determined by a good regulatory & business climate, skilled workforce and lower costs Other 5, Source: WAVTEQ based on

9 Top 15 destination countries for FDI into Africa Greenfield FDI (January - July 2018) 9 Greenfield FDI ($USD) FDI jobs 1 South Africa Egypt 2 Egypt Morocco 3 Morocco Tunisia 4 Kenya Guinea 5 Nigeria Ethiopia 6 Cote d Ivoire (Ivory Coast) Nigeria 7 Ethiopia Uganda 8 Ghana Kenya 9 Tunisia South Africa 10 Tanzania Algeria 11 Algeria Congo (DRC) 12 Mozambique Burkina Faso 13 Zambia Cote d Ivoire (Ivory Coast) 14 Zimbabwe Zimbabwe 15 Uganda Namibia Source: Based on UNCTAD data 9

10 USD m FDI inflows by year in Burkina Faso Strong growth since 2015 to near peak levels 600,0 500,0 400,0 300,0 200,0 100,0 - FDI inflows (USD m) Year Source: Based on UNCTAD data

11 Investor Signal: Turkey into Burkina Faso 11 Ayka Textile, based in Turkey is investing $378 million in Burkina Faso in the Textiles sector in a Manufacturing project. The company plans to invest CFA Fr200bn to establish a cotton processing plant in Burkina Faso. Operations are to commence in quarter three of This Investor Signal was recorded by fdi Markets on February 2018: Company Website:

12 Investor Signal: South-Korea into Africa 12 South-Korea-based Hansae, a garment company, is planning to expand its international presence. The company is considering building a new factory in Africa in the medium to long-term as well as establishing a management marketing and research and development centre in Europe. This Investor Signal was recorded by fdi Markets on Jun : Company Website:

13 Investor Signal: Taiwan into Africa and Latin America & Caribbean 13 An Investor Signal has been identified for Makalot Industrial (Taiwan) going into Africa and Latin America & Caribbean in the Textiles Sector. The company is considering opening manufacturing facilities in Africa and central America. The African facilities would be aimed at US and European clients given the cheaper transportation costs from the continent. This Investor Signal was recorded by fdi Markets on April 2018: Company Website:

14 How to attract FDI that will have the biggest sustainable development impact? 14 W A V T E Q

15 Sustainable Development Goals (SDGs) target driven FDI strategies How to attract FDI that will have the biggest sustainable development impact 15

16 16 WAVTEQ s Sustainable Development Company Index W A V T E Q

17 Key Criteria WAVTEQ s Sustainable Development Company Index 17 Download a FREE copy of our Sustainable Development Report: wavteq.com/publications

18 Case study: Largest Chinese & Taiwanese textiles companies WAVTEQ s Sustainable Development Company Index 18 Company Revenue USD billion Number Employees of Country origin of Company Description (produced items) Download a FREE copy of our Sustainable Development Report: wavteq.com /publications C1 >3 5,000-10,000 China Shoe producer C2 <1 2,000-5,000 China Lingerie producer C3 >1 10,000-20,000 China Down jacket producer C4 6 2,000-5,000 China Yarn producer C5 <1 20,000-50,000 China Cotton textile supplier C6 <1 2,000-5,000 China Premium quality leathers C7 >2 10,000-20,000 China Knitwear producer C8 >1 2,000-5,000 China Sports footwear, apparel & accessories C9 <1 5,000-10,000 China Viscose rayon producer C10 <1 5,000-10,000 China Women s fashion producer C11 >3 2,000-5,000 China Textile home goods producer C12 <1 5,000-10,000 China High-tech fashion producer C13 <1 5,000-10,000 China Lingerie materials C14 >1 20,000-50,000 China Yarn-dyed fabric manufacturer and shirts C15 >1 10,000-20,000 China Machines for textile engineering C16 <1 2,000-5,000 Taiwan Headwear items C17 <1 2,000-5,000 Taiwan Textile home accessories C18 <1 5,000-10,000 Taiwan Knitted fabrics and knitwear. C19 <1 2,000-5,000 Taiwan Textile producer C20 <1 >50,000 Taiwan Athletic shoes C21 >10 10,000-20,000 Taiwan Chemical products incl. fibres for textiles C22 <1 2,000-5,000 Taiwan Patch manufacturer C23 <1 2,000-5,000 Taiwan Performance fabrics and garments C24 <1 5,000-10,000 Taiwan Down products C25 <1 20,000-50,000 Taiwan Apparel C26 >10 20,000-50,000 Taiwan Denim fabrics and denim garments C27 8> >50,000 Taiwan Shoe producer C28 N/A 10,000-20,000 Taiwan Ready-to-wear garments C29 >2 5,000-10,000 Taiwan Jean producer C30 <1 2,000-5,000 Taiwan Textile products

19 Commitment of Textiles Companies to Sustainable Development WAVTEQ s Sustainable Development Company Index SD Index Classification of Chinese and Taiwanese textile companies (n=30) LAGGARDS FOLLOWERS LEADERS TOTAL Taiwanese companies Chinese companies Both locations Download a FREE copy of our Sustainable Development Report: wavteq.com/publications

20 Standards and memberships found in textile companies WAVTEQ s Sustainable Development Company Index 20 Name of standard Textile Exchange Global Recycled Standard Version 3 Global Organic Textile Standard, GOTS-NL, Version 4,0 ISO 14001:2004, revised format: ISO 14001:2015 Worldwide Responsible Accredited Production - WRAP Social Accountability International - SA8000 Bluesign standard - sustainable textile production Better Work Initiative Fair Labour Association (FLA) Leather Working Group-promoting sustainable leather production Source: WAVTEQ

21 Sustainable Development -Checklist for IPAs WAVTEQ s Sustainable Development Company Index Ask the company for a copy its latest published CSR report 2. Check the CSR report for any standard guidelines for sustainability reporting like Global Reporting Initiative (GRI) 3. Ask company for a list of any voluntary implemented environmental and social industry standards or memberships in fair labour associations 4. Check which standards are internationally recognized and require external auditing. Exclude standards with narrow area of influence (e.g. standards for greenhouse emissions) 5. Check validity for all existing standard certifications. The company needs to show the respective current certification certificate for each implemented standard or membership 6. Discuss with the company their willingness to apply CSR and specific environmental and social standards to their investment in your country and be prepared with the standards you would like to the company to adhere to, which will typically include industry-wide and sector specific standards 7. For government contracts or public-private-partnerships (PPP), consider as a pre-condition for the tender process that the company has a CSR that adheres to standard guidelines and certification in key environmental and social standards 8. Consider awarding incentives and free zone licenses only to companies that meet CSR and strict environmental and social standards

22 WAVTEQ - thought leadership in how to attract FDI About us 22 Join over 2,000 economic development professionals and sign-up for free to download our special reports, presentations and FDI studies. /publications

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