Vikas Budhiraja
Head – Marketing, Arise Textile Park & Apparel ARISE IIP
Our partnerships with African governments have been particularly fruitful
As a developer and operator or world-class industrial eco systems in Africa, ARISE Integrated Industrial Platforms (IIP) designs, finances, builds and operates integrated and tailor-made industrial zones with high added value. In a conversation with Fibre2Fashion, Arise Textile Park & Apparel’s Head Marketing Vikas Budhiraja talks about the gap in the African textile industry, advantages of investing in Africa, and why Benin is a good place to invest.
Give us an outline of Arise IIP—how and when was it formed, its promoters, milestones achieved through the years and current footprints around the world.
ARISE IIP has set itself as a trailblazing industrial ecosystem builder with activities spanning various African countries. Our primary vision is to catalyse job creation and continue our journey of improving the quality of life of communities in targeted regions through sustainably driven industrialisation and strive to maintain an impact-driven growth with a core transformational value.
We take a note of the natural resources currently being exported out of the African countries and put in place an ecosystem that promotes processing of these natural resources within that country. We also look at import substitution of high value products by encouraging import of raw materials, semi-knocked down or completely knocked down kits and value addition within the African countries to meet the domestic requirement.
What role are the African governments playing in supporting your business and the investors investing in your textile parks? What is the kind of advantages investors get from the governments?
Our partnerships with the African governments have been particularly fruitful throughout the years, and our joint efforts have led to concrete advancements in boosting local economies as well as pushing forth a sustainably driven agenda for growth. These ongoing partnerships have, without a doubt, provided us with assistance with incentives for initial skilling in terms of wage subsidy (50 per cent for the first 18 months of operation). Additionally, we benefit from zero income tax, payroll tax, dividend tax, withholding tax and land tax. Duty free imports of raw materials, machinery and accessories are also a considerable perk.
What are the main activities / focus areas of Arise IIP in 2022?
In our outlook for this year, we are focusing our efforts on continuing to ensure easy, timely, and hassle-free boarding of textile investors in the textile zones operated by ARISE IIP in Togo and Benin. This evidently goes hand in hand with ensuring that current and new textile investors get all the benefits we commit to providing for a smooth-sailing operation. Thankfully, our textile teams deploy thorough efforts that are backed by lessons learned from our vast and proven experience on the African continent and beyond. Over the past few years, Benin has seen an absolute boom to become the largest producer of cotton seeds in Africa. These strides on Benin’s end are the start of its upward climb. Currently reaping the benefits of strong trade agreements, this promising country has become a key location for exporting textile products, with the support of the AGOA (African Growth and Opportunity Act) and GSP (Generalised System of Preferences) agreements for the United States as well as the EBA (Everything But Arms) and GSP for Europe. With the creation of the Glo-Djibe Industrial Zone, we aim to foster such an impressive growth of the country further.
What are the few projects that were completed by you successfully last year and in which places?
One of our prominent projects that has proven its success is our Gabon SEZ (Special Industrial Zone). The GSEZ model has rapidly grown to be one that is highly replicated across African regions as companies within the zone and their trade partners have hired close to 20,000 people (both directly and indirectly) and garnered an annual export of $500,000 worth of processed products to 54 different countries. Such an evident success does not end there. We have also launched PIA (Plateforme Industrielle d’Atetikope) in Togo back in June 2021, which spans an impressive 750 hectares. It is strategically located in Lome with a thriving textile park providing ready plug & play infrastructure facilities for setting up integrated textile units like spinning, weaving, processing, and garmenting, matching with the international social, environmental and sustainability standards.
Did the pandemic play any role in the implementation of your project plans and business?
The recent COVID-19 pandemic supported expansion of ARISE into multiple African countries because all policy and decisionmakers understood the pressing need for the self-sustenance of African governments, rather than heavily relying on the export of commodity for foreign exchange earnings.
ARISE IIP’s commitment to facilitating this step out of a dependency-geared model has and is still proving its benefits to local economies as more industrial hubs are seeing the day throughout the continent.
Which developments in global politics support the development of textile zones in Africa and why is Benin one of the most appropriate locations for Asian textile players to invest?
The recent ban by US on imports of products (textile and apparel) that are made from Xinjiang (a cotton growing province in North-China which is at the middle of a controversy for use of forced labour) cotton has resulted in an unprecedented demand for a textile eco system which is sustainable, traceable, vertically integrated, and near to end market.
The Tigray war in Ethiopia, which has led to the cancellation of AGOA duty benefits, also pointed at the need of nearshoring, and hence setting Benin as an alternative destination within Africa in order to cater to the Western markets.
Benin in West Africa to a great extent can fill the gap created because of these two developments. It has 300,000 tons/year of traceable lint cotton that is CMIA certified, which is made available for vertical integration in the zone. Besides the AGOA and EBA benefits, it has competitive factors of production like land, labour, power, and logistics. The socially and environmentally compliant zones have common effluent treatment facilities. Plus, as a country, Benin is politically stable with its currency pegged against the euro. All taxes are at ‘zero’, providing an exceptional fiscal climate for investors. And there is also an 18 months of wage subsidy at 50 per cent for new investors.
What is the gap you see in the African textile industry as on date and how do you wish to close the loop?
Although boasting an enormous potential, the African textile industry may still require restructuring and a general streamlining of some key industrial processes. The most notable aspects that still require room to grow and which have been more and more evident as we’ve established our activity on the continent begin with missing industrial ecosystems. To fill this gap, we are ensuring control on all factors which are crucial for building a sustainable textile ecosystem. This includes raw material availability (stored in our warehouses), power, skilling, ensuring logistics, near-shoring, customers, ancillaries, and finally, the implementation of government policies for the zone to make it a closed loop.
Furthermore, we centre our activities around sustainable and compliant practices through Common Effluent Treatment Plant (CETP) based on ZLD (zero liquid discharge) technology, raw material traceability (CMIA/BCI certified cotton), ESG practices and life cycle assessment exercises. In addition, our zone allows for a range of flexible characteristics in terms of funding, including co-investment and through financial institutions for capital assets in terms of the textile value chain. Other flexibility in vertical integration options include backward or forward integration. For our flexibility to market, this involves the local, Economic Community of West African States (EOWAS), or international facets.
Published on: 09/03/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
