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All Eyes Seem to Be on the African Cotton Sector as the Region Gets More Investment

Interest in Africa as fertile ground for cotton cultivation is growing.

In the latest development, the International Islamic Trade Financing Corporation (ITFC), a member of the Islamic Development Bank (IDB) group, has signed a syndicated agreement of 100 million euros ($118 million) with the government of Cameroon and the Société de développement du coton (Sodecoton) as the executing agency for the export of cotton and the import of various agricultural inputs, according to media reports.

The agreement was signed by Louis Paul Motaze, minister of economy, planning and regional development, and IDB Group governor for Cameroon in a ceremony in Yaoundé, Cameroon.

“ITFC approved a total financing of $370.30 million for the republic of Cameroon since its inception in 2008, and 80 percent of the approved financing went to the agricultural sector. This financing is tailored to suit the financing needs of cotton farmers, and resembles ITFC drive to create impact on the people in our member countries,” said Abou Jallow, general manager of operations at ITFC, in published reports.

The financing is in line with Cameroon’s policy of promoting agricultural exports, especially cotton. Sodecoton will ensure the distribution of the fertilizers, in addition to buy from farmers their raw cotton and process into cotton fiber for exporting. Cotton is one of the country’s main exports and an important revenue generating vehicle for the country.

Turning to Mozambique, the country said this week it was working with the Better Cotton Initiative (BCI) to take its domestic cotton sector to the next level with additional economic and environmental efforts.

[Read more about cotton: ITC and WTO Partnership to Spell Greater Transparency for Global Cotton Sector]

The Cotton Institute of Mozambique (IAM), a government body that is responsible for the nation’s cotton sector, tapped BCI to accelerate its cotton sustainability goals. In 2014, IAM and BCI agreed to a strategic partnership that upholds BCI criteria within Mozambique’s national cotton growing regulations. This move marked the first time a national government took on the Better Cotton standard—placing Mozambique on a better path to reach its goal of becoming the first country in the world to produce 100 percent Better Cotton.

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Despite peaking at 182,000 tons in 2012, cotton production has remained considerably low over the past five years. Cotton yields in Mozambique have fluctuated, leaving many cotton processing plants unable to operate at capacity and properly plan for future production. While average yields have increased from 400 to 600 tons per hectare, sustainability challenges, including poor seed quality, loss of soil fertility and pest infestations have taken a toll on Mozambique’s cotton crops.

With its BCI partnership, Mozambique is aiming to bring its cotton sector back on track, with better environmental practices and the opportunity to grow its global presence.

In November, four African cotton producers—Benin, Burkina Faso, Chad and Mali, known as the Cotton Four—urged World Trade Organization members to increase assistance for enhancing cotton production, improving local processing capacity and developing cotton-to-textile value chains in Africa and to curb domestic support to the cotton sector.

The Cotton Four presented the Cotton Roadmap Project, which seeks to promote the cotton sector by improving the local processing capacity and developing cotton-to-textile value chains at the regional level. The objectives of the project, developed by the C4 in cooperation with the ITC, reaches beyond the C4 region and encompasses the Western and Central African sub region.

This new initiative includes impact indicators covering local processing capacity aimed at creating a robust and competitive cotton-based industry in Africa.

Kai Hughes, executive director of the International Cotton Advisory Committee, said, “If we want to make a difference in Africa, it boils down to how we should increase cotton yield.”

Hughes also stressed the role of cotton as a driver of economic growth and its contribution to food security and socio-economic and environmental sustainability.

WTO director-general Roberto Azevêdo noted that the number of projects in the cotton-specific sector in Africa has remained stable, and that the total value of commitments stands at $203.6 million, of which $113.7 million has already been disbursed.