Rapid exchange rate depreciation, high inflation and suspension of the residual fuel oil (RFO) have pushed up prices of locally made textiles, with the industry’s growth taking a big hit this year.
The cedi has lost about 53.8 percent of its value since beginning of the year, according to the 2023 budget statement and economic policy of government.
And losses suffered by the cedi against the US dollar and other major trading currencies contributed to the annual producer price inflation (PPI) reaching a new record high of 65.2 percent year-on-year in October 2022 from 45.6 percent the previous month.
These developments, in addition to suspension of the subsidy on RFO last month – as one of the measures to ease the financial burden on the Price Stabilisation and Recovery Account (PSRA) – are seriously threatening the textile industry’s ability to raise sufficient revenues to survive the upheaval in the economy, forcing the likes of Tex Styles Ghana Limited (TSG), producer of GTP and Woodin and distributor and marketer Vlisco in Ghana, to adjust their prices just to stay afloat.
“The exchange rate is one of the major challenges we are having here as a company, because the things we buy are in US$ and euros. The depreciation has really hit us, which is why we are increasing our prices,” TSG’s Sales Director, Emmanuel Debrah Kissi, told the Business and Financial Times during Tex Styles Ghana media engagement and factory tour.
He said despite the hikes in price which have happened about six times already, the company’s margin still keeps dropping: “We are not able to increase at the rate at which the cedi is depreciating, as well as rising inflation.
“This year has really been a difficult one. We have actually effected about 25 percent average increase just recently to try and close the gap we have. Same period last year, we had already done about 17million yards.
“Currently, we have done about 15million yards; we are already in December and one can’t really see the euphoria around. And so sales are not really going to be as we saw in the past years, especially as we have just made a 25 percent increase in prices. We have increased prices more than six times, and cumulatively we have done close to about 30-35 percent increment to survive the economic downturn in the country,” Mr. Debrah Kissi said.
Meanwhile, the media engagement and factory tour allowed Head of Woodin Operations, Mavi Kumah, to project the brand as one designed with the young and vibrant generation in mind.
Working over the years with local designers on creating exciting campaigns and ready to wear collections for the local and international market, Woodin is also keen on improving the entrepreneurial spirit of young people through a collaboration with Shoe Fabriek, a local footwear manufacturing company in the Eastern Region of Ghana, she said.
Woodin’s over-400 new designs of fabrics produced per year with 4 major concept collections are designed by teams in Ivory Coast and Ghana, and manufactured in factories of both countries with Ghana having 50 percent.