As a labour-intensive and export-oriented industry, textiles was the first manufacturing segment to benefit from the creation of an offshore regime in 1972. For around 35 years the sector was one of the main engines of GDP growth, benefitting from easy access to European markets and a competitive workforce. Since 2008, however, the industry has slowed as a result of the expiration of the Multi Fibre Arrangement (MFA) in 2005 and labour unrest after the 2011 revolution. To revive growth and tap new markets overseas, authorities are now looking to reorient production towards technical textiles and integrate into fast-fashion channels.
Tunisia’s textile sector today is composed of 1700 companies that contribute roughly 3% to the country’s GDP and account for 25% of exports.
In 2010 Tunisia was the fifth-largest supplier of textiles to the EU behind China, Bangladesh, Turkey and India, but the country has seen its position decline to ninth in recent years due to frequent labour disputes and production disruptions. The country currently accounts for 2.47% of textile imports to the EU, with lingerie, swimwear and knitted items particularly strong segments. Tunisia also produces one-third of the work-wear, bras and jeans sold in Europe.
With increased competition from low-cost Asian producers following the end of the MFA, foreign direct investment (FDI) to the sector has been declining since 2008. In 2015 the figure totalled TD40.8m (€17.5m), led by French and Italian companies that also receive the majority of local output – 36% and 28%, respectively. However, 2016 saw a drop of 45% in terms of new FDI, suggesting that 2015 may have been an outlier year.
Conversely, the sector saw a positive turnaround in terms of export performance, with a rebound in exports by 9.8% after negative growth between 2008 and 2015. The sector tallied $2.4bn worth of exports in 2016, mostly to the EU, which accounts for 80% of all textile exports, with France (36%), Italy (21%) and Germany (12%) as the leading markets.
While initially focused on low-value-added activities, the sector has gradually engaged in product development in a host of high-value-added niches, including textiles for the automotive, health care and aviation industries. A total of 250 companies already operate in technical textiles, of which two-thirds are dedicated to the apparel, personal protection and sportswear markets. To foster innovation and business planning in the Tunisian textile industry, the authorities established the Monastir El Fejja Competitiveness Pole (MFCPOLE) in 2006, which includes a business incubator, a technological resource centre, a fashion institute and two industrial parks. Aimed at linking companies to supporting institutions, MFCPOLE was also designed to foster start-ups.
The textiles industry is one of the largest employers in Tunisia, with over 160,000 workers paid $200 per month on average. The sector relies on a number of training institutions which include the Higher Institute of Technological Studies of Ksar Hellal, the National Engineering School of Monastir and the Higher Institute of Fashion Professions of Monastir, as well as 11 training centres for specialised workers and eight sectoral training centres for supervisors and technicians.
Despite the recent increase in exports, the sector has struggled to revive growth, owing to a fall in orders, greater competition, and labour and production disruptions. To help the entire industrial sector recover, the government has mobilised approximately TD200m (€85.8m) in financial support for companies in difficulty, as well as offering debt restructuring plans and new training programmes.
To maintain its competitiveness going forward, Tunisia’s textile sector will need to reinforce its sourcing capacities via the implementation of procurement and sales consortia, optimise integration between the textile and garment segments, negotiate with Asian businesses to supply small or restocking orders, and encourage wholesalers to hold stocks in the country.