Lessons from Tristar experience
Oct 16, 2006
THE Tristar factory in Bugolobi has stopped work although Managing Director Kananathan has called New Vision from the United States to say that he expects orders for an estimated 160,000 pieces per month for the next 18 months.
THE Tristar factory in Bugolobi has stopped work although Managing Director Kananathan has called New Vision from the United States to say that he expects orders for an estimated 160,000 pieces per month for the next 18 months. At an average value of $5 per piece, that would amount to over $14 million, more than the $12 million of garments exported by Tristar since it was set up three years ago.
It seems improbable that Tristar will double its rate of exports in the next 12 months considering that it is presently closed down. Let us wait and see.
Government support for Tristar was initiated with the best of intentions. AGOA presented a huge export opportunity into the United States.
However the sector has not properly taken off. The biggest handicap has been geographical. Uganda is too far from Mombasa. Countries like Mauritius, Sri Lanka and China situate their successful garment industries on the sea to minimise freight costs.
For an experiment to be of value, the results must be objectively analysed.
Realistically, it appears as though Tristar can only survive through government subsidies. It is doubtful that it can even produce garments for the local and regional market at a cheaper price than imported garments.
Government therefore needs to conduct a review into the long-term viability of the export potential of the textile sector. If it is not considered viable, it should identify other export sectors with greater potential (e.g. fruit juice, meat products and other partly processed commodities).
Government may continue to provide seed money to kick-start businesses but next time it should be done on an industry-wide basis and not selectively for certain individual companies. The estimated $30 million that has gone into supporting Tristar and the Basajjabalaba group of companies might have had much more impact if it was channelled into sectoral support, for instance concessional finance for anyone setting up abattoirs or fruit juice plants.
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It seems improbable that Tristar will double its rate of exports in the next 12 months considering that it is presently closed down. Let us wait and see.
Government support for Tristar was initiated with the best of intentions. AGOA presented a huge export opportunity into the United States.
However the sector has not properly taken off. The biggest handicap has been geographical. Uganda is too far from Mombasa. Countries like Mauritius, Sri Lanka and China situate their successful garment industries on the sea to minimise freight costs.
For an experiment to be of value, the results must be objectively analysed.
Realistically, it appears as though Tristar can only survive through government subsidies. It is doubtful that it can even produce garments for the local and regional market at a cheaper price than imported garments.
Government therefore needs to conduct a review into the long-term viability of the export potential of the textile sector. If it is not considered viable, it should identify other export sectors with greater potential (e.g. fruit juice, meat products and other partly processed commodities).
Government may continue to provide seed money to kick-start businesses but next time it should be done on an industry-wide basis and not selectively for certain individual companies. The estimated $30 million that has gone into supporting Tristar and the Basajjabalaba group of companies might have had much more impact if it was channelled into sectoral support, for instance concessional finance for anyone setting up abattoirs or fruit juice plants.
Ends