Many international organizations participated in this workshop, including the Organization of the Islamic Conference (OIC), Standing Committee For Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC), Steering Committee of Cotton in Turkey, West African Economic and Monetary Union (UEMOA), African Cotton Association, International Cotton Advisory Committee (ICAC), Islamic Centre for the Development of Trade (ICDT), Islamic Chamber of Commerce & Industry (ICCI), in addition to specialists and experts in manufacturing and trading cotton in several countries such as Benin, Egypt, Senegal, Cameroon and Burkina Faso, Turkey, Uzbekistan, Italy and some officials of the textile companies in Egypt. 

Ms. Alaa Al-Dulaimy, Assistant Secretary General for Media and Information of the ICCI represented the Chamber in the events of the workshop. She referred in her speech to the strategic importance of the cotton industry saying "the white gold is ignored for many years, so, we should have practical program so that we can establish companies and networks to help entrepreneurs achieve the desired objectives such as acquiring sound skills, communication and training." 

 Al-Dulaimy believed that in order to activate and work properly in this industry, exchanging experience is a must. She pointed out that she read about the excellence centers that aim to enhance and develop the cotton industry and to achieve harmony, communication, and networking so as to improve the technology of cotton production in OIC Member States. So these countries especially the private sector should exert great effort so as to accomplish the aspired goals.

Ms. Alaa Al-Dulaimy stressed that the Islamic Chamber gave a due attention to the development of inter-investment and the cotton industry is an investment in itself. So the Islamic Chamber established the International Islamic Company of Exploration of Investment Opportunities & Promotion of Intra-Trade (Foras) based upon commercial principles. It gathers Muslim businessmen who are concerned with exploring business and investment opportunities all over the Islamic world, preparing feasibility studies, providing consults and the needed information for the promotion and development of the projects, and providing the necessary information for activating intra-trade.

Al-Dulamiy said as the cotton industry is very important for Islamic economy, we should pay more attention to this industry and to include it among the project of Foras. But this action necessitates many procedures and mechanisms; firstly we have to agree with the Islamic Center for Development to find a specialized information center to collect information on cotton in the OIC countries, and then charter an investment map presented to investors inside and outside the Organization's countries.
Ms. Alaa Al-Dulaimy concluded her speech by appealing to the officials to give due concern to promotional aspect of cotton industry as it is clear that it does not have enough promotion. 

A number of visits have been arranged to be paid by the participating countries for textile factories in Burj Al Arab and other regions on Tuesday 13 October to get closely acquainted with the nature of Egyptian production. 

FINAL

  REPORT OF 

THE WORKSHOP ON

 «TRADE AND INVESTMENT IN THE COTTON SECTOR IN OIC MEMBER STATES»

ORGANISED BY
 

THE ISLAMIC CENTRE FOR
DEVELOPMENT OF TRADE

UNDER THE AUSPICES OF

THE MINISTRY OF TRADE AND INDUSTRY
OF THE ARAB REPUBLIC OF EGYPT

AND IN COLLABORATION WITH

THE INTERTIONAL ISLAMIC TRADE FINANCE CORPORATION

Cairo, 12-13 October 2009
 
REPORT ON

“TRADE AND INVESTMENT IN THE COTTON SECTOR
IN OIC MEMBER STATES”

In pursuance of the relevant resolutions of the 24th Ministerial session of the COMCEC held in Istanbul in October 2008, the Ministry of Trade and Industry of the Arab Republic of Egypt and the Islamic Centre for Development of Trade (ICDT) in collaboration with the General Organization for International Exhibitions and Fairs (GOIEF) and the International Islamic Trade Finance Corporation (ITFC) organized a Workshop on "Trade and Investment in the Cotton Sector in OIC Member States" in Cairo on 12th - 13th October 2009 on the sidelines of the 12th Trade Fair of the OIC Member States (12th OIC/EXPO 2009,  11th - 16th October 2009) in the General Organization for International Exhibitions and Fairs, Conference Hall AHMOUSS.
• Aims of the workshop:
The aims of the workshop were to gather economic operators and experts from the OIC Member States, the OIC institutions, regional and international organizations of the OIC Member States in order:
? Identify the ways and means likely to strengthen the cotton sector with a view to recovering the potentialities for a lasting trade development
? Create business opportunities between economic operators so as to enable them to establish direct relations between them.
? Formulate a set of concrete recommendations to be submitted to the Steering Committee on cotton chaired by the Republic of Turkey.
This workshop was composed of three tracks:
? a seminar (12th of October 2009);
? buyers/sellers meeting and visits to some leading Egyptian factories working in the cotton sector and products thereof in Alexandria (13th October 2009).
This workshop was attended by:
  HE Mr. Allal RACHDI, Director General of the Islamic Centre for development of Trade (ICDT)
  H.E. Dr. WALEED ABDULMUHSEN AL WOHAIB, Chief Executive Officer of the International Islamic Trade Finance Corporation (IDB Group).
  H.E Mr. Naghy JABAROV, OIC General Secretariat (Department of Economic Affairs);
  H.E Mr. Ozcan PEKTAS, Director General, the Ministry of Trade and Industry  of the Republic of Turkey, Chairman of the Steering Committee on cotton.
 
The Representatives of the following OIC Member States:
Benin, Burkina Faso, Cameroon, Egypt, Iraq, Libya, Mali, Morocco, Mozambique, Nigeria, Niger, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, Turkey, Uganda, Uzbekistan.
? The OIC following Institutions:
   The International Islamic Trade Finance Corporation (ITFC);
   The Islamic Chamber of Commerce and Industry (ICCI).
   The Islamic Centre for Development of Trade (ICDT);
? The Representatives of the following International and Regional Organizations:
   The International Cotton Advisory Committee (ICAC);
   The African Cotton Association (ACA);
(The list of participants is in annex n° 1)
A/ OPENING CEREMONY:

The official opening ceremony was chaired by Mr. Tharwat Al Miniawi, Representative of the Ministry of Trade and Industry of the Republic Egypt, the following speakers took the floor during the opening ceremony :
  H.E Mr Allal RACHDI, ICDT Director General;
  H.E Dr A. Al-Wohaib WALEED, CEO of the ITFC;
  H.E Mr. Naghy JABAROV, Representative of the OIC General Secretariat;
  H.E Mr. Ozcan PEKTAS, Director General, the Ministry of Trade and Industry of the Republic of Turkey, Chairman of the Steering Committee on cotton.
B/ PROCEEDINGS OF THE WORKSHOP:
After the opening session, the proceedings of the workshop were held in three plenary sessions during which Experts exchanged their views on the following themes:
? The World and OIC Trade in Cotton and products thereof and the position of the OIC Countries
? Future prospects: Industrial partnership and financing of cotton industries in the OIC Countries
? The role of OIC Institutions in the promotion of Trade and Investment in the Cotton Sector
I/ PRESENTATIONS OF OIC, REGIONAL AND INTERNATIONAL      INSTITUTIONS:
? Presentation of the OIC cotton Action Plan, by Mrs. ESRA HATINOGLU, from the Steering Committee on Cotton (TURKEY)
? "Sales promotion and marketing of cotton and derived products in OIC Member States: current status and prospects » by Amadou Cire SALL, Islamic Centre for Development of Trade (ICDT)
? Structured trade and commodity financing as a tool to promote cotton production, International Islamic Trade Finance (ITFC)
? “The Role of the Private Sector in Trade and Investment in Cotton Sector in the OIC Member States”, by the Islamic Chamber of Commerce and Industry ALAA DLIMI (ICCI)
? “The World Cotton Market: Current Situation and Prospects” By Mr. Ahmed EL BOSATY, International Cotton Advisory Committee (ICAC)
? The role of ACA in the promotion and processing of African cotton, by Mr. ABDIN Mohamed ALI, African Cotton Association (ACA)
? Promotion and processing of Cotton in the WAEMU area, by Mr. BALLA DIONG, West African Economic and Monetary Union (WAEMU).
II/ PRESENTATION OF NATIONAL EXPERIENCES:
Benin, Burkina Faso, Cameroon, Egypt, Mali, Syria, Senegal, Turkey and Uzbekistan presented their national experiences in the fields of trade, investment in the cotton sector.
III/ SYNTHESIS OF THE DEBATES:
COTTON the ‘white gold’ is one of the most important cultivated plants of the world and approximately 200 million humans in more than 70 countries earn their livelihood from this crop.
Cotton is insignificant on a global scale (it accounts for only 0.12 percent of total merchandise trade), it is an important cash crop to a number of developing countries and OIC Member States at both farm and national level. For example, cotton accounted for 65 percent of total exports for Benin; 45 percent for Burkina Faso; 42 % for Mali; and 34 percent for Chad. Notably, the share is also high for Uzbekistan (45 percent); Tajikistan (20 percent); Turkmenistan (15 percent); and Kyrgyzstan (8 percent). Asian and African countries produce more than 50% of cotton worldwide.
OIC Foreign Cotton Trade:
The OIC trade of cotton reached in 2008 a value of 4.93 billion US $ against 5.76 billion US $ in 2007, i.e. a 14.41% drop due of the international economic crisis and the price falling of cotton in the international market.
The world level, it appears that sub-Saharan Africa is the first cotton supplier with 585.6142% followed by the Middle East with 30.0226.93%, Asia with 10.8017.38%. The Gulf area and the AMU countries close walk with 0.5517% and 0.0210% respectively.
Intra-OIC Cotton Trade:
The intra-OIC trade in cotton reached in 2008 a value of 1 billion US $ against 1.68 billion US $ in 2007, i.e. 40.50% of drop related to the international economic crisis of the demand of cotton in many OIC Member States.
Intra-OIC Cotton trade accounted for 30.5626.34% of the foreign trade of the cotton products of the OIC countries in 20047.
The intra-OIC trade value in cotton (other than linters) reached in 2008 955 million US $ against 1.64 billion US $ in 2007 (see figure n°14), i.e. drop of 41.70% linked with the international economic crisis and the drop of the intra-OIC trade in this product.
There is a concentration of the intra OIC trade in cotton since ten OIC countries ensure more than 9394.41% of intra-OIC exports of cotton and derived products and 99.55% of the total intra-OIC imports. The main players are Egypt, Turkey Nigeria, Uzbekistan, Mali, Benin, Kazakhstan, Bangladesh, Pakistan, Indonesia, Morocco, Tunisia, Egypt, Malaysia and BahrainAlgeria.
- The vulnerability and high dependence on cotton in some OIC countries, notably those of sub Sahara Africa and central Asia has important poverty ramifications, especially when large price declines take place notably thanks to 3 main factors: the policies of subsidies implemented by some big industrialized countries like the USA and UE, the substitution of synthetic fibers like polyester to cotton and the fluctuations of the US dollar which is the main currency in pricing commodities.
Despite their comparative advantages, cotton industry in most of the OIC Member Countries particularly in sub Saharan Africa suffer from several weaknesses that jeopardize its viability in an era of increasing globalization and fierce competition in world cotton market.
Among the aforesaid weaknesses we can quote among others:
? The Abandonment or the neglect of cotton farming: many farmers have left cotton production and shifted to other crops, this change had a negative impact on local factories.
? The structure of the sector, especially in West African countries, where the cotton sector has been organized according to a “filière intégrée” model (that is a vertically integrated public sector): state-owned enterprises enjoying a monopsony for seed cotton purchase and cotton inputs sale have regulated the sectors. They dealt, most often, with the services related to production and marketing (including research dissemination, transport, ginning and exporting) and, sometimes, even provided public services in the rural cotton areas. This system was coupled with a mechanism of fixed prices at the country-level and guaranteed sales for producers. The whole sector organization certainly contributed to the rapid growth of cotton production, among other things, by providing stability and an efficient input-credit system. However, as from the mid-eighties and continuous low cotton prices, the system became unsustainable.
? highly unfavourable production costs as compared to the main Asia competitors notably, the cost of energy, the cost of cotton, transport costs, the problem of investisments financing and working capital, as well as the existence of a currency which convertibility affects competitiveness,
? The price and quality of the inputs (seeds, insecticides, fertilizers, equipements etc..) and the structure of rural areas and the ownership regime of the real estate,
? High level of illeteracy of the rural population and workers
? Poor infrastructure in rural Landlocked areas
? The inadequacy or the lack of training mechanisms in textile and garments which became a high skill sector  particularly in fashion design
? The lack of mobility of some member States in face the deep changes in the cotton sector (dismantling of AMF ) and elaboration of strategies to reposition all the cotton producing countries, in order to increase  the added value chain in the cotton sector,
? Poor textile supply in terms of manufactured products in spite of an important and competitive quality of cotton fibre production in the OCI member countries, particularly in West and Central Africa,
? The invasion of the fraudulous imports, counterfeited products and second hand clothes from Asia, which jeopardize companies and investments in the cotton and textile sector,
? The inadequacy of fiscal system, several African and all Central Asian cotton producers still tax their cotton sectors.
OIC and particularly OIC cotton producing countries should continue the reforms so as to face successively the competition and cope with the decline of world prices of cotton and the structural changes in this sector.
Participants stressed the need to expedite the implementation of the five-year (2007-2011) Action Plan for the OIC Cotton Producing Countries’, prepared by the Steering Committee on cotton, which will enable the OIC Member States to enhance the efficiency and effectiveness of the cotton sector against the challenges they face at the international level.
 This Action Plan involves activities and projects capable of to be realizing the strategic goals and targets of the OIC. Besides, the appointment of Centers of Excellence would systematically promote and create synergies towards promotion of knowledge-based economies through appropriate use of information and communication technology, as well as effective transfer of technologies.
C/ BUYERS/SELLERS MEETINGS AND VISITS TO EGYPTIAN FACTORIES:
25 persons from representing  13 OIC Member States took part in the visits organized by the Egyptian authorities (GOIEF) and ICDT to some leading Egyptian Cotton and textiles companies located in  BORG EL ARAB (Alexandria) : Benin (1), Burkina Faso (2),  Egypt (3), Indonesia (1), Mali (1), Morocco (2), Mozambique (1), Nigeria (3), Pakistan (2), Senegal (1), Syria (2), Uganda (1), Uzbekistan (1) as well as executives from GOIEF (2) and ICDT ‘s representatives.
The first company visited is a spinning factory “MEDITERRANEAN TEXTILE COMPANY (MEDTEX) S.A.E”, which is specialized in the field of textiles for more than 40 years and uses the last technology and has a daily capacity of 25.000 tons.
This visit was followed by an introduction of the SAIF Group; Three companies operate in the textiles field, which are: KOHAT TEXTILE MILLS – SAIF TEXTILE MILLS in Pakistan and MEDTEX in Egypt. Brochures and CD-ROM on the SAIF GROUP were distributed to the different participants.
The second company visited is called ESHRATEX. This spinning company is entirely managed by Egyptians which consume domestic cotton only, namely GIZA 86 and GIZA 88. Several executives from ESHRATEX explained to participants all the production process since the beginning of the production line until the final product. The production capacity is 15,000 tons/day.
At the end of the ESHRATEX visit, participants were invited to a lunch offered by ESHRATEX in Alexandria.
At the end of the lunch, the Nigerian Delegation, conveyed to the senior executives of ESHRATEX on behalf of all participants, their profound gratitude for their warm welcome and the visit they made.
D/ RECOMMENDATIONS:
At the end of the proceedings of the workshop, participants agreed on the following recommendations:
Strategy and cotton policies:
? Call upon OIC Member States to expedite the implementation of the OIC Five Year Cotton Action Plan (2007 – 2011).
? Provide technical assistance to OIC Member States in designing national cotton trade policy to encourage cotton production and sourcing from sustainable supply chains. Preferential fiscal, tariff and tax treatment should be provided to sustainable cotton production at national level.
Information and communication:
? Encourage the development and growth of sustainable cotton markets (cotton exchanges) through improved information gathering and targeted economic policies favoring cotton from sustainable sources.
? Strengthen R&D and innovation among the OIC Member Countries and institutions, forging partnership, enhancing knowledge-sharing, establishment of expert’s bank, technology transfer, etc.
? Develop an OIC Information Strategy on Cotton Sustainability in collaboration with ICAC and CFC: build an information database on OIC cotton production, processing and consumption. The information system should track basic science-based social and environmental indicators across foreign and national cotton production and textile manufacturing sources.
 
Financing and insurance:
? Call on financial institutions to set up an insurance on crops
? Call on financial institutions (IDB, ADB, UNDP, etc.) for funding the OIC Cotton Plan of Action, and national projects related to production, quality assurance, marketing and vertical enlargement. The holding of an international Conference of donors for fund raising may be an additional platform for financing.
? Recourse to the financing and guarantee mechanisms of IDB-Group and ITFC like export credits and insurance to expand the cotton trade among the OIC- Cotton Producing Countries,
? Call on financial institutions (IDB, ADB, UNDP, etc.) to design low cost  financing programmes dedicated to small farmers and SMEs  operating in cotton sector in OIC Countries.
? promote national, private and foreign investment in the coton sector and remove barriers hampering the capital flows towards this sector;
? facilitate access to selected seeds, phytosanitary products, pesticides fertilizers as well as to bank loans;
Trade negotiations
? coordinate the positions of the OIC Countries within the WTO Multilateral Trade Negotiations and with European Union (APE) in order to work for reducing and even abolishing all kinds of subsidies to the farmers of developed countries and for the opening of the markets of industrialized countries to cotton and related products by removing barriers to entry and reducing tariff escalation on processed products;
? request the participating countries in trade negotiations among the OIC Countries to include in the list of their products the cotton and related  products  that will be subjected to a tariff removal within the framework or PRETAS;
? Call on developed countries to give up all forms of subsidies and other distortion trade measures.
? Encourage the development of bio cotton and equitable trade in cotton

Technological and research& development:
? Encourage research and development in the cotton field in order to develop new cotton technologies and varieties in order to meet the growing demands of technical and sustainability standards increasingly being applied in the cotton sector,
? Optimize the existing inputs and Increasing the productivity by using inputs of high quality and decreasing the costs,
? Improve the product quality and Encourage and support the use of high quality of inputs, high tech machines and devices,
? Invite the ICCI, through its Investment company FORAS, to give a special importance to cotton sector projects,
? Strengthen exchange of experiences and joint cooperation in R&D, innovation and knowledge sharing among OIC Countries.
Development of infrastructures:
? open up landlocked rural areas by connecting them to road, railway and maritime  networks in order to develop multimodal transport;
? encourage investment in the logistics infrastructure facilitating transport, storage and distribution of cotton and products thereof among the exporting and importing Member States;
? create regional joint ventures in cotton processing industries in collaboration with the national and regional financial institutions of the OIC Countries as well as with international financial institutions.
? organize targeted promotional actions intended for the private sector in order to incite it to get involved in the efforts deployed by Member States in the field of investment development in the cotton and textile sectors;
? foster the integration initiatives (clusters, exports consortia, Economic interest Groupings-GIE) between producers and downstream processing units and develop the value chain of cotton production;
E/ VOTE OF THANKS:
The Participants expressed their profound gratitude to H. E President Mohamed Hosni Mubarak, President of the Arab Republic of Egypt for his High Solicitude towards the Organization of the Islamic Conference; they also conveyed their thanks to the Government of the Arab Republic of Egypt for the warm welcome and hospitality extended to Delegations and for the excellent organization of this workshop.
Participants expressed also their gratitude to H.E Prof Dr. Ekmeleddin IHSANOGLU, Secretary General of OIC for having launched a full-fledged programme on cotton and for the efforts deployed for making it successful.
Participants also expressed their appreciation to the ICDT and the ITFC for the perfect organization of this workshop as well as for the great efforts they have made to ensure its success.

Cairo, 13th October 2009