Socota of Madagascar Expects Textile Revenue to Grow on SADC

Groupe Socota, whose textile and garment-making unit is Madagascar's biggest, expects revenue from this business to rise 39 percent in 2011 as exports to southern Africa grow, Chief Executive Officer Salim Ismail said.

Revenue is forecast to increase to 63.3 million euros ($89 million) at Socota Textiles Ltd., Ismail said by phone from Antsirabe, 165 kilometers (102 miles) south of Antananarivo, the capital, on March 16.

''The Southern African Development Community markets are growing very quickly and we have the advantage of being very near compared to our competitors,'' he said, and with southern African experiencing summer during the European winter, workloads at the company's plants are more even.

Socota Textiles, which employs 4,340 people, has clients that include Marks & Spencer Group Plc, the U.K.'s largest clothing retailer, and Spain's Inditex SA, the world's biggest and owner of the Zara brand. In South Africa, the continent's biggest economy, it supplies Woolworths Holdings Ltd. and Edcon Holdings Ltd., owned by Bain Capital LLC.

The U.S. suspended Madagascar from eligibility for duty-free exports to the U.S. through its African Growth and Opportunity Act in 2009. The law, introduced in 2000 to help expand economic growth on the world's poorest continent and due to expire in 2015, allows about 6,500 products from Africa to enter the U.S. free of duties or quotas.

Groupe Socota, which also has interests in shrimp farming, sought to grow textile exports to European and SADC markets after the 2009 suspension caused by coup in March that year, which sparked a two-year economic crisis. The European market accounted for 76 percent of revenue in 2010, Ismail said.

Before the suspension from AGOA, Madagascar's textile industry accounted for 42 percent of export earnings for the Indian Ocean island nation, according to the World Bank. Madagascar's exclusion has led to the loss of at least 20,000 formal jobs, Ismail said.

Bloomberg